Cost and Benefits of Getting a College Education
Abstract This paper is an analysis of pursuing college education, based on years 2004 to 2008. As a working professional, college education is one of the most important credentials needed in starting a career. Despite the limitations, a rational and ambitious individual would undoubtedly seek such a level of education. With the present economic conditions, the cost of getting a college degree is soaring high. Finances of the family are affected, not to mention the inflationary factor of prices and school fees. In this simple analysis, the costs of gaining a degree in college are identified with the provided assumptions below. With regards to ...view middle of the document...
38% (average inflation rate from years 2004 to 2008). Using this inflationary assumption, present values are computed with a discount rate. If the inflationary rate is used in projecting the increases in costs and earnings, and then when it is used appropriately as a discount rate or discount factor, the result will be an accumulated present values of cost and earnings over the number of years used in this study as a basis.
Cost Assumptions No tuition fee increase per subject/per unit within the duration of college education Course is limited to four consecutive years (in this study, the course is B.S. in Hotel & Restaurant Management), with regular loads and no shifting of courses No needed loans/scholarships/financial aid availed Forgone earnings/opportunity costs are based on the minimum wage (regional) and are fixed until the last year of college. Classification of cost: Direct Costs are amounts of directly visible expenses. They include all money expenditure incurred on different items by the student. The following are examples of direct costs: Expenditure on tuition and tuition-related fees Other student fees and charges necessary for school admission Purchase of books and supplies (uniforms, stationary, etc.) Lodging expenses Transportation and Food Allowance Indirect Costs are also known as opportunity costs. These are amount which are indirectly visible. It refers to the value of students’ time or earning forgone to continue the study, emphasizing a factor of choice. By the opportunity cost of decision is meant the sacrifice of the next best alternative required by such decision. The projected costs of pursuing a college education are as follows:
University of Cebu COST Year 2 29,674 5,040 24,000 1,800 4,700
Direct Costs Tution & Student fees Transportation Lodging Food Books & Supplies Projects Indirect Cost/Opportunity Cost Forgone Earnings Total Direct Cost Total Indirect Cost Total Cost
Year 1 33,810 4,800 18,000 2,040 3,500
Year 3 40,014 5,280 28,800 3,600 2,450
Year 4 28,123 8,160 6,000 48,000 2,200 5,600
Total 131,621 23,280 6,000 118,800 9,640 16,250
39,648 62,150 39,648 101,798
67,968 65,214 67,968 133,182
67,968 80,144 67,968 148,112
67,968 98,083 67,968 166,051
243,552 305,591 243,552 549,143
Average yearly cost is at Php 137,285.75. Tuition fees differences depends on the number of subjects/units the student is getting per semester/per year. Below are the details:
Age Direct Costs Tution & Student fees First Semester Second Semester Miscellaneous Fees Other Student Fees Total Transportation Within Cebu City Outside Cebu City Total Lodging Food Books & Stationery Projects Total Direct Costs Indirect Costs Foregone Earnings
17 Year 1 12,925 11,891 5,600 3,394 33,810 4,800 4,800 18,000 2,040 3,500 62,150
18 Year 2 13,442 7,238 5,600 3,394 29,674 4,800 240 5,040 24,000 1,800 4,700 65,214
19 Year 3 15,510 15,510 5,600 3,394 40,014 4,800...