Seattle – March 26, 2014 – PayScale, Inc. today announced its 2014 College Return on Investment (ROI) Report. The report examines the return on investment at 911 colleges and universities.
PayScale has grouped the mix of public and private schools into the following categories: Research Universities; Liberal Arts Schools; Art, Music & Design Schools; Business Schools; Engineering Schools; Ivy League Schools; Party Schools; Sober Schools; Schools for Sports Fans; and Religiously Oriented schools.
The report also shows the difference in ROI between in-state and out-of-state tuition for public universities; for students who receive grant financial aid and those who do not; and for students who live on campus vs. off campus with parents/guardians vs. off campus independently. Additionally, the report provides multiple data visualizations on topics including:
- STEM Degrees, Gender and ROI
- ROI for Pell Grant Recipients
- ROI for Public School Alumni Who Stay In State Post–Graduation
- Ethnicity and Graduation Rate
“During a time of both spiraling student debt and tuition rising faster than inflation, post–graduate earnings are a necessary piece of the college decision-making process,” said Katie Bardaro, Lead Economist, PayScale. “Although post-graduate earnings shouldn’t be the only consideration when choosing a school, they should certainly play a part, especially when making choices about how much to borrow to fund your education. Students need to know whether they’ll be able to pay off their loans effectively in the context of their chosen field.”
Some highlights from Payscale’s 2014 College ROI Report:
- The average 20 Year Annualized ROI of the included schools is 10.4 percent. For comparison, as of Feb. 11, 2014, 20 Year U.S. Treasury bonds were yielding an annual return of 3.4 percent. Therefore, the typical person that attends a school in this report and graduates will earn more in 20 years as compared to someone who takes the tuition money and invests it in a 20 Year Treasury bond and works straight out of high school.
- Forty-six schools on this year’s main ranking have a negative 20 Year Net ROI, meaning the costs of attending these schools outweigh the financial benefit. Twenty-three of these schools were state schools, while 23 were private schools.
- Engineering schools dominate the top of the main ranking for 20 Year Net ROI. Nine out of the top 10 schools have an Engineering focus. The average 20 Year Net ROI for Engineering schools is $620,469, almost 3 times the average across all non-Engineering Schools ($218,866).
- Location matters: About half of the schools in the top 50 hail from the Northeast, with an average 20 Year Net ROI of $650,521.
- State schools provide the best Annual Return on Investment. Nineteen of the top 20 schools for Annual ROI are public schools.
- Religiously affiliated schools see a big spread in 20 Year ROI values: Manhattan College topped the list with an ROI of $675,600 (overall rank of 15), while Shaw University brought up the rear with an ROI of -$156,000 (overall rank of 1310).
- In addition to school-wide ROI measures, PayScale also produced ROI measures for schools across 11 major programs. Education majors earn the lowest average ROI with $-45,109, while Computer Science majors earn the highest average ROI with $671,081. The startling differences in these numbers show how much major choice impacts the financial benefit of one’s college degree.
- There is a strong positive correlation between STEM-focused schools and ROI. Schools with a higher presence of STEM majors tend to have higher overall ROI figures. The schools with the highest presence of STEM majors and higher ROI figures also have a higher presence of male students.
- In general, schools with larger endowments tend to have higher ROIs but the smallest populations of Pell Grant recipients. Schools with the fewest low-income, Pell Grant recipients have higher graduation rates and higher 20 Year Net ROIs. Conversely, schools with the most low-income, Pell Grant recipients tend to have lower ROIs and low graduation rates.
For more information on methodology, please go to: http://www.payscale.com/college-roi/c/methodology
Adds Bardaro: “This year PayScale changed its methodology to calculate a 20 Year ROI rather than a 30 Year ROI. The change was made for this reason: Previous PayScale research has shown that pay, on average, stagnates after age 40 and a 20 Year ROI brings us closer to this stopping point for real pay growth. This methodological change did not significantly alter the rankings but had the overall impact of producing lower ROI figures across the board. For example, Harvey Mudd still tops the list, but with a 20 Year ROI of $980,900 rather than a 30-year ROI of $2,113,000.”
PayScale also announced today the release of the new publication “Examining the Value of a College Degree.”
“As student loan default rates continue to rise, along with the cost of tuition, the value of a college degree has been both called into question and fiercely defended in recent months,” said Lydia Frank, Editorial Director, PayScale. “The Obama administration and U.S. Department of Education are actively working on a college ratings system that could impact federal funding for schools. With so much at stake, an open dialogue is key to moving forward. In the spirit of continuing that dialogue, we asked 12 thought leaders, from college presidents to business executives, to share their perspective.”
Contributors to “Examining the Value of a College Degree” include:
- Susan Brennan, Executive Director, Corporate Relations & Career Services, Bentley University
- Dr. Joseph W. Childers, Dean of the Graduate Division, University of California, Riverside
- Zachary First, Managing Director of the Drucker Institute at Claremont Graduate University
- Robert Franek, Publisher, The Princeton Review
- Greg Gottesman, Managing Director, Madrona Venture Group
- Martha Kanter, Ed.D., former U.S. Under Secretary of Education and Distinguished Visiting Professor of Higher Education at New York University
- Dr. Bridget Terry Long, Ph.D., Academic Dean and the Xander Professor of Education and Economics at the Harvard Graduate School of Education
- Ann McDermott, Director of Admissions, College of the Holy Cross
- Christopher B. Nelson, President, St. John’s College in Annapolis
- Roger Paschke, Chief Investment Officer, Hearst
- By Saad Rizvi, Senior Vice President, Efficacy, Pearson
- Richard Vedder, Director of the Center for College Affordability and Productivity
Creator of the largest database of individual compensation profiles in the world containing more than 40 million salary profiles, PayScale, Inc. provides an immediate and precise snapshot of current market salaries to employees and employers through its online tools and software. PayScale’s products are powered by innovative search and query algorithms that dynamically acquire, analyze and aggregate compensation information for millions of individuals in real time. Publisher of the quarterly PayScale Index™, PayScale’s subscription software products for employers include PayScale MarketRate™ and PayScale Insight™. Among PayScale’s 3,000 corporate customers are organizations small and large across industries including Mozilla, The Economist, Tully’s Coffee, Clemson University and the United States Postal Service. For more information, visit www.PayScale.com.
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