Teaching Degree ROI Guide: The Return on Investment You Can Expect with a Degree in Education
Reviewed by Jon Konen, District Superintendent
You can’t turn on the news or open a paper today without hearing about the $1.6 trillion in outstanding student debt that has piled up for American college graduates over the past couple of decades. Heck, it’s even got its own domain now.
If that hasn’t got you thinking yet about how to pay for college, it should. And, just as important, it should start you thinking about how college is going to pay off for you. Is the juice worth the squeeze? It’s an important question as you get into doing this adulting thing. And chances are that your first really big financial decision is going to be how much to spend on college, and how to get the financing to pull it off.
This leads to the concept of return on investment (ROI): the positive (hopefully!) financial benefit you receive for an outlay of cash. In practical terms, ROI is all about how much your career is going to net you compared to the amount you spend getting the education to qualify for the job.
Because teaching offers a fairly predictable salary structure, a well-defined major, and in many cases is tied almost directly to your level of education, it’s pretty easy to calculate your ROI.
The formula for figuring ROI is about as simple as it gets…
Total Lifetime Compensation (above what you would likely earn with a high school diploma) – Total Invested in Education = Total Return
In other words, what you can make over and above what you could earn with just your high school diploma—taking out the total cost of attending college, including wages that you might miss out on while you are in school, as well as interest costs if you borrow money for it. The result is the ultimate dollar value of your degree.
Of course, for many people, teaching is as much a calling as a profession. No one gets into it for the money—you do it because you love doing it, and because you believe in the kids and in the future. That’s all the satisfaction that money can’t buy.
We believe in min-maxing your education by looking for serious value and benefits in return for every tuition dollar you spend and not worrying too much about anything that doesn’t actually contribute to you becoming a great teacher. That’s a great way to maximize your return on investment. But even if you happen to be lucky enough to have a rich uncle picking up the tab and cost isn’t an issue, it would still be nice know what that investment earns you over the course of your career.
Calculating Your College ROI Starts With Cost of Your Initial Teacher Prep Program
Qualifying for a teaching job requires earning a bachelor’s degree. According to the National Center for Education Statistics (NCES), the 2018 average costs of tuition, fees, and room and board at a four-year school in the U.S. came to $27,357.
For four years of study, that means the total cost of a degree would come to $109,428 on average.
Of course, that is just an average—different schools have different tuition costs, and are located in different areas of the country that have different cost-of-living expenses. Going to school at a state university in a college town out in farm country may have identical tuition costs to another college in the same state system located in the big city, but the cost of living in that small town will be substantially lower. Furthermore, private colleges have much higher tuition costs than those public schools, regardless of where they are located
You can see the differences in this list of total annual costs of attendance (including living costs) for some representative public and private schools offering Initial Teacher Preparation (ITP) bachelor’s programs in states located in every major region from coast to coast. To provide a good representative sample, we made a point to identify schools from each category (public and private) with tuition rates that were close to the median cost for the states they are located in.
To really drill down to the brass tacks of what you can expect to pay, the calculations we provide subtract out the average federal financial aid that students at these institutions receive. And in the case of state schools that offer steeply discounted residential rates to in-state students, we look only at the in-state pricing:
- California
- University of California – Los Angeles (public) – $14,171
- California Baptist University – Riverside (private) – $23,365
- Florida
- University of Florida – Gainesville (public) – $8,057
- University of Miami – Miami (private) – $30,841
- Georgia
- University of Georgia – Athens (public) – $13,971
- Piedmont College – Demorest (private) – $17,894
- Illinois
- University of Illinois – Champaign/Urbana (public) – $17,302
- Northwestern University – Chicago (private) – $24,840
- Kansas
- University of Kansas – Lawrence (public) – $18,571
- Benedictine College – Atchison (private) – $23,767
- New York
- Stony Brook University – Stony Brook (public) – $14,893
- Cornell – Ithaca (private) – $30,494
- Pennsylvania
- Pennsylvania State University – University Park (public) – $30,996
- Duquesne University – Pittsburgh (private) – $29,622
- Texas
- University of Texas – Austin (public) – $16,505
- Trinity University – San Antonio (private) – $23,106
- Washington
- University of Washington – Seattle (public) – $12,001
- Gonzaga University – Spokane (private) – $33,545
Private Universities Come With Steep Costs That Hit ROI Hard
You can also see the significant differences in annual costs of attendance between public and private schools, which, of course, show a similar spread when taken as a national average.
