NEW YORK (MONEY Magazine) -
Even if you're more realist than optimist, the first stop on the path to wealth absolutely has to be college. People with a bachelors degree make 70 percent more than those with only a high school diploma, an advantage that adds an additional million bucks in earnings over their working lives.
Graduate degrees can be worth much, much more. Salaries for doctors and lawyers are all over the map, but consider that the median income of a cardiac surgeon is $400,000, according to Medical Economics magazine's 2003 earnings survey.
The average partner in many of the nation's elite law firms makes $1 million or more. (You're invited to tear those numbers out and nail them to your teenager's bedroom door.)
Plenty of mid-career workers go back to school too, and with good reason. According to the Graduate Management Admission Council, an M.B.A. typically makes almost 50 percent more after graduation than when he or she entered the program.
Education, of course, is not cheap, particularly the elite kind. Four years at Harvard and three more at its law school currently run about $300,000. Most students borrow to finance at least some of their education. In 2002 the average undergraduate debt was $18,900, according to the student loan finance company Nellie Mae. Grad students owed $31,700 on top of that. Law and medical students finished school carrying an average debt load of $91,700.
In this respect, though, investing in an education is like investing in real estate or in a business. It involves leverage, spending other people's money -- be it a Pell Grant, a student loan or a gift from Mom and Dad -- to increase the value of an asset. The asset here is your most valuable one, the earning power of your brain.
While a high school senior in rural Roseville, Calif., Arturo Gonzalez, the son of a Mexican-born railroad worker, painted HARVARD OR BUST on the side of his beat-up VW bug.
"I'm sure people thought it was a joke," he says. Five years later, González was working his way through Harvard Law School. Today, at 44, he's a partner at Morrison & Foerster, a large San Francisco-based law firm where the average partner made $740,000 in 2003, according to The American Lawyer magazine.
"For a kid who grew up in a house of modest means, borrowing $30,000 to go to law school did seem daunting," says Gonzalez. "But I wanted to go to Harvard, and was not about to let money or the lack thereof stop me. When I first began at Morrison & Foerster in 1985, my salary was $38,000, which I thought was pretty good. It was almost twice as much as my father was making working for the railroad."
As with any investment, there's risk involved in getting an education, even when the payoff appears rock-solid. The rise of managed care, for instance, has reduced wages for primary-care physicians. And software engineers face tough competition from abroad that didn't exist just five years ago.
Still, the trend is strongly in favor of investing as much in education as possible. NYU economist Wolff points out that the ratio of the average earnings of a college to a high school graduate has more than doubled since 1980. The biggest risk is foregoing the opportunity to get as much education as you can.
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