Collegiate Return on Investment
Salary.com has the scoop. There aren’t any surprises, for those who pay attention to such things. It’s worth noting that the difference here actually has less to do with ROI and more to do with whether you attended public school or private. The “worst” degree, which is communications, still pays for itself 58% of the time for public schools. But less than 1-in-5 does private school do the same. Granted, private school degrees in certain tech fields probably beat that, but outside of a select few majors and a limited number of schools, I’d be willing to bet you fall below 58% relatively quickly.
Which is not to say that public schools are always a good investment. Forbes has a list of schools that arguably aren’t. A fair number of them are public schools. A fair percentage of that, of course, is attributable to student inputs rather than outputs.
Meanwhile, the return-on-investment for private school may not be as bad as previously thought:
“We find no statistically significant differential return to certificates or associates degrees between for-profits and not-for-profits,” they wrote in the paper, which was released last month.
Certificate holders from for-profits tended to fare slightly worse in the job market, according to the study, while associate degrees from for-profits were worth slightly more than those from nonprofit institutions. Hence no clear winner emerged.
The revised paper still included some worrisome findings about for-profits. Those colleges are typically more expensive than their nonprofit counterparts, particularly community colleges. For-profits charged an average of $6,300 more in annual tuition for certificate programs, according to the study’s sample, and $6,900 more per year for associate degrees.
“The return on investment is undoubtedly lower at for-profits,” the paper said.
However, the study’s most significant finding, its authors wrote, was the large variation in wages and labor market returns across majors and academic disciplines. Those program-specific comparisons are probably more valuable than comparing wage data at an institutionwide level.
That last part, of course, undermines the point that I just made. Or maybe it’s referring to outputs (wages) moreso than inputs, which vary an order of magnitude from one institution to another. On the other hand, wages are for life and college costs are fixed. So I’m not sure. I’d also like to know is that for-profits have higher aggregate costs than non-profits, but how does that work if you delineate between public non-profit and private non-profit. Of course community colleges are going to be cheap. But how does the University of Phoenix compare to the University of Tampa (a private institution)?
There’s something noteworthy about both of these articles, though. We hear a lot about how college tuitions are rising because state support is slipping*. Yet, despite all that, public schools still offer huge discounts over private schools. Even out-of-state tuition at public schools tends to beat the privates. The former suggests that there is more at work with escalating costs than falling state aid (and that, before we even talk about increasing state aid, we need to establish that it won’t be used to enable unnecessary spending elsewhere). On the other hand, the latter statistic suggests that state universities are still doing a decent job curbing costs because out-of-state tuition is at least theoretically non-subsidized. Or maybe not, since it’s commonly stated that advertised tuition rates are not usually paid.
Anyhow, when we talk about ROI, we should not just look at the cost to the student costs, but total cost. One of my complaints about the “make college affordable” debate is how focused it is on making it affordable to the student, rather than keeping total costs in check. It’s one of the reasons I am excited about the potential for genuinely low-cost college options. Which our current system provides so little incentive for.
* – Note, I cannot find good statistics on this, though. The oft-cited statistic, which is the percentage of cost covered by the state, is not particularly helpful. The per-student dollar amount is what I want. The reason being that colleges that jack up tuitions to build a new rec center end up costing the student more and lowering the percentage of cost supplied by the state, while a more financially prudent university looks like it’s being more generously supported by the state when it isn’t.