This report was compiled by Housecall Pro, a software company for home service companies. The report takes an in-depth dive into differences in lifetime earnings, ROI, costs, starting salaries, and more.
For the last 375 years (since Harvard was founded), college has been almost universally considered the best choice for a bright future.
But in the last 30-40 years, the price of a college education has skyrocketed (at a rate that is significantly faster than that which wages are increasing), creating massive student loan debt.
And it’s left people wondering: “Is college really worth it?”
Many have already decided it’s not… in fact, post-2000 enrollment in America’s universities has shrunk significantly compared to the 20 years before the turn of the millennium. But we decided to run the numbers ourselves to see if a college education still does set you up for a brighter future.
Here’s what we found.
There are a significant number of variables that make a universal comparison between trade school and college complicated (not to mention, an exceptionally diverse amount of data).
For example, the expected starting salaries for skilled trades vary wildly, as do tuition costs between universities (and even specific fields of study).
So we made a few assumptions to make our analysis:
- We analyzed the average “all-inclusive” costs of a private for-profit trade school and public, in-state college.
- We analyzed the average expected starting salary for all college degrees and all trades.
- We assumed a 3% annual wage increase for both college and trade school students over the course of their lifetime.
- We assumed a market-average return of 10% for savings invested.
- We assumed both trade school and college grads would save at 2019’s national personal savings (7.9%) for the duration of their careers and that while in debt, all savings would go towards paying that debt off.
Here’s what we found when we crunched all of the data.
Trade School vs. College: Lifetime Earnings and ROI
If you look solely at starting salary and lifetime earning potential, overall, college is a better choice.
However, salaries and lifetime earnings do not tell the whole story – trade school allows you to start earning and saving sooner, thanks to less debt and a shorter education timeline.
This has several benefits:
- Since you’re earning debt-free years before a college grad, you’ll have money for life events like purchasing a house or having kids sooner.
- Assuming you started saving and investing for retirement the day your student debt was paid off, you’d end up with nearly $250,000 more in your retirement account after 40 years compared to a college graduate.
Furthermore, for the amount of money you invest upfront for trade school, you get much more back compared to college. In our analysis, a trade school grad could expect to earn 22x what they spent on education, compared to only 15x for college.
We selected an average cost for both in our analysis. But what you spend for each can vary depending on what type of school you choose to pursue.
The Cost of College and Trade School
Trade schools and colleges vary drastically depending on where they’re located, whether they’re public or private, and more. However, you can expect to pay significantly less for a trade school education than for college.
The most expensive 2-year trade program is still just 36% of the cost of the cheapest 4-year university degree. You also graduate with a third of the debt on average.
However, post-secondary education is more of an investment than purely a cost (meaning it should provide a return). So saving money on your education isn’t really all that beneficial if you make significantly less once you graduate.
Here’s what you can expect to earn in each scenario.
Starting Salaries for Trade School and College Grads
Ultimately, what you earn post-graduation depends heavily on the trade or degree you choose to pursue. Some trades can earn you more than $50/hr, whereas others may not pay you much more than $18/hr.
Similarly, some bachelor’s degrees will set you up for immediate employment whereas others have no direct industry associated with them.
So while the numbers above are estimates, the major/trade you choose can increase or decrease that significantly.
And finally, the pros and cons:
Have something to say? Share your thoughts with us in the comments below.