Can you measure a college’s return on investment?
We frequently receive questions from students and families in reference to PayScale.com’s new college rankings, which sorts institutions on the basis of a calculated 30-year return on investment (ROI). Are these rankings reliable? Not so much. Here’s an example of why:
Harvey Mudd College, PayScale’s top ranked school for ROI, produces a disproportionately high number of graduates in engineering, computer science, and software development, all of which are relatively lucrative fields. While Harvey Mudd’s graduates may earn the most, on average, their salaries are attributed, at least in part, to their major, rather than their undergraduate institution. Thus, it becomes difficult to provide for meaningful comparisons between institutions who emphasize different disciplines.
For example, Boston College is ranked 151st on PayScale’s list. What we do not know is how much the average engineering/computer science/hard science major at Boston College fares compared to the average student graduating with identical degrees from Harvey Mudd or other selective colleges. It’s also important to note that the most popular majors at Boston College include English, Communications, Psychology, and Human Development; all fields that are unlikely to lead to particularly hefty salaries in one’s 20s, if at all. Thus the preponderance of individuals entering less remunerative fields ends up diluting Boston College’s ROI data and by default skyrockets institutions like Harvey Mudd up the rankings.
In addition, the vast majority of the data PayScale.com collects is from younger people with less than ten years’ experience and purposefully does not include data for those with advanced degrees. Our aforementioned Boston College psych major may eventually bring home a handsome salary, but probably not before earning a Master’s and/or Ph.D. in the field.
So you’re probably wondering, if PayScale.com is not the most useful database for informing college choices, what sources can I access that may offer more reliable financial outcomes data? Well, if you want to attend school in Arkansas, Colorado, Florida, Tennessee, Texas, or Virginia then you’re in luck. If not, hang tight because new data is constantly being added to Collegemeasures.org, a non-profit site that has begun assembling a far more useful database called the Economic Success Metric, which enables college comparisons within the same major and geographic location. Using the ESM one can see, for example, that a Computer Engineering graduate from George Mason University starts out with an average salary of $58,923 while a Virginia State grad with the same degree brings home an average of just $32,934. Now, that’s meaningful data to examine when selecting an undergraduate institution.
CT Quick Take: We believe that future salary data can be valuable for students and families to consider as they weigh undergraduate options. However, we urge you to be cognizant of the many limitations inherent in this data and to seek salary information that accounts for critical variables like major and regional variations in pay.