Selecting which nursing school to attend is important. Choosing the right RN program for you is critical to your success in and after school. This video outlines the Opportunity Costs associated with selecting the right college for you.
It all comes down to what is called OPPORTUNITY COST. Simple put, it is the positive or negative cost we incur because of our decisions. Here is a simple example:
Let’s say that we have two nursing programs with identical outcomes. One has a total program cost of $12,000 and is 24 months long and the second has a total program cost of $40,000 but can be completed in 16 months. Please consider All else in the programs to be equal, accept for the money and length of program, for example: the same student, same teachers, same learning opportunities, and same curriculum is taught and learned at both programs. If I was to ask you right now which program would you want to attend there would be, most likely, a universal response…the first one, because tuition is just under one-third the cost of the second. Because most everyone answers program number 1 there will, most likely, be a high number of applications. Which means limited seats available, wait lists, denial letters, and for some, years of little to no career progression. But what about program number 2, because the tuition cost is over 3x that of program number 1 we put it out of our minds. Let’s look at the cost of that decision.
Two Students Selecting Two Different Nursing Programs
We will call our student Abigale, and compare the cost of her decision of selecting the nursing program at College number 1 vs. the program at college number 2. Let’s look at the moment of time she graduates from the longer program. Abigale, from program 1 graduates in 24 months at a cost of $12,000; she becomes licensed, and starts earning an RN salary. At that moment, Abigale from program 2 will have been graduated with a cost of $40,000, become licensed, and has a potential RNs income for 8 months. So at that moment,
Abigale at program 2 has a cost of $40,000 + she has her RNs income over the 8 months. According to bureau of labor statistics, and lets just pick a state, let’s say Utah, they report the average annual wage of an RN to be $59,810, so let’s estimate semi-conservatively and say starting wage for a new nurse is $45,000. That’s $ 3,750 per month, so 8 months of this wage is 30,000. So Abigale at program 2 has a cost of $40,000 + the potential income of $30,000. The loss of $30,000 of earnings, if she attends program 1, is the opportunity cost of attending that program and not getting the RNs salary sooner.
Which Nursing Program Looks Better?
Attendance at Program 2 is advised because the difference in tuition cost is outweighed by the income of an RNs Salary for those 8 months. And an 8 month head start in the work place for some professions could mean that graduates from Program 2 are training graduates from Program 1. This evaluation is the opportunity cost associated with selecting school number 1 over school number 2.
Now let’s look at a second situation where Abigale could attend two programs, still with the costs of $12,000 and $40,000, but this time the program lengths are the same, but, because there are so many applicants at program 1 Abigale is denied entry into program 1 for one year…..remember all else being equal. With program 2 however, Abigale starts this year.
Opportunity Cost Associated With Nursing Program Selection
What is the opportunity cost associated with selecting program 1 over program 2 by the time Abigale would graduate from program 1?
At program number 1, Abigale waits 12 months, start the RN program, graduates with a cost of $12,000, gets licensed and starts working as an RN. At program number 2, by this time, Abigale has started and finished her program, got licensed and has worked for 12 months as an RN earning a starting salary of what we mentioned earlier, $45,000. Abigale at program 2 has a cost of $40,000 + 1 year of salary of $45,000 and an entire year of work experience. So I ask you again, Why should you attend a Program with a higher tuition? And the answer is: When the opportunity cost outweighs the cost of tuition.
Just to wrap up, Opportunity Cost is critical and will help you make the best decision for you and your financial future.
- Wait lists
- Available seats
- Completion time
- Attending straight through or does the program schedule summers off
- Job placement/ Career Services
- Licensing exam pass rates
- Starting salaries
- Tuition increase over time
- Each of these items may play a role in your opportunity cost calculations.
- When considering a Program, please also consider these items:
Thanks again for joining us! And this has been another production from Illuminations!