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PayScale’s 2017 College Return On Investment Report Reveals “The Rich Get Richer”

Report correlates impact of household income upon future earning potential to show education is not the great equalizer previously assumed; Engineering schools deliver more than four times the ROI of liberal arts schools

Seattle, WA – April 18, 2017 – Today PayScale, Inc., the leader in cloud compensation solutions for businesses and individuals, announced the release of its annual College Return on Investment Report. The report is designed to help prospective students and families make informed decisions related to college debt and relative earning potential. In addition, PayScale ‘s College ROI report examines the degree to which a student’s household income upon entering college impacts his or her earning potential post-graduation, as well as career readiness upon graduation.

“Student loan debt is in excess of $1 trillion in the US, and college is a significant investment for most families and students. With myriad colleges to choose from, we believe students need to understand the relative ROI for various schools to ensure they are best positioned for long-term success upon graduation,” said Lydia Frank, Vice President of Content Marketing at PayScale.  “The average college student graduates with almost $30,000 in student loans, so it’s critical that prospective college students, parents and policymakers have a solid understanding of the value of their college education in the job market.”

“We’ve designed the College ROI Report to provide real-world insight into how college choice – right down to the selection of a major – can impact future earning or career advancement potential,” added Frank.

“It’s disheartening to see in the findings again this year that education is not always the great equalizer,” continued Frank. Katie Bardaro, PayScale vice president of data analytics concurs, “Those from the upper quartile of household income also have the highest median pay after graduation, while those from the lower quartile have the lowest. This data shows the post-graduate earning opportunities are not equal across all levels of household income.”
“Or, simply put, the rich keep getting richer,” closed Frank.

PayScale College Return on Investment Highlights:

  • Engineering schools are highly ranked, holding five of the top 10 placements on the list. The average net ROI for engineering schools is $653,000, compared to less than $157,000 for liberal arts, religious or arts schools.
  • Public schools dominate the overall ranking for annualized ROI, indicative of their relative low cost compared to private schools. Only five out of the highest 100 on-campus annualized ROI values come from private schools.
  • The federally-funded United States Merchant Marine Academy, where there is no difference between in-state or out-of-state tuition, claims the number one spot, with a 20-year net ROI of over a million dollars.
  • Harvey Mudd College, The Massachusetts Institute of Technology, SUNY Maritime College and the Colorado School of Mines ranked two through five, respectively.

EFFECT OF HOUSEHOLD INCOME PRE-COLLEGE ON INCOME POST-COLLEGE

1. College graduates who come from wealthy households upon entering college have a greater mid-career earning potential post-graduation. If the entering graduate has come from a wealthy family, s/he is likely to earn more long-term than an entering graduate from a poor family. The mid-career median pay for respondents whose household income was in the bottom 25 percent of the income distribution (self-reported) when they attended college is $72,700. The mid-career median pay increases to $80,100 for respondents whose household was in the middle 50 percent of the income distribution. Respondents whose household income was in the top 25 percent have the highest mid-career earning potential post-graduation with a median pay of $99,600. The pattern holds true across job levels.

2. Are college graduates from low-income backgrounds still suppressed? Thirty-two percent of mid-career workers (10+ years work experience) that report being in the bottom 25 percent of the household income distribution in college report earnings in the bottom 25 percent after graduation. Only 20 percent of mid-career workers that started in the bottom 25 percent now earn in the top 25 percent. Conversely, only 15 percent of mid-career workers that started in the top 25 percent now earn in the bottom 25 percent.

3. Workers who come from higher household income brackets in college are slightly more likely to become executives than individuals from lower household income brackets in college. (Executives are likely to have higher salaries.)

4. At every job level, workers entering college from lower household income brackets tend to earn less than their higher household income bracket peers.

Methodology:

Rankings in the PayScale College ROI Report are based on Net 20 Year ROI, on-campus costs (without Financial Aid). If a school does not report on-campus cost, then it is not included in the main ranking. “Overall” ranking refers to ranking of schools only, not school-job category or school-major combinations. For 2017, PayScale expanded the number of colleges included in the report by almost 50 percent, for a total of 1,422 institutions; 521 public (both in-state and out-of-state cost structures are included) and 901 private not-for-profit.

PayScale provides median earnings data of workers who attended college based on where their household fell in the income distribution when they attended college.

For more information, please refer to the full PayScale 2017 College ROI Report at:  http://www.payscale.com/college-roi

About PayScale
PayScale offers modern compensation software and real-time, data driven insights for employees and employers alike. More than 6,000 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 13 million employees. These companies include Dish Network, Getty Images, Skullcandy, Bloomberg BNA and Time Warner. For more information, please visit: www.payscale.com or follow PayScale on Twitter: http://twitter.com/payscale

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Erica Beyer
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