Is $13,300 a good investment for a degree?

Stuff reports:

For the rest, student debt – or “deferred tax liability” as one financial adviser likes to see it – has become a fact of life with over $14.3 billion now owed to the state.

But the ubiquity of student loans does not lessen their impact on individuals. Indeed, the sums borrowed continue to rise. The average amount borrowed by students in the 2012 year was just under $8000, up more than $520 from two years earlier. It probably would have been more if not for the fees “stabilisation” enforced on tertiary education providers by the Government.

The average loan at the end of June was over $19,000 – though the median was just over $13,300. At that rate, average balances of $20,000 or more appear likely to become the norm.

It’s a large debt overhang to start a working life with, though, in theory, a quality education should more than pay for itself in higher earnings.

So the median debt is $13,300. Does the extra earning cover that cost?

Well if you do not get a post-school qualification your median weekly income from wages is $729 a week (Stats NZ June 2014) which is $38,012 a year.

If you do not get a degree your median weekly income from wages is $1,055 a week (Stats NZ June 2014 for a bachelors) which is $55,011 a year.

That’s a difference of $16,999 a year. Over say a 40 year working life post study that is around $680,000 before tax in extra income. For a median student loan balance of $13,000 or so that’s a superb investment for most people.

It’s very had to argue that hard working truck drivers and builders should pay more in taxes, so accountant and lawyers leave university with less of a student loan.