Nearly 60% of students in America, or 12 million people, take out loans every year to help cover college costs. While the typical college graduate in the Class of 2014 with student-loan debt has to pay back an estimated $33,000, the overall outstanding loan debt exceeded $1 trillion in March 2012. There is no denying that college is expensive. And, when we consider that master’s degrees are as common now as bachelor’s degrees were in the 1960’s, it is clear that an undergraduate education is still very valuable and even necessary.
At the end of the day, college is an investment, and the only way to make the best out of this situation is to make informed decisions regarding college finances. A great way to do this is to consider the return on investment along with other important factors such as costs and financial aid when considering schools and majors.
So, what is return on investment, exactly? In the business world, return on investment, or ROI, is a measure of profitability that indicates whether or not a company is using its resources in an efficient manner, according to BusinessDictionary.com. In the college world, it’s basically the amount of money a student will earn (usually in the following 20 years after earning a degree) versus the amount of money spent to get a degree.
The following 10 colleges rank the highest in PayScale’s list Return on Investment Colleges for 2014:
1. Harvey Mudd College, 20-year ROI: $980,900. Typical starting salary: $73,300
2. California Institute of Technology (Caltech), 20-year ROI: $837,600. Typical starting salary: $68,400
3. Massachusetts Institute of Technology, 20-year ROI: $831,100. Typical starting salary: $68,600
4. Stanford University, 20-year ROI: $789,500. Typical starting salary: $61,300
5. Colorado School of Mines (in-state), 20-year ROI: $783,400. Typical starting salary: $66,700
6. Georgia Institute of Technology (in-state), 20-year ROI: $755,600. Typical starting salary: $60,700
7. Rose-Hulman Institute of Technology, 20-year ROI: $736,200. Typical starting salary: $65,100
8. Polytechnic Institute of New York University, 20-year ROI: $724,500. Typical starting salary: $60,700
9. Stevens Institute of Technology, 20-year ROI: $722,400. Typical starting salary: $64,900
10. Colorado School of Mines (out-of-state), 20-year ROI: $719,000. Typical starting salary: $66,700
However, this list must be taken with a grain of salt since other lists rank colleges based on different criteria. For example, PayScale does not count graduates of a school if they go on to earn a master’s degree or any other higher degree since it’s almost impossible to calculate how this degree affects earning as well. Also, PayScale calculates ROI using each school’s sticker price, and many students don’t pay this in full after getting scholarships and/or financial aid.
Besides the main list of 1200 schools, PayScale also has some others really helpful features like Best ROIs by major, Best ROIs by State, and Best ROIs by School Type (public, private, liberal arts, business, engineering, etc.). Another great list to consider is 50 Affordable Colleges with the Highest ROI by Affordable Colleges Online. Besides ROI, this list also takes the cost of tuition into consideration.
1. Georgia Institute of Technology-Main Campus, 30 Year Net ROI: $836,000. 4 Year Tuition: $26,704
2. State University of New York at New Paltz, 30 Year Net ROI: $644,500. 4 Year Tuition: $21,080
3. University of Virginia-Main Campus, 30 Year Net ROI: $620,900. 4 Year Tuition: $36,960
4. Texas A & M University-College Station, 30 Year Net ROI: $568,900. 4 Year Tuition: $21,188
5. Virginia Polytechnic Institute and State University, 30 Year Net ROI: $551,600. 4 Year Tuition: $35,408
6. College of William and Mary, 30 Year Net ROI: $544,800. 4 Year Tuition: $33,080
7. California Polytechnic State University-San Luis Obispo, 30 Year Net ROI: $542,700. 4 Year Tuition: $21,888
8. Massachusetts Maritime Academy, 30 Year Net ROI: $542,600. 4 Year Tuition: $5,580
9. University of Maryland-College Park, 30 Year Net ROI: $518,000. 4 Year Tuition: $27,864
10. Missouri University of Science and Technology, 30 Year Net ROI: $510,800. 4 Year Tuition: $31,392
What about majors? Recently, Salary.com published a list of 8 college degrees with high return on investment. To determine ROI for a specific degree, the average cost of the degree was subtracted from the gains over 30 years, then divided that figure by the average cost of the degree. Here’s the list of 8 majors, plus examples of jobs in each industry:
1. Economics: Financial Managers, Investment Operations Manager
2. Information Technology: Web Applications Developer, Computer Programmer
3. Human Resources: Recruiting Manager, Human Resources Assistants
4. Mathematics: Actuary, Financial Analyst
5. Marketing: Public Relations Manager, Brand Manager
6. English: Web Content Manager, Copywriters
7. Engineering: Chemical Engineer, Materials Engineer
8. Biology: Laboratory Manager, Biological Scientist