Although there is some evidence to back up the idea that a private school education can be more valuable over the long term than a public school option in fields like business where reputation and connections go a long way, there is little to suggest the same is true with teaching. Entry-level salaries are usually fixed by contract or policy within a district, and while your elite Yale Bachelor in Education Studies degree will definitely turn heads hanging on your classroom wall, you’ll be making the same amount as the teacher next door who went to State U.
In fact, a Georgetown University Center on Education and the Workforce ranking of 4,500 colleges and universities in the U.S. found that, apart from the elite Ivy League and specialty academies, in most fields there’s not a huge range of ROI differences for most four-year schools in the country.
Costs of Attendance Can Vary Depending on Your Financial Status
Something that can dramatically change your cost of attendance is your personal financial status. If you qualify for scholarships or federal grants for tuition due to your income level, for example, that portion of your tuition costs won’t come out of your pocket—while your salary will definitely all end up in your savings account. That changes the equation in your favor.
On the other hand, if you do not qualify for grants, but can’t afford to pay out-of-pocket for tuition, you’ll probably end up taking out loans. Even with the low interest rates and generous repayment terms available for federal student loans, that can mean years of additional payments… all of which will most definitely come out of your salary in monthly installments, starting as soon as you complete your degree program.
NCES found that the median student debt for bachelor’s degrees was over $40,000. Four years after graduation, preK-12 educators still owed, on average, about half of that amount.
Bankrate.com calculated that the estimated percentage of salary required for student loan repayments for teachers in 2020 came to nearly 36 percent of take-home pay… far and away the highest obligation as a proportion of overall pay of any profession they evaluated.
But being a teacher can also line you up for some additional discounts; programs like the Teacher Loan Forgiveness Program can write-off some of those loans based on where you choose to work.
So as you can see, the equation we started with up top doesn’t tell the whole story because it doesn’t tell your story. If you really want to get down to what the actual cost of your education is going to be, it’s a pretty nuanced process to arrive at your tuition costs, not just the tuition costs.
Determine the Salary You’re Likely to Earn to Find Your ROI on a Degree in Education
Your salary is the big weight countering your college expenses, and it has years to pay off… the longer you work as a teacher, the better your ROI is going to be. But what exactly is that salary going to be?
Some of the most definitive data is Bureau of Labor Statistics information on median salary levels for teachers. The Bureau shows salaries for teachers in the most popular roles as of mid-2020:
Medians are good here, because they represent the range of possible salaries you’ll be looking at over the course of your career… you may start off below that level, but as you move up the step-and-ladder system of pay raises that are common in the industry, you will eventually be making more and more.
Teaching positions are also well known for the perks. For starters, although you are earning a full year of salary, you are generally working for only ten months out of those twelve.
Teaching is also a stable profession with a salary that is locked in so it’s not impacted by major cyclical economic factors like recessions and bubbles. That’s not something that can really be quantified in dollars and cents, but it’s a benefit that many teachers were happy to have during the Great Recession and the COVID-19 pandemic. Even with all the stress that came with shifting between remote teaching under stay-at-home orders and classrooms reopening with all new safety protocols, teachers were feeling very fortunate to have essential government positions at a time when so many other people were losing their jobs, and as businesses and entire industries were collapsing.
Regional Differences in Salaries Impact Your ROI
Just as different parts of the country have different average costs for college, there can be real variation in the average teacher salary depending on where you live as well. For the same states we listed above in our examples of college costs, you can see the 2019 BLS median salary levels for elementary, middle and high school teachers:
- California
- Elementary School – $82,560
- Middle School – $80,160
- High School – $85,080
- Florida
- Elementary School – $55,210
- Middle School – $56,640
- High School – $57,880
- Georgia
- Elementary School – $58,190
- Middle School – $58,830
- High School – $59,860
- Illinois
- Elementary School – $63,280
- Middle School – $63,630
- High School – $74,340
- Kansas
- Elementary School – $50,650
- Middle School – $53,500
- High School – $52,050
- New York
- Elementary School – $82,830
- Middle School – $87,050
- High School – $87,240
- Pennsylvania
- Elementary School – $69,630
- Middle School – $69,330
- High School – $66,920
- Texas
- Elementary School – $56,280
- Middle School – $56,290
- High School – $58,000
- Washington
- Elementary School – $69,390
- Middle School – $70,970
- High School – $71,690
With few exceptions, you can see that high school positions pay more than elementary and middle school jobs, despite the degree having no cost difference… which is something that will influence your ROI over time.
