Posted on 06/28/2010 12:29:50 PM PDT by SeekAndFind
If there's one truism that goes virtually unchallenged these days, it's that a college degree has great value. Beyond the great books, beyond the critical reasoning skills, and beyond the experience itself, there's another way that a college degree has value: Over the course of a working life, college graduates earn more than high school graduates. Over the past decade, research estimates have pegged that figure at $900,00, $1.2 million, and $1.6 million.
But new research suggests that the monetary value of a college degree may be vastly overblown. According to a study conducted by PayScale for Bloomberg Businessweek, the value of a college degree may be a lot closer to $400,000 over 30 years and varies wildly from school to school. According to the PayScale study, the number of schools that actually make good on the estimates of the earlier research is vanishingly small. There are only 17 schools in the study whose graduates can expect to recoup the cost of their education and out-earn a high school graduate by $1.2 million, including four where they can do so to the tune of $1.6 million. At more than 500 other schools, the return on investment, or ROI, is less—sometimes far less. College, says Al Lee, director of quantitative analysis at PayScale, "is not the million-dollar slam dunk people talk about."
The top of the list was dominated by elite private universities, with the Massachusetts Institute of Technology taking the top spot. Its net 30-year ROI of nearly $1.7 million makes it the most valuable undergraduate degree in the nation. The large number of MIT students who enter such high-paying fields as engineering and computer science certainly helped, but the school's advantages go well beyond that, says Melanie Parker, executive director for global education and career development at MIT.
(Excerpt) Read more at businessweek.com ...
The new research is based on self-reported compensation data collected through PayScale’s online pay comparison tools. PayScale examined pay reports from 1.4 million graduates of U.S. colleges and universities with no advanced degrees to calculate the ROI of each school. One reason the PayScale study resulted in a far lower estimate of the ROI on a college education is the way it calculated college costs. Instead of assuming everyone graduates in four years, as some do, PayScale used the actual number of years it takes students to graduate from each institution—4, 5, or 6 years. Another reason for PayScale’s far lower ROI estimate is that it accounts for the fact that many students never graduate—and go on to earn little more than a high school graduate. For them, the ROI on their college education is effectively zero.
Of the two, graduation rates had a far bigger impact on ROI. Of the 554 schools in the study, the net ROI—for graduates only—was $627,239. But once adjusted for the average six-year graduation rate of 58 percent, the average overall net ROI shrank by 37 percent, to $393,574. Schools with the worst graduation rates—at some schools, fewer than 20 percent of students graduated in six years— fared even worse in the PayScale analysis.
Also, While private schools dominated the top of the list, public schools proved to be far better value overall, at least for in-state students. Because of the lower costs paid by in-state students—$82,301 compared with $126,933 for out-of-state students at public institutions and $170,219 for students at private schools—they enjoyed the best net annualized ROI: 9.7 percent. The worst deal: paying out-of-state tuition at a public university. Doing so results in an average annualized net ROI of 8.4 percent. Private schools yielded a net annualized return of 9.1
One big conclusion that can be drawn from the PayScale data is that college—and college alone—may not be the great investment it was once thought to be
At least half of the college students I meet shouldn’t be there. They should be working or taking technical training courses.
The USA (and the FEDS) have over-invested in 4 year universities. That needs to end, and the higher-education bubble should be popped.
Rather, local communities (not the FEDS) should put money into 2 year technical/apprenticeship schools.
It’s great for colleges - they get all that gummint grant money.
Ah, not so much anymore.
My daughter is half-way through her MBA. Great time to find this out!
Hey, I paid for my own degrees, and now teach college history. I am paid well (even being paid to not teach this summer to complete a couple of writing projects), and am paid to study my area of interest since childhood, World War Two.
Be envious? Yes, you may. My hobby is my job.
Once your nation is gutted, it’s true. An education doesn’t garner you what it used to. It sill expands your odds on finding employment and keeping it. It makes the jobless periods shorter. It elevates the types of jobs you are qualified to hold.
Anything you can do to increase your worth, is a positive.
Look, making the case that a high school education is the best road to travel these days, is a severely flawed argument IMO.
looks like this study is focused upon undergrad degrees only
the value of MBAs may also be overblown but in many specific cases there is a lot of personal financial and professional benefit (speaking from anecdotes about family and friends I have observed through the years)
generally I’d far rather see young people obtain a lot of “real world” effective working experience before even thinking about an MBA (and many do work first for a few years)..... when I’ve dealt in business with freshly-minted MBAs who don’t have serious and credible working experience, their attitudes and egos tend to overwhelm common sense..... but I’ll hope that would not be the case with YOUR daughter...... :^)
The absolute iratating thing I see is college grads that can’t write a complete sentence. These are kids from private colleges that charge in excess of $50k/year tuition. Four years at $50k and you can’t write a complete sentence is troubling. All of them have the right opinions though.
‘Academics’ are dummied down beyond all recognition.
It all depends on what sort of degree you get and what you want to do with it. The market pays more for some degrees than for others. That’s reality.
A degree in philosophy may be a fine education, but the market doesn’t demand philosophers the way it demands other professions.
Many students pick a program they like knowing full well it doesn’t pay as well as others. It’s a choice they are free to make.
Top Ten
1. MIT
2.Cal Tech
3. Harvard
4. Harvey Mudd
5. Dartmouth
6. Stanford
7. Princeton
8. Yale
9. Notre Dame
10. Penn
There's a big clue that income is more correlated with brains than education. Most people accepted into MIT would make far above average incomes even if they didn't go to college.
They neglected to include the opportunity costs in their investment calculations. Every hour studying for a degree could instead be spent earning money and gaining valuable experience. In the case of Bill Gates, the opportunity cost for finishing college turned out to be $53 billion.
How’d you make it past the Marxist goal-tenders on the dissertation committee?
Sorry to offend, but that's part of the problem:
Students and taxpayers are paying for your hobby while you punch the "publish or perish" ticket.
Meanwhile, every year we get more law school grads who will find work as buyers and office managers, more engineers who will toil as technicians, and more teaching school grads who know ideology better than their subject matter.
Higher education is now an industry that feeds off the public rather than serving to improve citizenship and the economy.
(Besides, we actually need technicians and buyers, we sometimes need office managers, and you know what they say about lawyers.)
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