For many families, a college education is seen as a key to future success. Traditionally, a diploma has been a stepping stone to career advancement and higher earning potential. However, the rising cost of higher education means a degree often comes with a hefty price tag, leaving students with debt that may take years—or even decades—to repay.
With tuition, books, and living expenses constantly increasing, it's more important than ever to consider the return on investment (ROI) of a college education. Simply put: is the financial benefit you gain from your degree going to outweigh the cost of obtaining it?
Each year, organizations like Payscale analyze various factors—tuition costs, graduation rates, and post-graduation earnings—to determine the long-term financial value of different universities. This information can be a powerful tool for parents and students as they navigate the complex landscape of college admissions and financial aid.
While every student's path and outcomes will vary, understanding these trends can help you make informed decisions and potentially avoid schools where the financial investment might not yield the expected returns. Before you or your child commits to a particular institution, we strongly recommend exploring data-driven insights into a school’s potential ROI.
Understanding Return on Investment (ROI) in Higher Education
When we talk about college ROI, we're looking beyond the sticker price of tuition. We're considering:
Initial Investment: This includes tuition, fees, books, and living expenses over the course of a degree.
Long-Term Earnings: What graduates typically earn in their careers after 10 or 20 years.
Net ROI: The difference between the initial investment and the long-term earnings, accounting for the time value of money. A negative ROI means that, on average, graduates from that institution earn less over a 20-year period than the total cost of their education.
It's crucial to remember that a negative ROI doesn't necessarily mean a school is “bad” or that its education is without value. Many factors contribute to a student’s success, including their chosen field of study, personal drive, and networking. However, a consistently low or negative ROI across a broad student body can signal that, for the average graduate, the financial benefit of attending that institution may not justify the cost.
Schools Where the Financial Return May Fall Short
Based on recent analyses of tuition costs and graduate outcomes, some institutions consistently show a negative return on investment for their graduates. While these schools may offer unique programs, smaller class sizes, or a strong sense of community, the financial numbers suggest that, for many, the cost of attendance may not be recouped in future earnings.
Here are examples of schools that, according to data, have shown a significant negative ROI for their graduates:
Rust College: Yearly tuition of around $9,900; 20-year net ROI of -$97,100
The Baptist College of Florida: ROI of -$63,400
Mississippi Valley State University: $75,700 tuition (four years), -$174,800 ROI
Talladega College: $88,200 tuition, -$156,900 ROI
Johnson University: $16,920 annual tuition, -$97,900 ROI
Miles College: $90,200 tuition, 17% graduation rate, -$164,600 ROI
Morris College: $92,200 tuition, -$106,800 ROI
Martin Luther College: $93,300 tuition, -$123,200 ROI
Voorhees College: $97,000 tuition, -$153,400 ROI
Paine College: $97,500 tuition, 20% graduation rate, -$94,700 ROI
Other schools with similarly troubling financial outcomes include:
Stillman College: -$80,400 ROI
University of Science and Arts of Oklahoma: -$65,500 ROI
Florida Memorial University: -$64,000 ROI
University of Montana Western: -$71,400 ROI
Emmanuel College: -$70,600 ROI
Brewton-Parker College: -$92,200 ROI
Shaw University: -$93,600 ROI
Benedict College: -$105,600 ROI
University of Maine at Machias: -$70,700 ROI
Claflin University: -$133,900 ROI despite a 56% graduation rate
Saint Augustine’s University: -$77,700 ROI with a 23% four-year graduation rate
University of South Carolina Aiken: -$66,000 ROI
Columbia International University: -$115,700 ROI
University of Montevallo: -$64,100 ROI
Campbellsville University: -$76,800 ROI
Unity College: -$82,000 ROI
Lindsey Wilson College: -$160,800 ROI
Wilson College: -$86,700 ROI
Davis & Elkins College: -$66,000 ROI
St. Andrew’s University: -$98,800 ROI
Montserrat College of Art: -$107,400 ROI
Emory & Henry College: -$91,300 ROI
Cazenovia College: -$98,600 ROI
Maine College of Art: -$163,600 ROI
Wheelock College (pre-merger with Boston University): -$140,700 ROI
What This Means for Your College Search
This information isn't meant to discourage higher education but to empower families to make financially sound decisions. Here are some key takeaways:
Look Beyond the Brochure: A school’s reputation or picturesque campus shouldn’t overshadow the financial outcomes for its graduates.
Prioritize ROI: Choose a school where your educational investment will likely lead to stable, long-term earning potential.
Explore Different Paths: Consider community colleges, vocational training, or public universities as potentially smarter financial options.
Factor in Financial Aid: A school with high tuition but strong aid packages might cost less than one with lower sticker prices and limited aid.
Consider Your Major: ROI can vary significantly by field. A degree in engineering might yield a higher ROI than one in fine arts, depending on the institution.
Review Graduation Rates: A low graduation rate may suggest academic or financial challenges that can leave students with debt but no degree.
Choosing a college is a significant decision for both students and parents. By factoring in long-term ROI alongside academic and social fit, you can help ensure that a college education is not only enriching but also a smart financial investment for the future.