A self-investment's full cost is fees plus lost earnings plus time. Its value depends on how large the earnings difference is and how long it lasts before the skill ages.
12 min read · Level 1
Forgone earnings are the cost almost everyone underestimates, and I think that is why full-time programmes are so often chosen by default. The fees are on an invoice; the salary you did not earn is invisible. Making it visible does not mean nobody should study full-time - sometimes it is the only route - but it does mean the choice should be made with the real price in view.
The full price of a self-investment has three parts:
Direct cost fees, materials, equipment Forgone earnings income you give up while studying or training Time hours that could have gone elsewhere
Forgone earnings are often the largest cost and the easiest to ignore. A two-year full-time programme:
Tuition 40,000 Earnings given up: 2 x 45,000 90,000 Total economic cost 130,000
If it raises pay by 15,000 a year, or 10,500 after 30% tax:
Payback: 130,000 / 10,500 = about 12.4 years
If the raise is only 5,000, or 3,500 after tax, payback is about 37 years - longer than many remaining careers.
Skills also depreciate. Technical skills can lose value as tools and practices change. If an earnings premium of 6,000 shrinks by 10% a year because the skill becomes common or outdated, after five years it is worth about 3,543 a year (6,000 x 0.9^5). Durable skills - communication, judgement, deep expertise in slow-changing fields - tend to depreciate more slowly.
Because ignoring forgone earnings makes full-time study look far cheaper than it is. For many programmes, the salary not earned is larger than the fees.
Depreciation matters because a return that fades is worth less than one that lasts. Two courses with the same starting pay rise can have very different values over a decade.
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Two ways to gain the same skill.
Route Fees Forgone earnings Total cost After-tax gain Payback Full-time, 1 year 12,000 45,000 57,000 7,000 a year about 8.1 years Part-time, 2 years 9,000 0 9,000 7,000 a year about 1.3 years
The part-time route takes longer and is harder to fit around work, but its total cost is roughly a sixth of the full-time route. For someone who can manage the workload, the price difference is decisive.
Comparing programmes only on fees. The income given up during full-time study is frequently the largest part of the cost.
Multiply current or expected earnings by the time you would not work, and add it to direct costs.
Ask whether the skill is likely to stay valuable for decades or fade within a few years as tools change.
Look for part-time, employer-funded or cheaper alternatives that lead to similar opportunities.
When considering full-time study, a career break for training or an expensive programme.
Do not reduce every decision to payback. Some education is chosen for meaning, curiosity or long-term options that are hard to price, and that can be a sound choice when made knowingly.
Analysis of job postings and wages by labour economists has repeatedly shown that pay premiums attached to specific technical tools can fall as those tools become widely taught and adopted, while broader skills such as problem-solving and communication have shown more persistent demand across periods.
Pair specific, fast-changing skills with durable ones, so part of what you learn keeps its value as tools change.
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