Given the high cost of college these days, it’s not unreasonable for parents and students to try to put a dollar value on a college education. What’s the college return on investment? And are there some schools that have a better return on investment (ROI ) than others?
The College Board reported in January that there is a clear economic benefit for students to obtain a degree. For example, in 2015, median earnings of college grads were 67% higher than those of high school graduates.
According to Jennifer Ma, senior policy research scientist at the College Board, “Although obtaining a college degree can mean forgone wages during a time when they are also paying tuition, by age 34 the average bachelor’s degree recipient will have recouped those costs.” The report says even if students must take on debt to obtain the degree, it is still a wise investment.
But those are broad statistics, and there is a lot of concern about student debt. Fortunately, there is more data available to help students and parents look more closely at specific schools, degree options, financial aid and student outcomes.
Money magazine devised its own ranking of colleges based on their ROI. It considers educational quality, affordability and alumni success, among other factors. Their analysis gives weight to some factors that differ from those of the popular U.S News and World Report rankings, which heavily weight selectivity. Nonetheless, the analysis still has some problems due to conclusions based on broad data pools. The attached article by Dave Bergman and Andrew Belasco reviews some of the challenges of trying to determine which schools provide the best value.
Factors Which Affect ROI Conclusions
While the Money listing is informative, there are factors that complicate their rankings. For example, can a liberal arts major expect the same salary as a business or technology major? The magazine makes an adjustment for that, but it is hard to know if it takes all variations into account. Also, the Money list of best colleges is a mix of public and private institutions—but the list bases tuition on the in-state cost at public universities, which skews the data.
How College Costs Are Affecting Employers
As Money author Kim Clark points out, employers realize that higher college costs are driving strong students from elite private schools into the large public universities. As a result, employers are changing their recruitment targets. Schools which may have previously been overlooked are now seeing interest from some larger, high paying corporations. This may ultimately change the success and salaries of alumni which is a factor in the ratings.
Bottom Line: What Really Matters?
According to research by Stacy Dale and Alan Krueger shared by Bergman and Belasco, what really matters is the student. “Students who attended elite colleges fared no better than those who applied and were rejected by elite colleges. In other words, smart and ambitious people achieved similar material wealth regardless of where they actually attended school.” Another important factor, according to a Gallup survey, is that students who leave school with a high amount of debt are less satisfied with their college choices.
Choosing a college is complicated, and it’s an expensive decision with long-term consequences. Is it possible to determine the actual college return on investment? There is a lot of data available, but there are intangibles to consider as well. Success isn’t all about achieving material wealth, but about finding a career that brings satisfaction. Look at the ratings and gather all the information you can to make the best decision.