PayScale’s annual contribution to college bragging-rights lists — the College ROI Report — ranks schools based on their returns on investment under various scenarios. But the rankings don’t answer a key question that must cross the minds of prospective students, and their parents, as they peruse the total cost figures for top-flight schools, which exceed $200,000 in some cases.
Is college worth it?
Based on the Payscale data for the top ROI schools — factoring in a student’s on- or off-campus housing choice, not including living with the family, and financial aid choices — the best 20-year net ROI was with on-campus housing and financial aid included, at $1.09 million. The winner? Harvey Mudd College, an engineering school.
The best annual ROI was also with on-campus housing and financial aid included: 17.6%. The winner: University of Virginia 's main campus, for in-state students.
To partake in those top ROIs, a student would have to pay $116,800 in costs at Harvey Mudd and $25,880 at Virginia.
According to the Economist, college graduates between 25 and 32 who work full time make $17,500 more per year than people in the same age group who only finished high school — but due to student loan debt and the overall cost of higher education, many college graduates are faring worse than if they had never gone to college at all.
The ROI for 46 of the 153 arts degree programs examined by PayScale had a ROI worse than 20-year U.S. Treasury bills, including 18 with returns of less than zero, the Economist reported.
One of the simplest ways to boost college ROI, of course, would be to lower the students’ costs. According to Demos, North Dakota is the only state that hasn’t cut its per-student funding since the Great Recession. The national average for the cuts have averaged $2,394 per student from 2008 to 2012, as states struggle to close wide budget gaps.
The state funding cuts have forced the cost of tuition to rise significantly: up 20% from 2008 to 2012 for public four-year schools and up 18.5% for public two-year schools.
Unfortunately, the top ROI schools from the PayScale survey will be inaccessible to many students because of the investments required before the returns are realized.
Other top ROIs from the PayScale data included:
Harvey Mudd College: The best 20-year net return on investment, calculated with on-campus housing and no financial aid, at $980,900. Cost: $229,500.
Georgia Institute of Technology: The best annual ROI, with on-campus housing and no financial aid, at 11.9% for in-state students. Cost: $92,250. With off-campus housing and financial aid included, Georgia Tech also has the best 20-year net ROI for in-state students at $746,800. Cost: $101,000.
Stevens Institute of Technology: The best 20-year net ROI with off-campus housing and no financial aid, at $848,800. Cost: $124,400.
New Mexico Institute of Mining and Technology: The best annual ROI with off-campus housing and no financial aid for in-state students, at 11.5%. Cost: $77,610.
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