Education as an Investment, Essay Example

Socially education is esteemed as the only means a parent can invest in his or her children’s future. Philosophically, education is the key to a happy, good, successful satisfying life. What about economically? When economic principles of analyzing investments are applied to education, the results are always astounding. From a businessperson’s perspective, education might be the best investment venture a man can commit to.

In contemporary economics, investment analysis usually employs ROI (Return on Investment) to measure how efficient a financial expenditure is. ROI is a popular scientifically sound metric that is widely used due to its simplicity and versatility. In a snapshot, modern investment parameters state that an investment venture must post a positive ROI if it is to be termed efficient and beneficial. If the ROI is on the negative, such an investment venture should be terminated and or limited in terms of resource allocation.

If we were to apply a similar principle in measuring the continuous investment of resources to education, as an individual or government, then education would sound much the same as printing legal tender at home. This is especially when the subjects of analysis come from minority and low-income families.

Many scholars and sociology experts believe that the US economic future is consequent to successful investment in education. President Barrack Obama has committed his administration to investing billions of dollars in education reform. The base of such decisions is in amplifying the socio-economic status of the young people in the country.

To elaborate on the positive ROI of education, let us use the 2,800 US federal TRIO education programs. These programs assist the low-income students in college education by providing private instruction, counseling, tutoring, mentoring, induction and cultural enrichment of students who could otherwise not make it in college.

ROI Analysis of Education: Case Study

The program costs $7,350 per student. The returns start almost immediately since five times the invested amount is then received back by the government from the additional taxes collectable from all TRIO participants. The TRIO students always graduate from college at much higher rates than the needy students who never receive similar support services. Consequently, the society benefits from having better personnel (educated), improves service delivery, performance efficiency and reduces wastage of time and resources.  It also eliminates one potential criminal from the youth. If such youths were without education, research has shown that 53% of them would be criminals by the time they are 30 years old. Such criminals would then be fed, guarded, treated and hosted by the state free.

The TRIO students then promise and usually commit to mentoring, funding and inspiring others needy students once they settle in a career. That means, they contribute additional funds for the program (construed here as investment capital). That is not all. The TRIO college grads will make a much higher income consequent to education and that will generate a continuous provision of greater tax revenue for the government. When all these benefits are totaled and quantified, it is easy to see that the federal investment capital in the TRIO programs has a positive ROI, one that is overwhelmingly incomparable to the initial capital.

Conclusion

The amount spent to educate a single person is incomparable to the amount generated from and resultant from the opportunities the person gets after that education. The amount spent is tuition fee, books and other education charges since birth are usually earned back within three years of employment and even in a shorter period if the individual continues with higher education. As such, going by ROI, education is a great investment venture for a nation and for an individual.