At what point in time does a college education not make sense?

[Shiloh Lundahl]

There is an economic term called diminishing marginal rate of return. Meaning for every one more unit sold the benefit becomes less and less. With the rise in college tuition costs and the strong emergence of availability of online education and trade schools, at what point does a college education stop making sense? 

I went to college and I got my undergraduate degree in social work (although I started out in business). Then I went on to get a master's degree in social work. I believe my whole education cost about 40k (if you count up all of the associated costs relating to my degrees) and it took me 6 years. My first year out of college I made 40k which is high for a social worker, especially right out of school. After a few years I became a supervisor making 55k a year. A few years later I started and built a private therapy practice where my income is now well over 100k. So my return if it were calculated on a cash on cash basis would be 100% my first year and 250% now, however, I was making little to nothing during the 6 years while I was going to school. So if you divide it by the length of time it took me to get my education (I believe that would be the IRR) then after the first year my return over the 6 years would have been 17% per year. Of course with more time that rate goes up. Now my return from when I started college until now 17 years later (let's say for simplicity's sake that years 09 and 10 I made 40k, 11 and 12 I made 60k in years 13 - 19 I made 100k for a total of 900k over a 17 year period with an initial investment of 40k). So my new IRR would be 132% per year now. But what about the social workers who never go into private practice but work for local or state agencies and continue to help out the community but their income is averaged out at around 45k per year. Following the same scenario, their IRR would be 73% per year (45k x 11 / 17 / 40k x 100).

Now the expenses come into place such as student loans and interest on those loans along with debt accumulated during the time one is going to college even with the “bare minimum” expenses to live during college and after while one is starting out. So if the 45k a year is living pay check to paycheck and barely coving student loan debt, and after the 11 years since school you are not in much of a better financial place then you were when you started, was it financially worth it to go to college?

Comparing this scenario with maybe someone who goes to a trade school for 20k but afterwards is able to start making 45k a year starting year 2, IRR would be 113% after the second year and 150% after the third year and 169% after the 4 year, etc., with only 20k in debt to pay off. Now imaging professions that have a lot more debt for the required education. Does there become a point where it no longer makes financial sense to get a college education?

What are your thoughts?