It’s that time of year again: High school seniors around the U.S. – the world for that matter – are receiving decision letters from colleges and universities. It’s a nerve-wracking time for sure, but once you’re gotten that coveted acceptance letter from your first choice school, you have some big decisions to make.
Deciding which college you’ll attend is a big decision. You’re going to spend the next four years of your life immersed in a school and it’s important to make sure the school you decide to attend is a good fit for you. While many prospective college students fret over which college has the best social life or sports teams, they should also ask themselves a very important question when choosing a school: What college will give me the best return on my investment?
Higher education in the U.S. is not cheap – that’s for sure. Many private institutions charge well over $50,000 per year when all expenses are taken into account and by the time you’ve graduated you could have a lot of debt to pay off. Bloomberg and PayScale set out in 2010 to ascertain the value-add that attending various colleges provides for students, and the results were surprising to say the least, with their analysis showing that colleges added on average $400,000 over 30 years to a person’s earning potential.
This year, the two organizations have banded together again to rework the rankings. To come up with the rankings, they analyzed the cost of a degree at each school and incorporated the average financial aid package students receive into their methodology. This year, the rankings changed up a bit, with some elite universities taking the top places and other schools filling out the list.
The California Institute of Technology came in at first place with a 30-year ROI of more than $1.8 million. According to the rankings, a four-year degree costs about $200,000, but the cost is cut in half for grant recipients – of whom there are many – and graduates are routinely awarded large financial aid packages. Following CalTech was Harvey Mudd College, with an ROI of $1.7 million, and the Massachusetts Institute of Technology, with an ROI of more than $1.6 million.
Moreover, all eight members of the vaunted Ivy League landed in the top 30, illustrating the dominance of private institutions in the rankings. In fact, private schools totaled 26 of the top 30 schools. Schools in Massachusetts, California, Pennsylvania and New York claimed 21 of the top 30 spots. The University of California, Berkeley represented the highest public school ranking, coming in at number 18 with an ROI of more than $1.2 million.
Some schools, however, fell from last year as financial aid packages were factored in. Notre Dame, for example, suffered a large drop in the ROI on its education. Al Lee, PayScale’s director of quantitative analysis, said that average 30-year earnings for alumni of more than 500 schools fell from the year prior.
“College graduates, in terms on earnings, are not immune to the recession, and overall the average college has become a less good deal than the year before,” Lee affirmed. “Graduate earnings have not held up, and costs have gone up.”
Financial aid packages can also greatly increase a student’s ROI. Boston is home to some of the country’s most prestigious colleges and cross-town universities Boston College and Boston University are consistently ranked as two of the best schools in the U.S. Both schools have four-year expenses that are virtually identical, but BC graduates have an average earning potential that is 16 percent higher than BU grads. Among other factors, the Bloomberg analysis asserts the school’s more generous financial aid program – BC students receive above $6,000 more on average than BU students – helps BC graduates earn more in their lifetimes.
Perhaps surprisingly, the analysis also determined the 15-year ROI from a college degree, finding the average to be just under $80,000. According to analysts, that figure indicates that a college degree has significant long-term benefits, but in the short- and medium-term they are mostly muted.
Ultimately, if you’re a high school senior and you’re deciding which college to attend, you should consider your financial aid package and the new Bloomberg/PayScale rankings, but don’t base your choice solely on them. The point of going to college is not simply to get a job – though that’s helpful – but also to grow intellectually.