Is College Worth It? A Return on Investment Analysis

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Some degrees are worth millions, while others have no net financial value. The biggest factor is your major.Key FindingsThis report estimates return on investment (ROI) — the increase in lifetime earnings minus the costs of college — for nearly 30,000 bachelor’s degrees.For students who graduate on time, the median bachelor’s degree has a net ROI…

Is College Worth It? A Return on Investment Analysis
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Some degrees are worth millions, while others have no net financial value. The biggest factor is your major.

Preston Cooper

Key Findings

  • This report estimates return on investment (ROI) — the increase in lifetime earnings minus the costs of college — for nearly 30,000 bachelor’s degrees.
  • For students who graduate on time, the median bachelor’s degree has a net ROI of $306,000. But some degrees are worth millions of dollars, while others have no net financial value at all.
  • After accounting for the risk of dropping out, ROI for the median bachelor’s degree drops to $129,000. Over a quarter of programs have negative ROI.
  • Four in five engineering programs have ROI above $500,000, but the same is true for just 1% of psychology programs.
  • Elite schools such as Caltech and Penn dominate the list of highest ROI programs. But attending an elite school is not a golden ticket; some Ivy League degrees have negative ROI.

Executive Summary

Most students attend college in order to get a better job with a higher salary. But the financial returns to college vary widely depending on the institution a student attends and the subject he or she studies. While prospective students often ask themselves whether college is worth it, the more important question is how they can make college worth it.

This report presents estimates of return on investment (ROI) for nearly 30,000 bachelor’s degree programs, drawing on a new Department of Education dataset and Census Bureau surveys.

In financial markets, ROI measures the profitability of an investment relative to its cost. In our study, we define the ROI of a college degree as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect costs of college.

The median bachelor’s degree is worth $306,000 for students who graduate on time. But the median conceals enormous variation. Some fields of study, including engineering, computer science, nursing, and economics, can produce returns of $1 million or more. Others, including art, music, religion, and psychology, often have a zero or even negative net financial value.

When accounting for the risk that a student will take longer than four years to finish college, or drop out entirely, median ROI drops to $129,000. Twenty-eight percent of bachelor’s degree programs have negative ROI when adjusting for the risk of non-completion. If ROI is adjusted to reflect the underlying cost of education, not just tuition charges, the share of non-performing programs rises to 37%.

The ROI estimates presented in this report can help students make better decisions regarding higher education. They may also be of interest to other stakeholders, including policymakers, trustees, and institutions themselves. The full dataset, including measures of ROI for all 30,000 programs, is available here.

Introduction

Students constantly hear the refrain that they must attend college to be successful. As a result, two-thirds of high school graduates enroll in college the following autumn. Almost all students cite getting a better job as a primary reason for attending college.

But as this report shows, the decision to attend college is less important than the choices that come next: which school to attend, and which subject to study.

This report assesses the economic value of nearly 30,000 bachelor’s degree programs at 1,775 colleges and universities across the United States. A key measure of economic value is return on investment (ROI), which we define as the amount a student can expect to gain financially from each individual degree. ROI compares the main financial benefit of college—the increase in lifetime income attributable to the degree—to the costs, including tuition and foregone earnings.

The analysis reveals that a student’s choice of program is perhaps the most important financial decision he or she will ever make. Most bachelor’s degree programs in engineering, computer science, economics, and nursing increase lifetime earnings by $500,000 or more, even after subtracting the costs of college. But most programs in fields such as art, music, philosophy, religion, and psychology leave students financially worse off than if they had never gone to college at all.

Differences in ROI between programs can amount to millions of dollars. Financially, the best program anywhere in the nation is the computer science major at the California Institute of Technology. Students in this program can expect an ROI of over $4.4 million. But 28% of programs have negative returns on investment, meaning that students will be financially worse off for having participated in those programs.

Our preferred measure of ROI incorporates the significant chance that the student will not complete college, and thus fail to realize the economic benefits of a college degree. We also report a “clean” measure of ROI, which assumes the chance of on-time graduation is 100%. Many programs which have high ROI in theory see their economic value fall dramatically when taking low completion rates into account.

