Consider some global conclusions drawn by the OECD as it evaluated the US education system and compared it to other "rich" nations in a report from 2012. College education (tertiary education) is expensive.
But, on average, there is a healthy return on that investment.
The nation as a whole benefits from its investment and from the students’ investments.
The issue that is rarely addressed is whether or not a specific four-year education at a specific school and at a specific cost is worth the investment for a given individual. As the OECD report indicates, an individual must consider direct costs for tuition, fees, books, and living expenses during a period of at least four years. He/she must also consider the loss in earnings accumulated over whatever time is required to obtain a degree. And finally, the student must have an estimate of the earnings potential from his/her specific educational path; not all schools and degrees are created equal.
An article in The Economist points out that there is an organization that is tallying data on educational outcomes so that prospective students might have some specific data with which to consider various options.
The article suggests that this type of information is greatly needed.
PayScale provides an annualized return on investment (ROI) for a large number of schools by integrating salary earned over a 20 year period since graduation after subtracting education costs and lost earnings (assuming a high school degree earning potential) while in school. The article provides this selection of results when all majors are included and financial aid is deducted from costs.
The PayScale website can be found here; the data on ROI can be found here. An interested individual can learn a lot by perusing this data.
The University of Virginia rates highest in the list provided in the above chart, not because it is the best school, although it is considered a very good school, but because it has low tuition for in-state students and it provides a significant amount of financial aid to needy students. The 17.6% annual ROI is obtained because only in-state students are tallied and with financial aid subtracted, the cost of the education is a mere $25,880. In-state tuition without financial aid comes at a cost of $94,300 and lowers the ROI to 10.3%. Out-of-state tuition raises the education cost to 191,600 and lowers the ROI to 6.4%.
If one wonders which schools produce the highest earning graduates over the next 20 years, PayScale provides an interesting answer. The winner is Harvey Mudd College with costs of $229,500 and a net ROI of $980,900. Including financial aid lowers the cost to $116,800 and increases the net ROI to $1,094,000.
Of the top 10 schools in terms of net 20-year ROI, eight are focused on technology: Caltech, MIT, Colorado School of Mines (twice for both in-state and out-of-state costs), Georgia Institute of Technology (in-state), Rose-Hulman Institute of Technology, Polytechnic Institute of NYU, and Stevens Institute of Technology. Stanford rounds out this top ten.
One has to wonder if these technical schools rate so high because a large fraction of the students must go on to post-graduate degrees if they are to participate meaningfully in science and engineering.
PayScale also is collecting data on schools by degree type as well. It considers the fields of art, business, computer science, economics, education, engineering, English and the humanities, life sciences, math and physical science, nursing, political science, and social work and criminal justice. This information should be invaluable in choosing a major and a school at which to study in a given field.
PayScale is attempting to provide some transparency to assist in making one of the most important decisions a person makes in his/her lifetime.
The PayScale effort seems very much a work in progress. The website behaved erratically (at least on Internet Explorer), and some of the responses to queries suggested a severe lack of statistically solid data. That was not surprising considering the scope of the effort. Hopefully, the data will only improve over time.
Meanwhile, those behind this project should be applauded and encouraged to continue this important effort.