By 2025, ROI for Public Colleges Will Outpace Private By 24 Percent
Seven out of 10 college seniors graduate with student loan debt, so determining the ROI on their degree is more important than ever before. For this reason, the most important decision students make might be one they don’t consciously consider: whether to attend a public or private college.
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“According to PayScale’s most recent data, public colleges are now typically the better choice in terms of financial outcomes post-graduation, than private colleges,” writes Lydia Frank, PayScale’s Senior Director for Editorial and Marketing, in a recent update to PayScale’s College ROI Report. “Is it true for every student, every school? No. But, public colleges (as a group) out-perform private colleges for financial ROI by 13 percent. If tuition increases and wage growth continue on their current trajectories, by 2025, the ROI gap between public and private colleges will grow to 24 percent, according to the PayScale College ROI Report forecast.”
It’s important to note that the forecast looks at in-state tuition for public institutions, so if you’re not in love with your state’s university system, the data probably won’t apply to your college decision. (More on the methodology, here.) Plus, the value of a college degree is increasing, no matter which school you attend. Today, the ROI of a college degree is $455,000; by 2025, the forecasted ROI is $512,000.
Also on the rise, no matter which type of school you attend: college tuition. At private institutions, the cost is expected to rise by 54 percent at private institutions; at public, a whopping 88 percent.
Even with the increase, though, it’s significantly cheaper to attend a public college or university, both today and in the future. Typical annual tuition at a private college in 2015 is $88,000; at a public college, it’s $30,000. By 2025, typical tuition at a private college is forecasted to be $118,000; at a public college, $44,000.
Partly due to the wide gulf in costs between public and private colleges, ROI is significantly higher at public institutions and will only increase. The current ROI at a public college is $489,000. In 10 years, the forecasted ROI is $570,000, or a 17 percent increase. Private ROI is $431,000 currently, and $448,000 projected, for a 4 percent increase.
So which school should you pick? As always, the one that’s right for you – not your neighbor or your classmate or someone else’s idea of you. But, when you’re determining which school that is, you might want to take cost – and return on investment – into account.
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