Degrees That Will Pay Dividends

Sun Herald

Sunday September 16, 2007

David Ciampa

You should have listened when your mum told you to be a nurse, writes David Ciampa.

WHEN most people think of investments they probably think of shares, bonds and property - which all have the right elements of risk and return. But how about an investment in yourself, one that will pay dividends over the entire course of your life? What am I talking about? Education of course. And if you borrow to invest in this asset class, the Government will actually help out with the terms of the debt improving over time.

It can be expensive but David Phillips, director of education sector consultant PhillipsKPA says higher education is an "investment in yourself that will make a profit". Based on average course fees and average income for the different occupations, supplied by The Good Universities Guide 2008 and mycareer.com.au, we have worked out the actual return you would get on your investment in eight different degrees for Commonwealth Supported Places (CSPs).

DENTISTRY

There may be some negative stereotypes about dentists but, on average, they earn the most straight out of university. Last year, the median entry level salary was $67,500. The Australian Dental Association says a dentist can earn from $85,000 to $95,000 after five years of employment with more experienced dentists earning up to $160,000 a year. Assuming an average salary of $85,000 and an average total outlay of $41,655, a dental degree can give you a 104percent return on your investment.

MEDICINE

They say those that go into medicine do it to help people and save lives. Keep that in mind, as after six years of study and living on student wages, you may feel a little cheated given the average intern salary of $51,850. The years of study will leave you almost $50,000 out of pocket, and even an average medical salary of $76,693 will only give you a 53percent return. But medicine is a long-term investment - you could earn up to $240,000 as a senior doctor or medical practitioner. Your income will vary depending on whether you are in private practice or the public system.

INFORMATION TECHNOLOGY

For a potentially lucrative career, an IT degree doesn't take very long and isn't that expensive. At the middle band of degree costs, the three-year course will set you back just over $20,000. An average salary of just over $90,000 for a computing or IT analyst is at the upper end. The return is very high at over four times your outlay, but so is the volatility, with about 25percent of IT graduates unemployed.

LAW

It's been a trying week for some politicians. Many of them, like John Howard and Peter Costello, started out as law students. However, a law degree offers more than just public life. You could become a barrister, solicitor, or concentrate on the sexier mergers and acquisitions of commercial law. It will generally cost you four years and about $33,300. Your salary will depend on the area in which you practise and the firm you work for, but the average Australian legal salary of $80,716 generates a return of 142percent.

ENGINEERING

There's more to engineering than field trips, flannel shirts and Blundstones. We need engineers to design and build infrastructure and now, more than ever, to develop alternative energy sources. It's not as expensive a degree as medicine or dentistry, and it offers a lot of earning potential once you're in the workforce. The Hays Salary Survey 2007 say the resources boom has meant graduates specialising in mining engineering can earn about $70,000 to $75,000. The four-year engineering course costs $28,472 and offers you an average return of 144percent.

ACCOUNTANCY

There's definitely no lack of opportunities for accountants - for every four vacancies, there's one accountant. The shortage is so bad that some firms are recruiting talented year 12 students, offering them part-time jobs and free university degrees. If you're not one of those lucky freeloaders, three years at university will cost about $25,000 and by the time you pay that back, you'll be earning just under three times what you paid.

NURSING

Nursing wasn't always taught through universities; you used to have to apply through hospitals. Due to current nursing staff shortages, the Government has continued to develop the degree, offering more CSPs and more funding. Nursing is now one of the cheapest and easiest courses to get into, and graduates have excellent employment opportunities. Nursing offers low risks, low costs and a very high return. Fees are usually $12,000 for three years' study and only 3percent of graduates are unemployed. From a small outlay, you generate the largest return of the eight fields of study, at 352percent. Nurses are still underpaid, however, compared to some of their colleagues in the financial services sector.

EDUCATION

Compared to some other qualifications, this is a safe investment and, although not as low risk as nursing, there are a lot of employment opportunities. The highest salary a teacher can earn from a bachelor's degree may not be at the level of some other jobs, but the medium-term return is one of the highest, at 276 per cent.

DEBT TO SOCIETY

THE Tax Office takes a certain percentage of higher education loan program (HELP) repayment income (HRI) once you start earning over a certain amount (over $39,825 for 2007-08).

The ATO says the average tertiary debt is $10,500 and the average repayment time is seven years. However some graduates in expensive degrees end up with a debt of more than $50,000. Unfortunately a lot of the debts of full-fee paying students actually do look like mortgages. At Melbourne University a full-fee paying student will fork out $232,140 for a degree in medicine.

Andrew Heaven, a financial planner with AMP, says when faced with a tertiary education bill you should pay off your unsecured debts first such as car loans or credit cards. He says the Commonwealth Supported Places (CSP) debt is a lower priority because it carries a lower rate of interest compared to the high rates charged by banks. But he does encourage you to "chip away" at your student debt with any extra dollars you get, such as a bonus at work or a tax rebate.

© 2007 Sun Herald

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