Pages: 26-40
Introduction. The rate of return to schooling (returns to investment in education) equates the value of an individual’s lifetime earnings to the present value of educational costs. For an investment to be economically justified, the rate of return should be positive and should be higher than the alternative rate of return. For the individual, weighing the costs and benefits means that they should invest if the rate of return exceeds the private discount rate (the cost of borrowing and an allowance for risk).
Aim of the study.
The costs incurred by an individual are the earnings deferred while studying, plus any tuition fees or incidental expenses incurred. Private benefits amount to how much an educated person earns (after taxes) compared to a less educated person. More or less, in this case refers to adjacent education levels – for example, university graduates compared to high school graduates.