We calculate ROI with respect to the net tuition that students pay, taking financial aid into account. But net tuition is usually less than the underlying cost of college. Governments and private interests subsidize college through financial aid, direct appropriations, donations, and endowment spending. Other stakeholders, including policymakers and trustees, may wish to assess ROI after accounting for the full underlying cost of college, not just tuition. Therefore, we also provide a measure of ROI with respect to the full cost of education, not just tuition charges.

Individual financial returns to college are the paramount consideration for most students. Almost all students say access to a well-paying job is a primary reason for attending college.

The results improve on existing estimates of college ROI in multiple ways. First, the analysis leverages a new dataset, the program-level College Scorecard, to report results for individual majors at each college rather than the college overall. Second, it augments the Scorecard with data from the U.S. Census Bureau to estimate earnings throughout students’ careers, rather than just the first two years after graduation. Third, it provides more accurate estimates of the increase in earnings attributable to each degree by adjusting for demographics, ability, family background, and local labor markets.

The measures of ROI reported here do not incorporate everything a prospective student might care about. There are non-financial benefits to certain degrees; theology majors, for instance, usually don’t study religion for its lucrative returns. These measures of ROI also don’t incorporate externalities to college education. College degrees have both social benefits and social costs.

But the individual financial returns to college are the paramount consideration for most students. Almost all students say access to a well-paying job is a primary reason for attending college. Moreover, those who deliberately choose a low-paying major for its non-financial benefits should know just how much money they’re giving up to pursue a “dream” career. These measures of ROI supply the knowledge necessary to navigate those tradeoffs.

If students make better choices regarding where to go and what to study, their bank accounts won’t be the only thing that benefits. Wages and salaries are the mechanism through which the economy signals its labor needs. High earnings for engineers are a sign that we need more engineers. Knowledge of ROI is the path not only to individual prosperity, but higher economic growth overall.

What do college graduates earn?

According to the Bureau of Labor Statistics, people with a bachelor’s degree earn 67% more than people who only have a high school degree. The wage premium associated with college is well-established and a major reason why so many students view the bachelor’s degree as a “golden ticket” to economic prosperity.

But the average conceals variation. Some bachelor’s degree programs vault their graduates into jobs that pay two or three times as much as a high school graduate earns. But other programs leave their students with incomes barely above high school level. Once again, the most pertinent question isn’t “does college pay?” but “when does college pay?”

Fortunately, students now have access to a new dataset, the program-level College Scorecard, which includes the median earnings for graduates of over 30,000 bachelor’s degree programs. But the Scorecard has a major limitation: right now, it only reports earnings for the first two years after graduation. This is a problem as earnings tend to rise considerably throughout college graduates’ early careers. To estimate lifetime earnings for all 30,000 programs, I extrapolate Scorecard earnings using data from the Census Bureau’s American Community Survey (ACS). More details may be found in the methodology article accompanying this paper.

The analysis reveals a clear difference in earnings by major. Ninety-five percent of engineering programs, weighted by the number of graduates, will produce median earnings above $80,000 per year by the time their graduates reach mid-career. (Unless otherwise noted, all figures in this paper are weighted by the number of graduates.) Other majors with strong earnings outcomes include computer science, health and nursing, and economics.

But just 1% of psychology programs will yield earnings above $80,000 per year when their graduates are aged 35. Similarly, it is unlikely that graduates of arts, music, philosophy, religion, or education programs will reach annual earnings of $80,000 or more by mid-career.

Individual programs at the same institution can produce vastly different earnings outcomes for their graduates. One of the most lucrative programs anywhere is the finance major at the University of Pennsylvania. Graduates of this program will have median earnings of over $288,000 by age 35, according to my estimates. But students at the exact same school who choose a major in film and photographic arts can expect earnings of just over $45,000 by age 35.

For college graduates, earnings tend to start at a relatively low level but rise steeply throughout the early career. Median earnings for bachelor’s degree programs in the Scorecard are roughly $39,000 at age 25. Earnings then rise rapidly year after year until the mid-thirties. At age 35, the median program produces earnings of $65,000. Incomes plateau in the late thirties; by age 45, the median program’s earnings have risen to just over $71,000. After age 50, earnings begin to decline.

It is important for students to know that their earnings immediately after graduation significantly understate their earnings capacity later on in life. However, earnings immediately after graduation are a reasonable guide to what a student will earn relative to peers in other programs. In other words, the ranking of programs changes little throughout life. Engineering and computer science will almost always be lucrative majors, while art and religion will usually disappoint those in search of large paychecks. The correlation between earnings at age 25 and earnings at age 45 for the 30,000 programs in the Scorecard dataset is 0.94.