But you can find some ways to hack the system by planning ahead for the possibility of interstate mobility, or at least staying open to the idea… You’ll note, for example, that tuition costs in Washington state are very similar to those in Kansas… yet Washington state teachers make as much as $20,000 more per year in the same positions.
Cost of living will have to factor into any decision you might make to relocate as a way to chase opportunity and a higher salary, but it’s clear that you can get more benefit from your degree that might be immediately apparent at first.
Factoring in Pension and Healthcare Benefits for Teachers
Pension and healthcare benefits can be substantial as well. Most teachers have strong union representation that comes with the benefit of collective bargaining, which means union leaders negotiate on their behalf for generous benefits and retirement packages… 2020 BLS data shows that 90 percent of school teachers are enrolled in defined-benefit pension plans with guaranteed payout on retirement that is formula-based rather than market-driven. The certainty of that package is uncommon in the world today, giving it value that goes beyond even the dollar amount of the monthly income it provides in retirement.
On the other hand, there can also be a cost to these retirement benefits… in exchange for those pension plans, at least ten different states exclude teachers from participating in Social Security retirement benefits, so you will forgo the check that most Americans get after the age of 65 from the federal government. To calculate the impact of this, you’ll need to both calculate your estimated Social Security payout (the Social Security Administration provides an online calculator for this purpose) and your estimated pension benefits (which will vary from state to state and sometimes district to district).
On the healthcare front, teachers pay 16 percent of plan premiums, which is lower than the 20 percent average for workers in general. So that is certainly an added value, although rising healthcare costs in the United States may not make it feel like one—according to 2018 Department of Labor data, teachers are contributing $1,500 more per year toward healthcare than they were in 2008. The $151 per month average contribution is higher than the $138.76 paid by most American workers, although the coverage itself is usually better.
If you total up those, you will find that your benefits can add as much as 40 percent to your total annual compensation over time.
The Value of A Master’s Degree in Teaching
Although a bachelor’s degree is all you need to become a teacher, many teachers go on to earn a master’s degree in their field eventually anyway… despite substantially higher costs that come with an advanced course of study. According to NCES, the average cost of graduate-level tuition and fees for 2019 was:
Since a master’s in education typically takes two years of full-time study to complete, roughly double those numbers get added to your investment costs tab.
But some of those costs are baked in to your profession… most teachers have to get a certain amount of continuing education in order to maintain their positions. If you have to invest in the education anyway, then using that spending to earn a master’s only makes sense.
And that master’s is tied, in many cases, to salary increases according to contractual agreements at school districts. According to the National Council on Teacher Quality, almost 90 percent of large school districts offer additional pay to master’s-qualified teachers.
For a 25-year career, a master’s degree can earn you an additional $287,250 in your pocket… and only around 3.5 years worth of work to pay back the cost of investment.
Other Bonus Pay Can Add to Your Bottom Line
Performance bonuses remain contentious in education circles despite studies finding some benefit in student performance coming from such programs. But there are a few districts that continue to run such programs, and the results you achieve in the classroom can result in real boosts to your paycheck if you work in one of them.
More typical options for bonus pay come through taking on additional tasks at school or bringing additional skills to play. For example, Los Angeles Unified School District offers an annual stipend of up to $5,406 to teachers who earn a bilingual California teaching certification. The Austin Independent School District not only offers an annual stipend for bilingual teachers of $6,000, but $1,500 as a sign-on bonus for those teachers when they are first hired.
Another common benefit offered by Austin ISD is a $2,000 annual bump for earning your National Board Certification. Many districts have some similar incentive program to crack those tough National Board exams and become certified, so it can be worth your time to meet their stringent requirements:
And then there is the time-honored tradition of taking on a sport or club leadership position. Coaching soccer or football can add another couple thousand to your annual salary, while club leadership or working as a chaperone can bring in hundreds.
At the end of the day, the week and the schoolyear, you’re not in it for the money. But when you consider how much you will be spending for your degree, you certainly need to consider how much you’ll be earning when you make your decision about where to go to school. With a careful ROI calculation, you can enjoy a very comfortable lifestyle with summers off, great benefits, a unique level of stability, and the kind of job satisfaction that only teachers can really understand – and you can have it all without crushing student loans hanging over your head. All of those things come together to provide a richness of life and a sweet sense of comfort in more ways than one.
(Salary data reported by the U.S. Bureau of Labor Statistics in May 2019 for kindergarten, elementary, middle and high school teachers. Figures represent national data, not school-specific information. Conditions in your area may vary. Information accessed Jan 2021.)
(Tuition data provided by College Scorecard and the National Center for Education Statistics, services of the U.S. Department of Education.)