New Report Analyzes College Students’ Return on Investment
Monday, December 2, 2019
By Janai Raphael, Graduate Assistant for Research and Data Analysis
As college costs (and, coincidentally, student loan debt) continue to rise many have joined in a national conversation centered around one important question: Is going to college really worth it?
In a new report, Georgetown University’s Center on Education and the Workforce takes its “First Try at ROI [return on investment]” and analyzes the different factors, such as institution choice, cost of attendance, and type of degree, that can impact a student’s ROI. Using data from the College Scorecard, the report focuses on net present value which is “an estimate of how future earnings are valued in the present” and ranks over 4,500 public, private nonprofit, and private for-profit postsecondary institutions by ROI. The report measures students’ ROI in the short-term and long-term, which are defined as the periods 10 and 40 years after enrollment, respectively.
Among the report’s key findings:
- Students enrolled at community colleges and other two-year institutions have a higher return on investment within 10 years of first attending the institution.
- However, four-year institutions that primarily award bachelor’s degrees have the highest ROI in the long term.
- Compared to private institutions, public colleges and universities have higher ROIs in the short-term.
- Graduates from private, nonprofit institutions have a higher ROI in the long term when compared to graduates from public institutions.
Some of these findings are intuitive. Community colleges offer shorter programs, which allows students to quickly earn a credential and enter the workforce. Bachelor’s degrees are more expensive and take longer to complete; however, they produce higher earnings on average. Similarly, public colleges generally have lower costs of attendance which means that students won’t have to take on as much debt to attend. Private, nonprofit colleges, on the other hand, require students to take out more debt, but it often pays off in the long run.
The report notes, “Over the course of 40 years, even after paying off higher amounts of debt, private college graduate will reap a long-term net economic gain of $838,000, compared to $765,000 for graduates of public colleges.”
Each year millions of students eagerly enroll in college in hopes that once they graduate, they’ll be able to secure well-paying jobs in their fields of choice allowing them to financially support themselves and their families. However, we’ve all heard stories where that’s not the case. In some instances, some students are not able to find jobs in their field after graduating. In other instances, college graduates have found jobs – but they’re not well-paying – leaving them with high amounts of debt and financially vulnerable.
In recent years, many higher education stakeholders increased their efforts to help students better understand the cost and value of their education before enrolling in college. At the federal level, the U.S. Department of Education released an update to the College Scorecard, which historically only displayed institution-level data, to include debt and median earning levels across different academic programs to help students make better, more informed choices.
Whether earning $838,000 or $765,000, the findings of this report confirm that yes, college really is worth it. However, these findings also have the potential to significantly impact the way students pick which institution to attend. While securing a well-paying a job is often a student’s primary motivator for enrolling in college, they often pick up a lot of other benefits along the way.