Q&A of the Day – Florida’s Collegiate ROI

When compared to the country overall, the average Florida bachelor’s degree results in an additional $160,000 in ROI over the course of the 40-year period, or in other words, the net additional benefit for a typical Florida college graduate is $4,000 more annually in today’s dollars, compared to the average student in the average other state, obtaining a degree from the typical college within their state.  

Episode Transcript

Speaker 1 (00:04):
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(00:46):
I would like to ask you a follow up question
to your story about the performance of Florida's universities. We've
heard for a while now that Florida is the best
state for overall value, but what I've not heard is
the tangible impact. In other words, we know that certain
degrees from certain prestigious schools make carry more weight with
employers than degrees from lesser regarded schools. Is there a
way to account for this within Florida's collegiate system? Thank you,

(01:10):
and so I believe I understand what you're looking for
here and really good questions. So over the years, I've
had conversations with parents and students who might feel conflicted
about staying in state and attending a college or university
within Florida as opposed to say, going to an Ivy
League school if that's an option, And to the point

(01:32):
of your question, on the one hand, shelling out or
being on the hook for say one hundred thousand dollars
per year maybe daunting. However, if that leads to elite
job opportunities, it could provide phenomenal ROI in time. And
this is evidenced by the way by the top three
national universities according to the US News and World Report rankings,

(01:53):
consisting of Princeton, MIT, and Harvard this year all expensive places.
Prince for example, isn't only the number one school nationally
this year, but according to the study, it's also the
number one value this year, despite annual tuition of greater
than sixty five thousand per year, a number that is

(02:14):
literally greater than ten times the in state tuition rate
of Florida's top performing university of the University of Florida.
So in other words, you can see what the average
outcome is for those that are getting a degree from Princeton.
It's well worth it. Sometimes you do get what you
pay for in education. Now, Florida's collegious system ranks as

(02:35):
the top state primarily based upon the consistently strong performance
of the state's colleges and universities combined with the lowest
in the nation tuition costs for in state students along
with high graduation rates. So an attempting to boil down
today's question to arrive at an answer for NETROI in
comparison to the rest of the country will dig in.

(02:57):
The return on investment for a college degree is the
net present value of lifetime earnings over an average degree
minus the cost of obtaining the degree. So nationally, the
forty year return on investment for a bachelor's degree is
approximately one point eight million dollars based upon Georgetown University's

(03:19):
Center on Education and the Workforce analysis of US Department
of Education data. So they do this study annually and
what they found most recently, and this kind of answers
the question you ubiquitously, is going to college still worth
it well for the average person that obtains the degree,
The answer is yes, to the tune of one point
eight million. Now in Florida, we stand out again for

(03:42):
our exceptionally low public tuition cost being lowest in the US.
The average in state tuition rate right now only forty
five hundred and forty dollars per year for four your institutions.
So that does bring about additional ROI with the other considerations,
when compared to the country. Overall, the average Florida's Florida

(04:03):
bachelor's degree results in a surplus above what I just
mentioned of one hundred and sixty thousand dollars over the
course of the forty year period. Or in other words,
the net additional benefit for a typical Florida college graduate
is four thousand dollars more annually in today's dollars compared

(04:29):
to just the average student obtaining the average degree anywhere USA.
And so this is where you can have a lot
of fun, or at least I can. So let's say
that you invested that extra four thousand dollars annually at
the typical rate of return at the s and P.
Five hundred, which is ten point one percent the net
value of that Florida degree. Now that would be over

(04:53):
forty years, one point eight two billion.

Speaker 2 (05:00):
I think, how you look at me. Brian looks at
me like I'm going to figure it out. I was
waiting for you throw out a number twenty dollars tolds
give me this look like no, it's just no.

Speaker 1 (05:11):
No. Now it's one point eight two million dollars. One
point eight two million if you take the four thousand
invested have average market return. So that is the value
of a Florida degree with the power of compound interest
in stock market returns.