Financial ROI for Public Colleges Will Far Surpass Private Colleges By 2025

PayScale's College ROI Report has been keeping track of the monetary value of a college education at hundreds of colleges and universities for years, but what about the future? We turned to our data science team to forecast the college return on investment for both public and private schools through the year 2025. Now we can predict how much more college grads will earn in 20 years compared to the typical worker with only a high school education.

College ROI Forecast


As you can see, the value of a college education will continue to rise in the next 10 years, but if costs continue to rise at current rates, the median college ROI from public colleges is outpacing that of the median ROI at private colleges by 24 percent.

Read the methodology.

The New Conventional Wisdom on Choosing a College

By Lydia Frank

A decade ago, private colleges were typically the better bet in terms of financial return on investment post-graduation. And, the advice most aspiring college students heard was to go to the "best" (aka most selective) college they could get into and study something they were passionate about. They would be rewarded with an amazing education, a far-reaching network and plentiful career opportunities. However, many of the students who believed that promise graduated into an economic recession after taking out historically high student loans, and the expectations for how far their college education would take them professionally weren't always met.

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. 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.

According to The College Board, the average published tuition and fees at private four-year institutions has increased 146 percent in the last 30 years, and 225 percent for in-state students at public four-year institutions. The big difference? One year's tuition and fees at a public university averages $9,139, while at a private university it averages $31,231. Wages, however, are not increasing. "For most U.S. workers, real wages — that is, after inflation is taken into account — have been flat or even falling for decades," according to Pew Research Center.
 
The debate around the value of college education in the labor market has grown heated. In the current environment, we're seeing some of the advice around how to approach college selection shifting dramatically. Instead of "go to the ‘best' college you can get into," it's "go to the college that is the best fit for you." Instead of "study a subject you're passionate about," it's "study something that's at the intersection of what you love, what you're good at, what the world needs and what someone will pay you to do."

What's been positive about this shift in thinking and around focusing some attention on student outcomes has been that students are realizing that they can obtain a great education almost anywhere, if they put in the effort. College is almost always "worth it," but gone are the days of picking a school off a "top 10" list, choosing a major without understanding how it translates into a job and hoping for the best. Students will be happiest if they follow a few bits of advice when pursuing higher education.

Go to a college you can afford

This means understanding your ability to pay back student loans post-graduation. What is the earning potential for the field you're interested in? Is employment in that field growing/shrinking? If you don't know, do some research before you sign your student loan documents.

Commit to your education

As in many areas of life, you only get out what you put in. In a recent Washington Post article, Hunter Rawlings, president of the Association of American Universities, wrote, "The courses the student decides to take (and not take), the amount of work the student does, the intellectual curiosity the student exhibits, her participation in class, his focus and determination - all contribute far more to her educational 'outcome' than the college's overall curriculum, much less its amenities and social life." In short, it's not just where you go, but how you spend your time in college that determines your career potential.

Stop trying to figure out the "perfect job" for you

You can become passionate about many different careers. There's not one specific job that is your destiny. That's the secret no one tells you. The concept of a "dream job" is out-of-date and has caused far too many 20-somethings loads of strife when they couldn't figure out what theirs was. Find purpose in whatever you end up doing. Just like your college education - your career is a product of the effort you put into it.

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