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What is the opportunity cost of a person going to a university?

An opportunity cost is the cost you incur when you choose one path and forego another.  So, what needs to be examined is what path you are foregoing to go to school. Assuming that you would work instead, your opportunity cost is the wages you would earn if you chose to work, rather than attending school.  This could amount to a substantial sum of money, but there needs to be more to your consideration of...

An opportunity cost is the cost you incur when you choose one path and forego another.  So, what needs to be examined is what path you are foregoing to go to school. Assuming that you would work instead, your opportunity cost is the wages you would earn if you chose to work, rather than attending school.  This could amount to a substantial sum of money, but there needs to be more to your consideration of this issue.  Let's assume that you will attend and graduate college in four years and that you could earn $25,000 per year if you worked instead.  That would be $100,000 that you would earn if you chose not to go to school. You would also most likely have to spend money to attend a university, which can be expensive. If you go to school instead of working, statistics tell us that you are likely, when you graduate, to earn far more per year, almost double the earnings.  If you have a forty-year work life, assuming no raises over the period of your career, your earnings would be $50,000 x 40, which would be $2,000,000.  If you forego university and work instead, you will have $25,000 x 44, for the four extra years you would have worked, which equals $1,100,000.  Even with the high costs of tuition and other educational expenses, you make a lot more money long-term by attending college.  There is what seems to be a big short-term opportunity cost to attend and pay for school, but a very large long-term opportunity cost to forego an education.  This is a very simplified model, not accounting for the exact costs of attending school or the fact that regular pay raises will compound the higher wage base far more than the lower wage base, but it should help you understand the concept of opportunity cost. 

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