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A Student’s View of R eturn O n I nvestment

A Student’s View of R eturn O n I nvestment. A Micro Perspective www.bobp.biz. Microeconomics versus macroeconomics. Microeconomics focuses on the behavior of individuals in making decisions about the allocation of limited resources.

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A Student’s View of R eturn O n I nvestment

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  1. AStudent’s View of Return On Investment A Micro Perspective www.bobp.biz

  2. Microeconomics versus macroeconomics • Microeconomics focuses on the behavior of individuals in making decisions about the allocation of limited resources. • Macroeconomics looks at theperformance, structure, behavior, and decision-making of the whole economic system.

  3. Defining Return on Investment • A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of different investments.To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. • Basic formula is: !!! Return on Investment and Economic Impact are two different measurements. (Gain from Investment-Cost of Investment) ROI = Cost of Investment

  4. Types of ROI Impacting Career Tech

  5. Macroeconomics: What’s the Big Picture • Return on Investment andEconomic Impact for Career Tech programs has been an important topic in recent years. Much of the discussion has focused on attempting to show the macroeconomic impact of training programs to taxpayers, communities, and all stakeholders. These discussions are important and relevant, but the many facets and moving parts involved in macroeconomics often makes it difficult to make definitive conclusions about economic impact and concrete returns on investment.

  6. Microeconomics: What’s in it for me • Microeconomics is about the direct impact of decisions to the individual. This presentation will focus on the micro, instead of the macro, impact to stakeholders and students using Career Tech programs. In macroeconomics, the concern is the overall level or rate of economic activity, and the activities that that cause it to change. Microeconomics is concerned with choices among alternatives, and their impact on an individual.

  7. Some Background and the Beginning • Daughter Lindsey: Typical successful student and perfect daughter. Finished college in four years with a degree and a certification that allowed her to be employed as a school teacher. • Son-in-Law Matt: Typical imperfect boy “who’s not really good enough for my daughter” but somehow convinced her marry him anyway. Started college, but fortunately dropped out with only one semester’s bills to pay. Was successful working at an $9 an hour sales job (plus some commissions), but decided to enroll in a Career Tech Machining program. • Started August, • On-The-Job Training by March, and • Employed as a machinist by May. • Dad happier!

  8. Eye opener • Lindsey’s investment: $12,487.50 per semester times 8 for a total of $99,900. (Not counting books, fees, and interest.) • Matt’s investment: $800 per semester times 2 for a total of $1,600 dollars. (Matt did pay an additional $870 for tools and books.) • The Eye Opener: Perfect daughter Lindsey and that Matt kid did not qualify for financial aid for Matt’s education so they had to write a check for tuition and materials. After starting his job at $16.50 an hour and working overtime, his first check was about $1,350. Daughter said, “Dad, did you know Matt will earn almost all of his school cost back after working three weeks? Do you know how long I’ll have to work make back my educational cost?” • My Answer: “Yes dear, I’m still paying for your college.”

  9. What we learned with the leadership team • At the same time my son-in-law was starting his new career, a leadership team at school was working on identifying and defining performance measures. This group met for several months and had lively and mostly constructive conversations. • The Holy Grail of performance measures was to find out how to gauge Economic Impact. • We made some progress, but the Grail is still elusive.

  10. Some conclusion from the Leadership team • Some performance measures can be determined based information we already collected • Some measure are important for internal planning • Some performance measures must be extrapolatedfrom information into reports • Some measures might be important for potential customers

  11. Identified Performance Measures in Career Major Programs (From Gordon Cooper Leadership Team) Info needed for economic impact Info we already collected Info we started collecting Info we need to collect

  12. LIFE is about Choice…Consequences and Rewards The Game of Life taught us about choices… but it also taught us a little about luck. A micro look at ROI will focus on individual choices.

  13. ROI for the Student • We DID NOT set out to develop this performance measure • But it seemed to be something that was relatively concrete • It also seem fairly easy to determine • ROI for the student might not satisfy all stakeholders, but might be useful for student recruitment and for student decision-making

  14. What we learned From School Catalog Salary / (Tuition + Time) Salary / Tuition 1Hours of Training times minimum wage Tuition + Time / Hourly wage 2Tuition plus Time Investment 4Tuition /Hourly wage From Wage Survey Report 3Hourly Salary from Wage Survey Report X 40 hours X 52 weeks in a year Lindsey had been wrong. When you calculated the time investment in a training program, it took a little longer than three weeks to earn all the investment back.

  15. Comparisons Private Security ROI Certified Nurse Aide ROI PLC Programmer ROI A & P Aviation Mechanic ROI Welding ROI

  16. More comparisons Matt’s ROI Lindsey’s ROI* Accountant ROI Dentist ROI Dental Hygienist ROI Undecided ROI

  17. BUT…The Longer Term Impact Per Year Impact calculated by taking annual salary minus annual minimum wage salary. Private Security ROI Certified Nurse Aide ROI PLC Programmer ROI A & P Aviation Mechanic ROI Welding ROI

  18. BUT…The Longer Term Impact Matt’s ROI Lindsey’s ROI Accountant ROI Dentist ROI Dental Hygienist ROI Undecided ROI

  19. Limitation to Student ROI • Does not factor long-term earning potential • Does not consider previous learning and experiences • Training and education is still only a part of the puzzle related to student success in a career • A person’s pay is not the only indicator to success and fulfillment BUT • It does show a correlation between tuition cost, time investment, and wage rates • It does give a student more information to make intelligent educational choices • It does give policy makers comparisons to make program decisions and could help students make better decisions for their future

  20. So What does all this mean? • Students can be successful in a many ways. • We need to be brutally honest when we provide career counseling. • Do we need to talk about educational ROI for students? More Questions contact: • Bob Perry bobp@gctech.edu • Marty Lewis martyl@gctech.edu

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