Via the WSJ’s Real Time Economics blog, PayScale has released the results of a study that attempts to provide an ROI for college education. From the WSJ:
The study surveyed results from self-reported compensation data from 1.4 million college graduates across 852 public and private institutions. ROIs were calculated based on the cost of college — tuition and fees, room and board, and books and supplies — and the estimated median pay for that graduate plus four-to-six years to compensate for time spent in school. Costs don’t account for financial aid. The 30-year returns are reflected in real terms and the annual ROI figures include a 4.3% yearly wage inflation.
Overall, the best value proved to be public schools attended by in-state students, yielding a 9.7% average net annualized ROI. The worst deal was attending an out-of-state public school, yielding an annualized net ROI of 8.4%. The net annualized return for private institutions was 9.1%.
The study suggests that a bachelor’s degree has been devalued with lower ROIs over the years, though advanced and professional degrees are seeing greater returns. It also points to the longtime belief that attending an elite university matters — Ivy League schools take up five spots in the top 10.
The top-10 colleges ranked by 30-year ROI were:
- Harvey Mudd College
- Notre Dame
Not a whole bunch of surprises there. However, this just looks at the total dollar amount. If you sort by Annual Rate of Return (a measure of the value of the investment, not just the total return) my alma mater, The College of New Jersey, outranks UPenn, Yale, and Notre Dame. Plus, there are all sorts of questions one can raise about their methodology (which can be found here.). Continue Reading