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How College ROI & Net Price Vary By Income Level

PayScale has been calculating college return on investment by school since 2010 using our proprietary alumni earnings data and each school's "sticker price," as reported by the Department of Education. However, new data, made available via College Scorecard, allows us to show how ROI may be impacted for students of different income levels by factoring in net price data for students receiving federal financial aid (but including all financial aid awards and scholarships they receive) – essentially incorporating the "real cost" to attend a given college.


We wanted to demonstrate how much cost, and therefore ROI, can vary even at a single college for students from a range of economic backgrounds. We chose just a handful of schools for this proof of concept that represent a good mix of public and private institutions.

The percentage of students who receive federal financial aid also varies greatly school to school, so these data are not a comprehensive representation of a college's "net price" for students at each income level. For example, only 28 percent of Princeton students who receive financial aid are receiving it from the federal government. The other 72 percent are receiving other types of financial aid – directly from the institution, for example.

Diving into this data also raises new questions. What we aren't able to show here is how graduation rate and alumni earnings vary across income levels for each school.

We know from various other studies that how much money your parents make is hugely impactful on your chances of completing college. According to The New York Times, "About a quarter of college freshmen born into the bottom half of the income distribution will manage to collect a bachelor's degree by age 24, while almost 90 percent of freshmen born into families in the top income quartile will go on to finish their degree." But, graduation rate by income level isn't currently available for individual schools.

Similarly, we know that finishing college doesn't necessarily guarantee equal opportunity in terms of career outcomes for students across all income levels. In fact, "Rich kids without a college degree are 2.5 times more likely to end up rich than poor kids who do graduate from college" according to The Atlantic. But, again, alumni earnings aren't currently tied back to their parent's household income at the individual college level.

We plan to include this new government data in the March 2016 release of the PayScale College ROI Report which will cover more than 1,000 U.S. colleges.

And, for our part, we hope to move toward even greater transparency for students around earning potential post-graduation to help empower and inform America's future workforce.