Price is what you pay. Value is what you get.
Warren Buffett
Warren Buffett said it about stocks, but it holds for college: price is what you pay, value is what you get. Most families fixate on price, the tuition, the room and board, the sticker shock of four years. Far fewer ask whether the degree will return more than it costs, including the wages a student gives up while paying for it.
The consensus says yes: lower unemployment, higher pay, better prospects. But that case leaves out two things any serious financial analysis includes. The first is the time value of money. A dollar earned forty years from now is not worth a dollar today. The second is taxes. Graduates earn more and keep a smaller share of each additional dollar.
Put both back in and the picture inverts. The raw lifetime wage advantage of about 1.07 million dollars collapses once you discount it to today’s dollars and subtract taxes. For the median student, that advantage becomes a deficit of roughly 82,000 dollars. Not a smaller gain. A loss.
That does not mean no degree is worth it. It means the answer depends entirely on your skills, your school, your field, and your price. Some degrees are exceptional investments. Many are not.
Layer federal taxes on top, and at full sticker cost the high school graduate’s lead widens to $82k.
Bachelor’s degree holders pay tax at higher marginal rates and keep less of each premium dollar. The high school graduate pulls further ahead.
Source · U.S. Census Bureau, Current Population Survey · IRS 2024 brackets · Author’s NPV model
This is Chapter 3 of the book. Read the full math in the book, or run your own numbers in the model.
Read next: Is College Worth It? The argument in full, or how the numbers are calculated in this breakdown.