There are exceptions, of course. Nursing majors tend to start their careers at a high level of earnings, but their earnings capacity grows more slowly than other majors. Though nursing majors significantly out-earn physics and economics majors during the early career, by age 45 the physicists and economists have caught up with the nurses. Conversely, while education and communications majors start out with roughly the same salary, by age 45 the communications majors earn $10,000 more annually than their education-major peers.

Use the searchable table below to find estimated earnings for your college and major at ages 25, 35, and 45.

While earnings by themselves are a useful measure of the value of college, they are only one half of the ROI equation. To ascertain a full picture of the economic value of college, we also need to consider costs.

What is the full cost of college?

The full cost of college is more than just the price of tuition. A student who attends a four-year college necessarily gives up other alternatives. The student must spend a minimum of four years out of the labor force, and the wages he or she gives up during that time may exceed the cost of tuition. If the student takes longer than four years to graduate, the opportunity cost of his or her degree goes up.

ROI must also consider counterfactual earnings, or what each student would have earned in a parallel universe where he or she did not attend college. Assessments of ROI often compare the earnings of college graduates to the earnings of the median high school graduate. However, this simple analysis is insufficient for an accurate estimate of ROI. People who choose to attend college are different from those who do not. The two groups have different earnings potential. The counterfactual earnings for a college graduate are likely to exceed the earnings of the median high school graduate.

The same principle applies to different majors. Does an engineering graduate have high earnings because of his degree, or because engineering tends to attract people with scientific minds who would earn high wages no matter what? If so, an engineering major might have different counterfactual earnings than an English major. What about students who attend public colleges versus private colleges? Private college students often come from wealthier families. Are high earnings for private-college graduates due to the school, or due to family background?

Obviously, it is impossible to look into parallel universes and observe what each student would have earned had he or she not gone to college. We can, however, estimate counterfactual earnings for each program based on the observable characteristics of its graduates, such as demographics, geographic location, family background, and cognitive ability. The full details of this adjustment are available in the methodology article. By comparing observed earnings to counterfactual earnings, we can estimate the true financial value of each individual college degree.

Similar to the earnings of college graduates, typical counterfactual earnings start at a relatively low level but rise throughout the career. Despite lacking a college degree, high school graduates gain experience and skills as they work in the labor market. Unlike college graduates, they can start building this workforce experience at age 18 rather than age 23. By age 48, typical counterfactual earnings exceed $45,000 per year.

For the most part, students’ earnings with a degree exceed their earnings without a degree. At age 45, the typical college graduate out-earns her counterfactual self by over $25,000 per year. But there are exceptions. About 7% of programs, mostly in art, music, and religion, have higher counterfactual earnings at age 45. In other words, these programs would not pay off even if there were no other costs to college.

But there are other costs to college. Most students cannot work full-time while they are enrolled. Earning a bachelor’s degree means spending time out of the labor force. Every year a student spends in college costs her around $24,000 in lost earnings, according to my estimates.

Students must also pay tuition while enrolled. To calculate ROI, I use net tuition after grants and scholarships. Financial aid programs such as the Pell Grant, along with institutional scholarships, significantly reduce tuition charges for most students. The typical student does not pay the “sticker price” tuition rate advertised on colleges’ websites. The average public college in the Scorecard dataset charges net tuition of $4,000 per year to state resident students, while the average private nonprofit college charges nearly $15,000.

I do not count living expenses as a “cost” of college, since students would have to pay for food and rent regardless of whether they attend college. Living expenses may still represent a significant barrier for some students, who may struggle to come up with the cash liquidity to meet their needs if they are not working full-time. But they do not represent an extra cost associated with college and thus should not figure into the ROI calculation. I do, however, include students’ estimated spending on books and equipment as a cost of college.

ROI for 30,000 bachelor’s degrees

I define ROI as the present discounted value of lifetime earnings with a college degree, minus the present discounted value of counterfactual earnings (including earnings while enrolled in college), minus the cost of tuition, required fees, books, and equipment. For the initial ROI calculation, I assume the student spends exactly four years in college, graduates, starts working at age 23, and retires at age 65. (We’ll relax some of these assumptions in a bit.)

