The millions of high-school seniors and their families beginning the final stretch in their college search this fall will follow many of the same rituals in this annual rite of passage. They will buy mountains of guidebooks, take countless campus tours, roam the aisles at college fairs, and scour the rankings from best values to most wired campuses.
But none of these encounters will answer the ultimate question that they’re trying to figure out: what am I buying and is it worth it?
The reporting for my book, College (Un)Bound: The Future of Higher Education and What It Means for Students, led me to nearly two dozen college campuses throughout 2012. Whenever I saw a prospective student tour in progress, I tagged along on as many as I could inconspicuously join. On these tours, colleges emphasize the bells and whistles: the fancy dorms, climbing walls, and technology-filled classrooms. They end up distracting prospective students and parents from getting answers to that ultimate question.
Students and parents need to worry less about whether the dining hall serves sushi, if students can choose their dorm roommates, or the hours of fitness center (all questions I heard on tours). The fact of the matter is that even after years of courting each other, colleges know more about prospective students than prospective students know about them. Students and parents need to even that playing field by asking tougher questions and demanding answers about their return on investment from the schools they’re considering:
• What is the school’s gradation rate for students with family and academic backgrounds similar to theirs?
• What is the job-placement rate of the college’s graduates and how is it calculated?
• What is the average debt of students at graduation?
• Besides the famous alumni that every school likes to tout, where are last year’s graduates working and what are they earning, on average? How about five years ago? Ten years ago?
The higher education industry has long touted the economic benefits of going to college, in part through a triennial report from the College Board called “Education Pays.” This year’s edition was released this month and found that over the course of a 40-year career, the median earnings of a bachelor’s degree recipient are 65 percent higher than those of high-school graduates.
But those are averages that tell you little, for example, about the payoff of going to a state university and majoring in sociology.
Going to college is still worth it, but the question students and parents increasingly should be asking these days is whether it’s worth going to any college for any major at any cost, especially if they need to take on mounds of debt to earn their degree. The problem is that until recently families had few places to turn to make such bottom-line comparisons between colleges when it came to their return on investment.
Think about it: Before we buy a car, we can find various measures on everything from gas mileage to results of safety tests. We can turn to objective sources to check comparisons of similar vehicles and see which cars hold their value over time. But when it comes to potentially one of the most expensive purchases in a lifetime, the attitude from colleges has always been that we should just trust them on the value of their product.
Not anymore. In the last year, a series of tools has emerged that allows students and parents to finally make those quick and easy comparisons on the return on investment between colleges they’re considering. The Obama administration’s College Scorecard advertises itself as the place where families can figure out where to get “the most bang for your education dollar.” While it doesn’t include early-career salaries of graduates, another similar tool does: College Reality Check from the Chronicle of Higher Education.
At the same time, a handful of states, including Colorado, Texas, Tennessee, and Virginia, are building useful databases that allow families to compare colleges, and even majors, based on the actual earnings of graduates of their in-state schools.
To be sure, all the tools are in their infancy and have their limitations. Take student debt. Despite all the attention given to the issue, not all colleges report the average debt of their graduating classes. As a result, the figures in the College Scorecard on student debt at graduation include parent loans. The salaries of graduates in College Reality Check come from Payscale.com, and are self-reported by users of the site.
Earnings included in the state-run databases are more accurate because they come from employers, but for now only include the first-year salaries of college graduates. Even so, the findings challenge some of our long-held assumptions we have about the return on investment when we only consider the national averages. Take two-year degrees, for example. The conventional wisdom is that a bachelor’s degree is worth more than a two-year degree.
But in Tennessee, average first-year salaries of graduates with a two-year degree are $1,000 higher than those with a bachelor’s degree. In Texas, the average first-year salaries of graduates with a two-year technical degree are $11,000 higher than those with a bachelor’s degree ($50,827 vs. $39,725). Indeed, technical degree holders from community colleges often earn more their first year out of school than those who studied the same field at a four-year university.
Going to college, of course, is about more than just the paycheck after graduation. But students and parents should care at least as much about calculating their return on investment as they do about whether the dining hall serves sushi.