Many people believe that a university education will lead to higher lifetime earnings and greater financial freedom. Actual Earnings seem to confirm this. People with a four-year degree make far more over their lifetimes than those without—about 75% according to this study by the Federal Reserve Bank The following are some examples of how to use San Francisco. But This path should be evaluated against other options. Bitcoin This is also an outstanding investment. The average CAGR (compound annual growth) for the last 10 years was 71%. The Bitcoin’s growth has opened up a new path towards financial freedom. What If we invest in Bitcoin instead of tuition and time for University? Which Would a longer career yield a higher return?
Valuing Education
The The price of an education at a university has outpaced inflation by a wide margin. In the last 40 years, tuition increased more than 250% inflation adjusted dollars and 830% in nominal terms. FurthermoreMany observers believe that over the years, universities’ focus has shifted from quality education to entertainment and control of speech. Parents Students are asking themselves, and rightly so, whether the university investment is worthwhile. Confidence In higher education, the percentage has plummeted from 57% in 2015. Students College enrollment for US recent high-school graduates has fallen from 70% in 2009, to 61% by 2023. Parents Students are searching for alternatives.
Even The 75% premium for college wages is misleading. The The reality is, students with a 4-year degree are usually smarter and more hard-working than their peers who start working right after high school. This number doesn’t tell us what the premium would be for an individual student who could achieve a four-year degree but chooses not to.
In His book The Case Against Education, Bryan Caplan The college wage premium is reduced significantly when a student’s wages are considered individually, rather than as a group. His When comparing students of similar ability between high school and university, the premium for college wages is reduced by half. That For an individual, it is estimated that the premium on college wages is around 38%. The The same person who earns $1M in lifetime wages would expect to make $1.38M if they had a college degree.
Even The value of college is underestimated in this calculation. Caplan calculates that approximately 80% of the added value is merely signaling—demonstrating to employers that the student is the kind of student who has the characteristics to achieve a four-year degree and be successful in the workplace. Only Education adds 20% to the value of a product.
In Students lose four years’ wages in addition to their university fees and gains. This Four years can be spent not just on making money, but also to gain valuable skills which will make you more useful and competitive in the market after four years.
Valuing Bitcoin Investment
Bitcoin represents an entirely new asset class—a digital asset whose supply remains absolutely scarce regardless of demand. As governments demonstrate a complete inability to say no to borrowing and printing new fiat money, both sophisticated investors and ordinary people are looking for an asset that can’t be inflated by any powerful individual, government, or bank. As Absolute scarcity is the only way that the bitcoin price can trend upwards in the long-term. This is borne out in bitcoin’s superior returns over its lifetime that has exceeded every other common asset class in 11 out of 14 years. Bitcoin’s 71% CAGR over the past 10 years has dwarfed the 11% that the S&P 500 has yielded in the same period.
Bitcoin Has superior rarity, portability, as well as verifiability when compared with gold. It Has a low ownership cost and a small jurisdictional risk. It Has some regulatory immunity compared with other assets. The The properties of Bitcoin strongly indicate that they will significantly reduce the value of existing assets such as gold, bonds and real estate.
Michael Saylor A 21-year bitcoin price forecast was recently released. His A bearish estimate is a 21 % CAGR. If Bitcoin can offer students and their parents a return on investment that is comparable to this. Before investing money in tuition and skipping four years of earning and developing practical skills, they should consider it carefully.
Another Price model. The power-law models promoted by @Giovann35084111 has proven to be remarkably accurate over the course of the bitcoin history. This Model predicts a rapid increase in bitcoin’s value early, followed by a gradual decline as the currency matures. It The price of Bitcoin is said to increase in average proportionally to time multiplied by the sixth power. This The model predicts a CAGR around 45% for the next 12 months, which will then gradually drop to about 25% after ten.
Comparing The two
We look at both options as investment in capital—a university education as an investment in human capital and bitcoin as an investment in an appreciating capital asset.
The Cost of a University Education includes direct costs as well as opportunity costs. The A payoff would be a 38% increase in salary over the career. The Investing in Bitcoin is an alternative that we will consider. Day 1. The funds saved for education. In In both scenarios, it is assumed that the parents will pay for living expenses during four years. ThusThe cost of university education is not increased and the wages for non-university students are not reduced. InsteadAll of the net salary will be used at the end each year to purchase bitcoins for four years, which would otherwise have been spent supporting a university student.
We In both cases, assume that salary increases by 3% annually. This This is a measure of both inflation and real growth. Dollar Models and values assumed in nominal terms and without inflation adjustment. Since When comparing the performance of two scenarios over the same period, the level of inflation is not a significant factor.
