Is it worth it to attend college?
It’s the question all potential college students wonder, especially with student loans being top of mind and perpetually in the news.
The short answer is yes, with some caveats.
This week in The Science of Leadership, we explore a study from Georgetown University’s Center on Education and the Workforce (CEW) that attempts to answer that very question by examining return-on-investment (ROI) data from over 4,500 colleges and universities.
ThE Study: Ranking College ROI
Before we explore the results, there’s some info we need to understand first.
Georgetown’s study looked at data from various institutions across the country. This data came from the federal government’s College Scorecard, which provides an easy way for potential students to analyze institutions and decide what school is the best fit.
The team took this College Scorecard data and ranked all schools based on their ROIs after specific time periods. For example, some attendees from specific schools saw economic gains around ten years after enrollment, while others took 40-plus years to see gains.
By “gains,” the team means that the person now earns more than a similarly-aged person who has a high school diploma but no college education.
Lastly, and this is important, the team isn’t examining the ROI of a degree. They’re looking at ROI at various years after enrollment. In other words, they looked at how long after a person attends a particular school will they see a financial return.
The Value of Attending College
The results indicate that 60 percent of students from all institution types earn more than someone with a high school diploma ten years after enrolling.
On the other hand, the team found that at 1,233 postsecondary institutions, more than half of the students earned less than those with only a high school diploma after ten years.
For most students, regardless of the institution, college does have a strong ROI; however, for half of the students at 1,233 specific institutions, this is not the case. For those particular students, having only graduated high school would’ve made more financial sense.
It’s also worth noting that the report also didn’t weigh the ROI of specific degrees or the impact that learning essential soft skills had on students. It would be interesting to see these aspects further explored in the future.
Low Graduation Rates and Demographics Play a Factor
This begs the question: why do some institutions have a lower ROI than others? According to the team, the reason may be due to lower graduation rates and earning disparities due to demographic factors such as race, gender, and ethnicity.
The team was very clear about that first part: The economic implications of low graduation rates can be severe. This is because these students often take out loans. Without a degree, they are burdened with debt without enjoying the ROI that comes from earning a degree.
Here’s what the CEW’s Director, Dr. Anthony P. Carnevale, said of these findings:
“College typically pays off but the return on investment varies by credential, program of study, and institution. It’s important to inform people about the risk of taking out loans but not graduating, which could leave them without the increased earnings that would help them repay those loans.”
Carnevale’s comments suggest that earning a degree provides the actual ROI, not simply attending. It would be interesting to see this data utilized to only look at graduates in the future or to analyze the impact fields of study have after graduation.
ThE ROI of College Based on Institution
The team also provided insights into which types of schools have the best ROI for students, and the results are pretty interesting.
“Private colleges that primarily offer bachelor’s degrees lead the list of institutions that provide the highest return on investment 40 years after enrollment,” the team said.
“In fact, the ten colleges with the best long-term net economic gains, ranked below, are four-year non-profit institutions, led by three pharmacy schools.”
The top three schools were the University of Health Sciences and Pharmacy in St. Louis, Albany College of Pharmacy and Health Sciences, and the Massachusetts College of Pharmacy and Health Sciences. Check out the complete list here.
Colleges that offer certificates and associate degrees offer the highest ROIs ten years following enrollment. The team says this is because these schools require fewer credits to graduate, which reduces the level of college debt while also enabling students to learn a skillful trade and enter the workforce faster.
Similarly, the team found that public colleges offer a higher ROI after ten years than private colleges because they’re usually cheaper. These findings were recently backed up by a similar study by the Bipartisan Policy Center.
And finally, at the 40-year mark, the CEW said:
“Four-year public institutions lead to higher returns ($1.03 million) than four-year private nonprofit institutions ($984,000). Public institutions primarily granting associate degrees have a long-term return of $856,000 while the return at private nonprofit institutions at the same degree level is $780,000.”
These findings suggest that attending college does have an ROI. However, that ROI horizon happens at different times for different schools based on the institution type. It also highlights the importance of completing whichever school one attends because that is the real ROI creator.
Attending college is a major financial decision. Right now, there’s a push to make more data available for students to reference when making their decisions. In Georgetown's case, they make a plea for better career counseling to help students make sense of this data and choose schools that will provide them a return.
“We need a comprehensive career counseling system to help students and their families use this information to make decisions about college,” said Martin Van Der Werf, CEW director of editorial and education policy.
While this will definitely help students make better choices, student success upon entering college is also critical because finishing college is by far the biggest boon to earnings later on in life.
This issue is even more problematic than ever because, as we’ve covered before, student retention rates have been falling over the last few years, spurred by a college mental health crisis and the pandemic.
However, retention rates are also intimately linked to engagement rates that help students connect with their peers and campuses.
From our data, leadership development programming can be a great tool in terms of increasing engagement and student success because these programs foster communities and equip students with skills that help them transition into careers.
The Science of Leadership Connects Cutting-Edge Leadership Research to the Real World
Ready to dig deeper? Read the Georgetown team’s full report here. To learn more about student retention and mental health, check out our recent article.
Learn more about how the NSLS sets students up for success here, and check out our webinar, Persistence with Low-Income Students, about how leadership development can increase retention with at-risk students.
Have a burning question about any of the topics we’ve covered? Email us at blog@nsls.org. We’d love to hear from you.