Consider the physics program at the University of Maryland-College Park. I estimate that over the course of her career, a Maryland physics graduate will earn approximately $1.79 million in present value terms. The counterfactual earnings for this student, including the foregone earnings while he or she is enrolled in school, amount to $1.23 million in present value terms. Net tuition is $18,000 over four years. The ROI for this program is equivalent to lifetime earnings minus counterfactual earnings minus tuition costs, or approximately $545,000. In other words, Maryland’s physics degree has a net economic value of $545,000 over its graduates’ lifetimes.

Present value of lifetime earnings with the degree: $1,786,867

Subtract present value of counterfactual lifetime earnings (including earnings while enrolled): $1,223,332

Subtract present value of tuition, fees, books, and equipment: $18,056

Return on investment (ROI): $545,478

Weighted by student counts, the median ROI across all 30,000 bachelor’s degree programs in the College Scorecard is $306,000. In other words, the median bachelor’s degree has a net financial value of just over $300,000, after accounting for tuition and opportunity cost.

But the median conceals substantial variation. Sixteen percent of programs have negative ROI. These programs have no financial value for their graduates after accounting for tuition and opportunity cost. At the other end of the spectrum, 12% of programs have ROI of $1 million or more. Students who graduate with one of these degrees can expect a seven-figure lifetime payoff.

Put simply, choosing a bachelor’s degree program is the most important financial decision many people will ever make.

ROI varies substantially by major. Sixty-nine percent of engineering programs deliver a lifetime payoff of $1 million or more, and 97% have ROI of at least $500,000. Another strong major is computer science, where 85% of programs have ROI exceeding half a million dollars. Programs in transportation, construction, and architecture also deliver handsome rewards to their students: 77% have a payoff above $500,000.

But plenty of programs have ROI that students might consider disappointing. 68 percent of programs in visual arts and music have negative ROI, meaning graduates are worse off financially for having received their degree. A majority of programs in philosophy and religious studies leave their students in the red, along with 28% of programs in psychology, English, liberal arts, and humanities.

A surprisingly high 31% of programs in life sciences and biology have negative ROI. The most likely explanation is that many students pursue these majors in preparation for a lucrative graduate degree in medicine. The ROI analysis in this report considers returns on the bachelor’s degree alone. If biology students don’t use their degree as a springboard for medical school, they will typically see disappointing returns. Preparation for a graduate degree is certainly important for students to consider when choosing a major, but it is beyond the scope of the ROI estimates presented here. (A forthcoming report will calculate ROI for graduate degrees.)

It’s possible to calculate not just how much each college degree is worth, financially, but how long it will take for a student to recoup the costs of college. In other words, how many years must a student work before he or she “breaks even” on her degree? I calculate that a majority of new college graduates will recoup the costs of their degree within eleven years of finishing college, assuming once again that they graduate on-time.

But the results once again look different depending on field of study. Within ten years of graduating college, students in 99% of engineering programs have fully recovered the costs of college. But the same is true for just 33% of communications and journalism programs and a paltry 2% of psychology programs. The median psychology student has to wait for 23 years before ROI turns positive. After 40 years, only 71% of psychology programs have reached positive ROI.

Even psychology looks good, however, compared to majors at the back of the pack. By the time they reach retirement age, students in just 40% of programs in philosophy and religious studies have recovered their college costs. The same is true for just 32% of programs in art and music.

One word of caution: the estimates reported here are for the median graduate of each program. If a program has negative ROI, that means its median graduate receives no financial return from her degree. However, it is possible that some graduates of that program will see positive returns, though they will be in the minority. Similarly, a program with positive overall ROI may still produce some graduates for whom the degree was not financially worthwhile. While outcomes for the median graduate are the best way to analyze the overall worth of a college degree, prospective students should remember that exceptions to the norm can and do occur.

What if some students don’t finish college?

The above figures assume that pursuing a college degree is riskless for the student. In practice, college is an extremely risky investment. Many students take longer than the standard four years to finish college, and between a quarter and a third of four-year college students never get their degrees at all. Dropping out leaves students responsible for many of the costs of college, but they usually receive none of the benefits of the degree.

