Is tertiary education really worth it?
Despite the general mood of anti-intellectualism, New Zealand has a relatively high rate of participation in tertiary education. However, for many, they attend university for reasons rather than enrich themselves or get a higher paid job. I once heard that a female university student said the sole incentive for her to attend university is the higher chance to find the "man" with "potential", financial potential that is.
So what kind of financial potential a university graduate may possess? In a recently published OECD report (PDF) on education, it is suggested in New Zealand, on average, a male university graduate would earn about NZ$ 170,000 more in his lifetime than those with only high school qualifications.
It may sounds like a lot but it's the earning increased in lifetime. Put that in context of a typical working life of a Kiwi (age 22 - 65), the average increase in wage works out like $80 a week, about 10% - 15% percent increase from the average wage in New Zealand.
Furthermore unless you are lucky enough to have rich parents, you'll have to pay for your tertiary education nowadays. In my situation, I estimated that I need at least 12 years (4 years university and 8 years full time working) before I can reclaim the amount I invested in education. This estimation is actually too optimistic, as you are less experienced and earn less in first few years.
Inflation would make the repayment a bit faster, thanks to the interest-free student loan. However, that does not help in the long run as your other costs would also increase.
The return rate for your investment in tertiary education varies, largely depends on how much financial support you get from your parents and the government, but 10% - 20% in the long run should be a pretty accurate estimate. It does not sounds too bad, but there are also risks. It depends the wider economic environment is tied up to your employment status, if you don't work, you no longer receive the return on your investment.
From a pure monetary sense, I would rather invest my money in real estate market than education. However according to MasterCard, there are things in life you just cannot put them in monetary value. The report suggested three: people with tertiary qualification are generally more healthy, has more interpersonal trust, and are fairly interested in politics.
