A degree from The University of Alabama can pay more over time than investments in United States stock market indexes, according to a recent economic analysis.
A UA education provides real annual return on investments that range from 14.6% to 17% for the 2019-2020 graduating class when lifetime earnings from a degree are compared to the previous degree.
The return on investment of a UA degree is better than if a high school graduate had, instead of going to college, invested the cost of earning a degree from UA and withdrawn that growth at age 67.
The data is drawn from the latest UA economic impact report conducted by the Center for Business and Economic Research in the UA Culverhouse College of Business that examined a UA education from the perspective of private investment.
“College has a real cost that can be considered as an investment, but a degree from The University of Alabama is a worthwhile and prudent investment that is better than putting money in the stock market,” said Dr. Samuel Addy, associate dean for economic development outreach in Culverhouse and a senior research economist for CBER.
The economic analysis projected the earnings of UA graduates at the bachelor’s, master’s and doctorate level, comparing their lifetime earnings to each degree and a high school diploma, and considered the direct cost of getting a higher degree plus foregone earnings while in college as the investment. The lifetime earnings, then, is money gained from jobs after graduation with the higher degree. With each analysis, the more advanced degree paid off.
According to the report, a person with a high school diploma is projected to earn about $3.4 million in their lifetime and a person who took some college courses about $3.8 million.
A UA graduate with a bachelor’s degree from the 2019-2020 academic year, however, is projected to earn, on average, nearly $6 million in lifetime earnings, yielding a 14.6% real annual return on investment, or ROI.
Those with a master’s degree from UA could earn nearly $7.5 million before retirement, an ROI of 17.0%. For a UA doctorate, lifetime earnings are projected to be $9.6 million, which yields an ROI of 16.1%.
“The University of Alabama delivers real results for its graduates that pay off not just in earnings, but enhance the quality of their life and those of their family and community,” Addy said.
The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.