Is a University Degree a Good Investment ?, Invest News & Top Stories


(NYTIMES) – Most four-year degrees pay off by paving the way for graduates to recoup the cost of their studies fairly quickly, new analysis shows. But this is especially true for some programs, while others may offer little economic benefit over a high school diploma.

The findings are part of a US report of some 38,000 post-secondary diploma and certificate programs published by Third Way, a public policy group.

The report analyzed data collected for the Federal Ministry of Education’s “College Scorecard” tool to measure the “return on investment” offered by various higher education programs.

The results show that almost two-thirds of the 26,000 bachelor’s degree programs in the study enabled the majority of their graduates to earn enough money to recover their costs in 10 years or less after graduation.

Bachelor programs, which typically last four years, are generally more expensive but are more likely to show at least some return on investment – meaning graduates earn enough to pay their college fees fairly quickly – for those who graduate. diploma, versus two -ans associated diplomas or shorter certificate programs.

This is good news for students who have completed these four-year programs, said report author Michael Itzkowitz, senior researcher for higher education at Third Way and former principal of the College Scorecard.

However, certain fields of study – usually those in higher-paying fields like engineering or healthcare – are much more likely to lead to faster economic acceleration than fields like the arts, religion, or biology.

All of the major electrical engineering and communications engineering programs, for example, have seen most of their graduates recoup their educational investment in five years or less. But many programs in certain fields, like theater and dance, show no return on investment, according to the report, which means most of their graduates earn less than a typical high school graduate.

“It’s not surprising,” Mr. Itzkowitz said. “But it’s depressing.” This does not mean, according to his report, that programs with little return on economic investment provide no “societal value”. But this suggests that economic performance in some fields may be “limited”, perhaps because the available jobs pay too little or offer unstable career opportunities.

Ms Lisa Sohmer, an independent academic consultant, said these findings needed to be put into perspective. While a college education is an investment, she said, it pays off in ways that aren’t strictly financial. Students are exposed to new ideas, she said, and discover strengths and interests they never knew they had.

“It’s about exploring, learning, growing,” she said. “The point is not to come out as you entered.” The report found that most graduates of “the vast majority” of bachelor’s degree programs, regardless of field of study, were likely to earn more than if they had not enrolled.

Programs at public institutions offered the greatest likelihood that graduates would be able to recoup their investment within five to ten years, according to the report.

Programs offered at for-profit colleges are the least likely to provide a good return on investment for their graduates, according to the report. Only 40 percent of for-profit programs show graduates recoup the costs within 10 years, compared to 73 percent for public programs and 56 percent for private non-profit programs.

Here are some questions and answers about college costs:

How much does a four-year college degree cost nowadays?

According to the College Board, the published average cost of a four-year public university, including tuition, fees, room and board, is around US $ 22,000 (S $ 29,500) per year. . Average annual costs at private four-year nonprofit colleges are well over double that amount.

How does the report measure “return on investment” for a college education?

The report estimated how long it takes to recoup a student’s net costs, based on the “premium” income a student earns from attending college.

Here’s an example: If a student graduates with a business degree and earns $ 15,000 more than a typical high school graduate in the state, the earnings bonus is $ 15,000. If the degree cost US $ 60,000, it would take four years to recover the cost.

If the majority of students who graduate from a program are able to recoup their costs in 10 years or less, the program is considered to offer a reasonable return on investment; five years or less is even better.

The report looked at around 2.2 million students who graduated in 2015 and 2016. Their income was measured two years later (2017 and 2018) and then adjusted to 2019 dollars.

He looked at the out-of-pocket expenses that a graduate would pay, after deducting grants and scholarships.

How should students and families view information about a program’s “return on investment”?

College consultants caution against choosing a study program solely because of its potential salary. It is often difficult for high school students, for example, to know what fields or careers will interest them six years later (or more if they are in graduate school), said Mr. Jeff Levy, an independent educational consultant.

And exposure to new ideas and topics in college can spur interest in career paths they’re not yet familiar with, he said.

“I would advise families to ignore the data,” he said. “It’s noise.” He suggested that students who are interested in a degree because it currently seems lucrative – say, nursing – seek volunteer experience in the field.

This will help determine if they really want to further their education and help them apply, as these programs are often very competitive.

Ms Carrie Warick, director of policy and advocacy at the National College Attainment Network, a nonprofit group working on behalf of low-income and minority students, said getting a degree that a student had no affinity for , just because he paid well, was probably reckless.

“You don’t want students to make this decision just on the basis of their finances,” she said.

But such information can be useful, she said, when the time comes to compare financial aid. If a student is interested in an area that tends to generate lower income, it is important to reduce borrowing costs. Therefore, the amount of grants and scholarships offered by a college should be carefully weighed when comparing offers from different schools.


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