New Report Measures ‘Return on Investment’ of Various College Degrees
Here are some questions and answers about college costs:
How much does a four-year college degree cost these days?
The average published cost of a four-year public university, including in-state tuition, fees, room and board, is now about $22,000 a year, according to the College Board. Average annual costs at four-year private, nonprofit colleges are well over twice that amount.
How did the report measure “return on investment” for a college education?
The report estimated how long it takes to recover a student’s net college costs, based on the earnings “premium” a student gains by attending college. Here’s an example: If a student graduates with a degree in business and earns $15,000 more than the typical high school graduate in the state, the earnings premium is $15,000. If the degree cost $60,000, it would take four years to recoup the cost. If a majority of students who graduated from a program are able to recoup their costs in 10 years or less, the program is considered to offer a reasonable return on investment; five years or less is even better.
The report looked at roughly 2.2 million students who graduated in 2015 and 2016. Their earnings were measured two years later (2017 and 2018), then adjusted to 2019 dollars. It looked at out-of-pocket costs that a graduate would pay, after deducting grants and scholarships.
How should students and families consider information on a program’s “return on investment”?
College consultants caution against choosing a course of study solely because of its potential salary. It’s often difficult for high school juniors, for example, to know what areas or careers will interest them six years later (or longer, if they attend graduate school), said Jeff Levy, an independent educational consultant in Santa Monica, Calif.
And exposure to new ideas and topics in college may spur interest in career paths that they don’t yet know about, he said. “I would advise families to ignore the data,” Mr. Levy said. “It’s noise.”
He did suggest that students who are interested in a degree because it currently appears lucrative — say, nursing — seek volunteer experience in the field. That will help determine if they really want to pursue the degree and will help them when applying, because such programs are often highly competitive.
Carrie Warick, director of policy and advocacy at the National College Attainment Network, a nonprofit group working on behalf of low-income and minority students, said pursuing a degree that a student didn’t have an affinity for, simply because it paid well, was probably unwise.