Students in doubt about their ability to finish college on time (or finish college at all) should consider not just the financial value of various degrees, but their chance of on-time graduation. Some schools, such as Pomona College and Georgetown University, have on-time graduation rates above 90%. But nearly a quarter of schools in the Scorecard dataset have an on-time graduation rate below 20%.

While choice of major is arguably more important than choice of college for the “clean” measure of ROI, in which all students are assumed to graduate on time, institution quality is a key determinant of graduation rates, which in turn have a major effect on the true ROI of each program. A program with high post-graduation earnings but a middling completion rate may have the same true ROI as a program with moderate earnings but a strong completion rate.

Assuming all students finish their degrees in four years, just 16% of programs have negative ROI. But if students take five years to finish, then 21% of programs have negative ROI. Assuming completion in six years, the value of the degree is negative for 27% of programs. Naturally, among students who drop out, 100% of programs have negative ROI. I estimate that a student who drops out of college will typically lose over $100,000 in tuition payments and foregone earnings.

Using institutions’ reported completion outcomes and making appropriate allowances for transfer students, I adjust ROI for each program in the College Scorecard to account for the risk of noncompletion or extra years of study. Median ROI drops from $306,000 before the completion adjustment to just $129,000 after the adjustment. These results suggest that college is still a good bet on average, but that’s not true for every program.

With the completion adjustment, 28% of programs show negative ROI. Over 3,000 programs flip from positive ROI to negative ROI after applying the adjustment. Many of these are in fields with marginally positive earnings outcomes, such as psychology, education, and public administration.

The case of for-profit colleges is illustrative. For-profit schools often provide education in career-oriented fields such as business and nursing. As a result, the “clean” ROI for for-profit colleges is higher than it is for public and private nonprofit schools, which are weighed down by low-value programs such as English literature. But for-profit colleges also have extremely poor completion outcomes. The on-time graduation rate at for-profits is just 19%, compared to 41% at public institutions and 57% at private nonprofits.

After making the completion adjustment, 55% of programs at for-profit colleges have negative ROI, compared to 24% of programs at public institutions and 30% of programs at private nonprofits. While private nonprofits have more negative-ROI programs than public colleges, they also represent a disproportionate share of high-ROI programs: 25% of programs at private nonprofits have ROI above $500,000, compared to 17% of programs at public institutions and 14% at for-profits.

The completion adjustment turns some programs from sure bets into question marks. Without adjusting for completion rates, fewer than 2% of programs in business, finance, and management have negative ROI. But after the adjustment, nearly 10% of these programs don’t pay off.

Psychology already has questionable value as a major before the completion adjustment (28% of programs don’t pay off). But when accounting for completion rates, a majority of psychology programs (58%) are negative-ROI. Even for very lucrative majors, the completion adjustment reduces the estimated payoff. Sixty-eight percent of engineering programs have ROI above $1 million before the adjustment, compared to just 22% of engineering programs after the adjustment.

Prospective students often wonder whether paying for a more expensive college is worth the cost. If earnings outcomes are equal, then higher tuition means lower ROI. But in practice, more expensive colleges often have higher graduation rates and access to professional networks that can raise earnings and ROI. The question is whether these beneficial effects make up for the higher tuition.

Programs at the most expensive schools (those with net tuition above $12,700) have a median completion-adjusted ROI of $198,000, compared to $129,000 for all programs. On average, the higher payoff from more expensive schools is enough to make the heftier tuition bill worth it.

But there are exceptions. Twenty-eight percent of programs at the most expensive schools still have negative ROI. High tuition is therefore no guarantee of quality, as consumers sometimes assume. Major is the most important factor. At the most expensive schools, 81% of arts and music programs and 62% of psychology programs have negative ROI. While attending a more expensive school might boost ROI at the margins — particularly if that school has stronger graduation rates — it generally won’t salvage the financial value of a degree in the wrong field.

Moreover, 15% of programs at the cheapest schools (those with net tuition below $2,000) have a payoff above $500,000. At these inexpensive colleges, 82% of engineering programs, 51% of computer science programs, and 37% of health and nursing programs net their graduates more than half a million dollars.

Attending a very elite school and choosing the right field often has a significant payoff. The best program anywhere in the United States is the computer science major at the California Institute of Technology. Graduates of this well-regarded program can expect an ROI of $4.41 million over the course of their careers. Not far behind is the finance major at the University of Pennsylvania’s famous Wharton School, where lifetime ROI is $4.35 million.

