Have you ever wondered if college is worth the money you’ve spent there?
A new report can give you an answer by estimating the return on investment a student can reasonably expect over their lifetime. This report includes an ROI calculator that lets you search through 3,349 colleges.
In addition to the elite universities you’d expect, “you also see a lot of flagship public universities” at the top of the list, Kevin Miller, one of the report’s authors, told Yahoo Finance Live on Wednesday.
“Many technical institutions and institutions focused on science and engineering also tend to have high average earnings,” says Miller, associate director of higher education at the Bipartisan Policy Center, which published the report.
The top colleges based on the full report model include places like Stanford, MIT, and Yale. The top 10 also includes lesser-known colleges like Massachusetts College of Pharmacy and Health Sciences, private business school Babson College, and Maine Maritime Academy.
On the other side of the ledger, about one in 20 students in the United States currently attend institutions with a negative return on investment, meaning they can reasonably expect to lose money by attending the school.
Addressing “inherent inequalities”
The model works by dividing the “college earnings premium” — the pay rise students get after graduation — by tuition. Then it takes into account a range of other factors from student debt levels to completion rates as well as the discrimination in the job market that many graduates will face.
“There’s a lot of inequality built into the economy,” Miller said. “…One of the things we are concerned about in our report is making sure that the students who have the most to gain from college, especially women and people of color, attend worthwhile institutions and that we protect students from more predatory institutions that may pay nothing at all.”
Public institutions are the safest bet with 99% to 100% of them providing a median estimated positive return on investment according to different models. Next come private non-profit institutions, which 93% of the time provide a positive return under the full model.
The obvious laggards are private, for-profit institutions – many of which “are estimated to provide little value to the typical student”, according to the report. Only 69% offer a positive return, according to the data.
“We need greater responsibility”
The authors hope the report can change how higher education works in years to come, noting that policymakers and student loan providers can make better decisions using the data.
The federal government lends about $150 billion a year to students. Although the U.S. Department of Education can technically punish colleges that have large numbers of borrowers who are unable to repay their debt, the department rarely imposes such penalties.
“We need to see tougher accountability standards enforced at the federal aid level,” says Miller, co-author of the report with Shai Akabas, director of economic policy at the Bipartisan Policy Center. …”The federal government must seriously consider reducing the worst offenders of institutions that provide no value to students.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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