Tuition The differences between university types are dramatic. For The average annual tuition in state at an American public university will be $11,500 in the years 2024-2025. OutThe tuition for out-of-state students is $25K per annum. Students Attending a private university will cost you $44K a year. And Ivy League The average family will spend $65k per year on tuition. Community Colleges are less expensive than universities. In Some students are eligible for additional financial assistance, including scholarships. And some may live in places where tuition is free (well—paid for by further fiat money printing).
Let’s consider two cases—an in-state public university and free tuition. We In the case of bitcoin, assume that you use the amount spent on tuition each year to buy bitcoins annually. This is a way to average the dollar costs and spread the risks of entering the market at different times.
For We consider two scenarios when calculating the Bitcoin price: Saylor The bear case model (21% CAGR), and the power law model, which starts out with a high return but gradually drops over time in line with its historical power law curve.
We Comparing results for a 40 year career (four years of university and 36 years in the workplace case). We Consider that the average non-college annual take-home salary is $30,000. Then, the college premium per annum is calculated to equal 38% of the total premium over the course of a lifetime. We The non-college option saves only the tuition fees and the first 4 years of pay. The College path buys bitcoin with college wage bonus each year, and has the same income as non-college pathway.
In Each plot shows three values as they change over time.
- Non-College Investments: Dollar Value of Bitcoin from the purchases made with tuition savings and earnings earned during first four years
- College Investments: Dollar Value of Bitcoin from the purchases made each year from College Wage Premium
- College Premium Savings: Dollar Calculate the value of your savings if you don’t invest in bitcoin
To To give the best possible treatment to the option of college, we suppose that the premium for college wages is also invested each year in bitcoin.
Results
Even In the meantime, Saylor In bear case (21 % CAGR), investing in bitcoin tuition money, and income for the first 4 years far exceeds the premium of a degree over the course of a lifetime. The The college wage bonus never even catches up after 40+ years. Because The bitcoin investments in these two scenarios are both very appealing. If Financial freedom is defined as a $5M bitcoin saving, achieved within 20 years of the non-college route and 25 years of the college path. By Comparatively, saving only the premium for college in fiat currency without investing in Bitcoin is a poor strategy. It returns less than 1/200 compared to the path of non-college and around 1/100 if you invest in bitcoin.
Now let’s suppose your student gets free tuition, either through a scholarship or government-subsidized tuition. In In this case, the only benefit of the non-college option is that it allows you to earn the same amount as if you had gone through college for four years.
The The results indicate that, even here, investing four years’ salary rather than delaying a superior wage for another four years yields an improved return.
What If the Bitcoin power law matches the increase in bitcoin, will it continue to do so? We Consider both free and public tuition at universities.
In The non-college option is clearly superior to the college route, regardless of tuition. The public university tuition alternative with the power law achieves financial freedom ($5M) in only 15 years from high school—at age 33.
Other scenarios
What What will happen if we are overly optimist about the future of bitcoin performance? If Both scenarios break even when we lower the Bitcoin CAGR to 10%. If Even if we reduce the CAGR to just 5%, it will still take 18 years before the college route pays off in comparison to a non-college pathway.
What if the college path prepares the student for a more lucrative career—like engineering, medicine, or law—where the college path may be the only option for those careers and where the college wage premium may be much higher? In If a university has a bitcoin CAGR of 21 %, then the premium needs to be at least 113% in order to break even over the course of 40 years.
That’s not the whole story. Medicine Law requires even more deferred wage years and more tuition fees than a 4-year degree. Assuming The college wage premium would have to be 300% for eight years’ deferred pay and eight-years of tuition at a public university (certainly an underestimation of medical or legal school tuition). Engineering appears to be the sweet spot here—preparation for a professional career in four years with a larger-than-average expected wage premium. Even Here, however, 113% of the break-even premium is an arduous task.
If you’d like to investigate other scenarios, here is a Google Sheet Here you can try out the different parameters I’ve used and look up the formulas.
Broader Considerations
This The analysis focuses solely on the return of capital investments. It doesn’t consider personal satisfaction derived from the alternative paths, motivation, the networking benefits of a university, the personal growth experience of a university vs. working directly from high school, and many other factors. It also doesn’t consider the potential volatility of bitcoin, either concerning the uncertainty or the additional stress of riding the bitcoin rollercoaster.
If These findings indicate that even if the bitcoin saving strategy in a university degree is successful, a non-university education will likely be more financially beneficial than a university course. This The conclusion allows parents and students to take a more subjective look at other possible paths, which may better suit their values and personality. Bitcoin Not only does it provide a way to financial freedom, but also a route towards greater career freedom that is not constrained by academic or financial factors.
This This is a post written by a guest. Stan Reeves. Opinions BTC does not endorse the views of any third parties. Inc You can also find out more about Bitcoin Magazine.
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