The top 25 programs all have an ROI above $2.7 million. Twelve are in computer science, five are in engineering, three are in business or finance, two are in mathematics, one is in economics, and the remaining two are specialized programs. Twenty-four programs are at private nonprofit universities (the exception is the University of California-Berkeley’s electrical engineering major). Almost all the universities appearing in the top 25 are considered elite colleges, which suggests that access to these schools’ professional networks is an important determinant of earnings at the very top.

But some schools without a powerful name brand can still offer excellent financial returns if students know where to look. Touro College in New York places 284th on the U.S. News and World Report College Rankings, but graduates of its health sciences program can expect a lifetime ROI of $2.27 million.

Though elite colleges dominate the list of top programs in the country, attending an elite school is no golden ticket. Over 100 programs at colleges with an acceptance rate below 20% have negative ROI. Several U.S. News juggernauts such as Harvard, Penn, and Chicago all offer at least one program that leaves its students financially worse off.

At Harvard University, students who major in ethnic and gender studies can expect an ROI of negative $47,000. The film and photographic arts program at the University of Pennsylvania has an ROI of negative $140,000. Seventeen different programs at New York University have negative ROI, with the worst among them (music) leaving students over $500,000 in the hole.

While major is the most important determinant of ROI, there are exceptions to the trend. A handful of psychology programs have respectable ROI, particularly those oriented towards research and experimental psychology. The programs at Harvard University, Amherst College, and the University of Chicago all deliver payoffs of $800,000 or more.

Even in the arts, there are diamonds in the rough. Michigan Technological University operates a program in drama and stagecraft that delivers ROI of $795,000. Music students at the University of Texas-Austin can expect an ROI of $586,000. Two philosophy programs (the University of Pennsylvania and Dartmouth College) each have an ROI above $1 million.

Find the ROI for your college and major in the table below.

What is ROI relative to the full cost of education?

Most colleges do not charge students the full cost of their education. Net tuition at most colleges is significantly lower than underlying spending per student, meaning most students get a subsidy of one form or another. Federal and state governments provide students with Pell Grants and other financial aid to subsidize students’ education. Public institutions get direct appropriations from state governments, which reduce tuition charges. Some schools have endowments or generous private donors to draw upon for revenue. Foreign students and graduate students pay higher tuition rates and cross-subsidize domestic undergraduates, who are the focus of this analysis.

As a result, the average public college in the Scorecard dataset spends over $21,000 per full-time equivalent student on education-related expenditures. (Education-related expenditures include spending on instruction and administration, but not research, dormitories, dining halls, or hospitals.) Despite the heavy cost of education, net tuition for in-state undergraduates is just over $4,000. Even private nonprofit universities, which do not receive direct appropriations, still subsidize their undergraduates: per-student spending exceeds $29,000 but net tuition is just under $15,000.

This report’s estimates of ROI incorporate net tuition as the direct cost of college, as students should want to know ROI based on the costs that they and their families face. But other stakeholders, such as policymakers, trustees, donors, and college administrators, may wish to incorporate the full underlying cost of college into the ROI calculation.

Because spending exceeds tuition at most schools, a program that has positive ROI with respect to net tuition may have negative ROI with respect to spending. In other words, the positive ROI of some degrees may be an illusion facilitated by subsidies, rather than a reflection of the degrees’ inherent value. A program that delivers a positive earnings payoff only with a significant outside subsidy may not be worth subsidizing.

The median program in the Scorecard has an ROI of $129,000 when ROI is calculated with respect to net tuition (including the completion rate adjustment). But when ROI is calculated with respect to underlying spending, the median program’s payoff drops to just $77,000. While a majority of degrees still justify their underlying costs, the return shrinks substantially.

Twenty-eight percent of programs have negative ROI when calculated with respect to net tuition. With respect to spending, the share of programs with no economic value rises to 37%. A majority of programs in several major categories — including liberal arts and humanities, public administration, and the social sciences — have negative ROI with respect to spending.

Of course, several fields largely survive the spending adjustment: a majority of programs in engineering still boast an ROI above $500,000. Most programs in computer science, economics, mathematics, health, and architecture maintain an ROI exceeding $250,000. Even if students were responsible for the full cost of their education, it would still be financially worthwhile to pursue one of these programs.

