Friday, August 29, 2008 Wages and cost of education By Ernesto G. Yap University of San Carlos
A student of mine happily told me last week that she had found a job. She graduated from an engineering course last March 2008. Her salary will be P8,000 a month, exclusive of meals and lodging. She will be undergoing training in Laguna, in a quite reputable company. After the training, she hopes her salary will increase considerably.
I would have thought that a fresh graduate of a non-engineering degree will be earning about P8,000 while an engineering graduate will receive about P10,000 to 12,000 a month. We can estimate the costs of taxes and other deduction to be about 15 percent to 20 percent. So this brings to about P6,500 the take home pay of a new non-engineering graduate and about P10,000 a month for a fresh engineering graduate (assuming he or she gets P12,000 a month).
On the other hand, one semester in college is at least P20,000. If you multiply P20,000 by eight semesters, you get P160,000 as the total cost of a four-year college education. If personal allowance is assumed at P5,000 a month, the total allowance for four years is P240,000. You probably can round it all up to a conservative P450,000. For an engineering student, the costs may be about 30 percent to 35 percent higher, or about P585,000.
If one applies a simple computation for a payback for college education spending, we can arrive on the following estimates: six years for a non-engineering degree graduate; and about five years for the engineering graduate. This does not seem bad, and if this is a business venture, it has high potentials.
But several things may not have been considered. When can the graduate pay back his parents the full amount of his college education? From his take-home pay, he still has to pay for his own needs and wants. His take-home pay of P6,500, or even P10,000 would not be enough, especially if he originally comes from the province and must rent a place to stay in the city.
Would he be able to save, and how much?
Still, we have not considered the opportunity costs. The money that our parents spent for our education could have been used for other purposes that will result in additional earnings. So theoretically, the overall cost of education is far higher than P450,000 to P585,000. It could be double or triple the amount if we consider how much our parents would have earned had they invested the money.
Hence, we have to consider our education as a gift. But how are we using this gift? What if, we cannot find a good and decent job or any job at all? Are we squandering this gift by not gaining sufficient knowledge, skills and the right attitude to prepare us for life after school?
