A FIRST TRY AT ROI: Find Your School Visit cew.georgetown.edu/ Ranking 4,500 Colleges CollegeROI for online, sortable tables of the 4,529 colleges and universities by various ROI metrics. Anthony P. Carnevale Ban Cheah Martin Van Der Werf 2019 Center on Education and the Workforce McCourt School of Public Policy I Acknowledgments We are grateful to the individuals and organizations whose generous Many others contributed their thoughts and feedback throughout the support has made this report possible: Lumina Foundation (Jamie production of this report. We especially are grateful to our talented Merisotis, Wendy Sedlak, Holly Zanville, and Susan D. Johnson); the Bill designers, editorial advisors, and printers, whose efforts were vital to its & Melinda Gates Foundation (Patrick Methvin and Jamey Rorison); the successful completion. Joyce Foundation (Sameer Gadkaree); and the Annie E. Casey Foundation (Bob Giloth and Allison Gerber). We are honored to be their partners in The views expressed in this publication are those of the authors and do not necessarily our shared mission of promoting postsecondary access, completion, and represent those of Lumina Foundation, the Bill & Melinda Gates Foundation, the Joyce career success for all Americans. Foundation, or the Annie E. Casey Foundation, or any of their officers or employees. All errors and omissions are the responsibility of the authors. The staff of the Georgetown University Center on Education and the Workforce was instrumental in the production of this report from conception to publication. In particular, we would like to thank • Jeff Strohl for research direction; • Nicole Smith for economic methodology; • Kathryn Peltier Campbell and Michael C. Quinn for editorial and qualitative feedback; • Hilary Strahota, Emma Wenzinger, Frank Zhang, Caitlin Panarella, and Allie Babyak for communications efforts, including design development and public relations; and • Andrew Debraggio and Coral Castro for assistance with logistics and operations. A First Try at ROI: Ranking 4,500 Colleges Contents Introduction ........................................................................................................ 1 Calculating the Potential ROI of College .....................................................4 Conclusion ......................................................................................................... 17 References .........................................................................................................18 Appendix A. Data and Methodology .............................................................19 Appendix B. Table of 4,500 Colleges and Universities .............................24 I Figures Figure 1 Institutions that primarily grant associate’s degrees have the Figure 3 In the long term, the net present value of future earnings for highest short-term net present value, while those that primarily grant students who attend private nonprofit colleges is greater than bachelor’s degrees have the lowest. ....................................................................9 that of earnings for students who attend public institutions. ........................10 Figure 2 The median debt at colleges that predominantly offer bachelor’s Figure 4 Even though costs and debt levels for students who attend degrees is twice as high as the median debt at colleges that predominantly private nonprofit institutions are higher than those of students at other offer certificates. ........................................................................................................9 institutions, their median 10-year earnings are also higher. ..........................10 Tables Table 1 The institutions with the highest long-term net present value are Table 4 Institutions at the median of long-term net present value are mostly bachelor’s degree institutions. ...............................................................................6 public institutions that grant all levels of postsecondary credentials. ............ 11 Table 2 The institutions with the highest net present value in the short term Table 5 Institutions at the 75th percentile of long-term net are mostly institutions granting certificates that take two years or less to present value are mostly bachelor’s degree institutions. ...............................13 complete. .................................................................................................................... 7 Table 6 Institutions at the 25th percentile of long-term net present Table 3 The institutions with the lowest net present value in the long term value are mostly less-than-four-year institutions. ...........................................15 include theological institutions, beauty schools, and a tribal college. ..............8 II A First Try at ROI: Ranking 4,500 Colleges Introduction As college costs and student loan debt continue to rise precipitously, benefits. A college credential is often essential for starting or changing more people are wondering if college is worth it. Based on earnings alone, a career. Once enrolled, college students might discover a new career yes, it is. On average, workers with a bachelor’s degree make 80 percent field that changes their goals and opens their future, or they might make more than workers with no more than a high school diploma.1 At the same friends who later help their careers or increase their quality of life. The time, the potential benefits, as well as the costs, vary notably by institution, emotional and financial aspects of deciding whether and where to attend program, and field of study, and students should be informed about the college makes it a hard decision to parse using the same factors as other potential costs and benefits of their choices.2 investment choices. It is difficult to talk about the return on investment (ROI) of college in College is expensive, and as with all expensive investments, the potential the same terms as other financial investments.3 Investing in a college return is a key consideration when choosing where to enroll and what to education has greater immediate effects on a person’s life than investing study. Potential students should consider how much it will cost to obtain in the stock market; however, a college degree provides no tangible asset, a credential, and how much they could potentially earn with it. They unlike investing in a home.4 It may take years for the investment to pay off, should also consider the time required to get the degree, the net price, since the value of the degree lies in what a person does with it.5 Investing the convenience and location of the program, the likelihood that they in college entails some risk: most students go into debt to pay for college. will graduate, and the amount of time needed to get traction in a career and to reach prime earning age.6 In addition, they should consider the net However, while much has been written about student debt, not all debt present value (NPV)7 of their potential future earnings, weighing the costs is bad. Some colleges with high average student debt also have high of investing in college now against the potential gains over time. graduation rates leading to high earnings. Students who stay in school for four years (or longer) will logically accumulate more debt than students This report provides information about some of these factors by ranking who stay a year and then drop out. College also has non-monetary colleges according to return on investment, using new data from the 1 Carnevale et al., The College Payoff, 2011. 2 This point is also made by Oreopoulos and Petronijevic, “Making College Worth It,” 2013, and Webber, “Are College Costs Worth It?,” 2016. 3 Other researchers have looked at measuring the financial returns from colleges, including Avery and Turner, “Student Loans,” 2012, and Barrow and Malamud, “Is College a Worthwhile Investment?,” 2015. 4 This comparison assumes that the risk of the investment in the stock market is the same as the risk of investing in college so that higher expected returns from the stock market are not a compensation for additional risk. See for example Greenstone and Looney, “Where Is the Best Place to Invest $102,000 – in Stocks, Bonds, or a College Degree?,” 2011. 5 Baum and Schwartz (2012) make the case that investing in college is similar to making an investment that has to be paid for over time, such as buying a home. They frame the affordability of college not in terms of its total cost but whether the benefits from higher earnings can support the debt payments with enough resources left over for other necessities. 6 We do not deduct the opportunity costs of investment in a credential because the foregone earnings vary according to individual circumstances. For a more extended discussion, see Appendix A. 7 Appendix A includes a more detailed description of the data and methodology used in our net present value computations. Other studies of the ROI of a college credential also use net present value as their standard metric. See Webber, “Are College Costs Worth It?,” 2016; Strohush and Wanner, “College Degree for Everyone?,” 2015; and Lobo and Burke-Smalley, “An Empirical Investigation of the Value of a College Degree,” 2018. 1 expanded College Scorecard, an online database started in 2015 to give because they generate strong earnings quickly after students more information about colleges.8 This report focuses on net present finish their credentials. Certificates in nursing are particularly value from college, which