All else being equal, higher spending translates to lower ROI. But many institutions with high expenditures nevertheless maintain respectable ROI. Programs at institutions in the top quintile for spending ($27,400 per student or more) have a median ROI of $187,000, compared to $77,000 overall. The top spending category includes many elite private institutions, state flagship universities, and renowned research schools. These schools also tend to have strong graduation rates and access to high-wage professional networks, which may boost ROI.

But high spending is no guarantee of strong ROI. Nearly a third of programs at schools in the top spending quintile have negative ROI with respect to spending. It is possible that additional spending, if wisely invested, can improve ROI — particularly if that spending is targeted towards boosting graduation rates. But for too many programs, high institutional spending has not resulted in positive ROI.

Conclusion

Most young Americans say they want to get a college degree. But from a financial perspective, the choice of program is much more important than the decision to attend college at all. Some programs leave students worse off financially than if they’d never attended college at all, while others can increase net lifetime earnings by millions of dollars.

The estimates of ROI provided in this report can help students make better decisions about postsecondary education. The ROI estimates for all 30,000 programs are available in the tables above and for download here. The results also offer some broad takeaways for students, other stakeholders, and those interested in higher education policy.

Major is the most important factor. College rankings like the U.S. News and World Report emphasize choice of institution. But from a financial perspective, choice of major is the more important consideration. Major alone explains nearly half the variation in ROI. Students will have a much greater chance of financial success if they study engineering, computer science, nursing, or economics, rather than art, music, religion, psychology, or education.

This isn’t to say that lower-earning majors are worthless. Society needs artists and musicians. But low incomes for these majors signal a supply-demand mismatch. Universities are producing too many art majors and too few engineering majors relative to the number of jobs available in each of these fields. As a result, employers bid up the wages of engineers while surplus artists flood the labor market. The answer is not to eliminate low-earning majors nationwide, but to reduce their scale.

Elite institutions can pay off — but not always. Should you pay more to attend a fancy private school? Sometimes. The very best programs in the country are usually located at “elite” schools. These schools may offer more supports to boost completion rates, and graduates of elite colleges also have access to professional networks that supply lucrative job opportunities. Pricier tuition can be worth the money if expensive colleges can deliver higher earnings.

But elite schools are not a golden ticket. Even at Ivy League schools, there are several programs with negative ROI. The choice of major matters more. Engineering and computer science programs at schools without powerful brand names almost always have higher ROI than film or gender studies programs in the Ivy League.

Many bachelor’s degree programs don’t make sense, financially. Having a bachelor’s degree is usually better than not having a bachelor’s degree, even if the degree comes with $30,000 of student debt. But after accounting for mediocre completion rates and high underlying spending, many bachelor’s degree programs don’t look as good. Thirty-seven percent of programs do not deliver a financial return when adjusting for spending and completion. Another 32% have a lifetime ROI below $250,000.

Mediocre or nonexistent ROI suggests a misallocation of resources. It is likely that many of the students in programs with poor ROI might be better served if those resources were shifted to other forms of postsecondary training, such as apprenticeships, vocational schools, or career-oriented associate’s degrees. As students do not directly fund most of their own education, there is a role for policymakers in such a reallocation of funding.

Granted, many bachelor’s degrees have nonfinancial benefits, and students should certainly take those into account when choosing a program. There are also social benefits to some degrees. The engineers who developed the iPhone probably captured only a small fraction of the social value they created. But it’s likely that degrees which generate large social benefits also come with large private rewards. The idea that most negative-ROI programs are generating enough “social benefits” to justify themselves is doubtful. The degrees with large social benefits probably also have large private ROI.

Moreover, bachelor’s degrees can generate social costs. As the share of the population with a college degree rises, employers request higher educational credentials from job candidates, even though the underlying skills required to do those jobs have not changed. It follows that some college graduates simply take jobs away from non-college graduates. This displacement effect likely explains much of the college wage premium. While college graduates benefit, the economy does not grow overall.

For prospective college students, though, those considerations are largely beyond the immediate decisions lying ahead. I hope the estimates of ROI in this paper will empower students and their families to make more informed decisions. The most important financial question they can answer is not whether college is worth it, but how they can make college worth it.

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