Noting that low-income students tend to see smaller long-term returns on their college investment than peers, a new analysis explores which types of institutions—and which individual institutions—tend to provide the greatest economic benefit.
Published by Georgetown University’s Center on Education and the Workforce (CEW), the report finds that, overall, public institutions tend to offer the strongest return on investment (ROI) for low-income students, considering students’ expected 40-year earnings minus their college costs. The CEW defines low-income students as those whose families earn $30,000 or less annually, a category that includes more than one-third of all college students.
At the level of individual institutions, however, the 24 colleges and universities with the highest ROI for low-income students are private, nonprofit universities. Georgetown University tops the list; Stanford University, Harvard University, Tufts University, and Massachusetts Institute of Technology round out the top five.
High college ROI not a given
For the analysis, CEW researchers used data from colleges that reported net-price information and low-income students’ average earnings to the December 2020 College Scorecard. “College typically pays off for low-income students,” they write, “but not as much as it does for their peers.” The pattern holds true across all institution and degree types and reflects a confluence of disparities.
For instance, low-income students are less likely to graduate than their higher-income peers and go on to earn less in adulthood. Low-income students also are more likely than other students to work while attending college, potentially deterring them from selecting high-earning, but time-consuming, majors. They also may not have as much access to robust professional networks as higher-income peers, Robert Kelchen, professor of education at the University of Tennessee at Knoxville, told Inside Higher Ed.
Shedding light on schools’ ROI
But ROI varies significantly by institution, and institution type. Looking at bachelor’s degree-granting institutions, CEW found that public institutions—with their lower costs—tend to position low-income students for the highest ROI across a 40-year timeframe ($951,000), compared with private nonprofit institutions ($863,000) and for-profit colleges ($763,000).
In an analysis of individual institutional ROI, private nonprofit universities dominate the top slots. The three top-ranked institutions each had an average ROI exceeding $3 million across 40 years. Many of those colleges, however, “enroll relatively small shares of Pell Grant recipients,” Anthony P. Carnevale, the CEW’s director and report’s lead author, said in a press release. “ROI is important, but students won’t get that ROI if they can’t go to these colleges.”
To better recognize colleges and universities that educate larger numbers of low-income students and deliver strong ROI, the CEW also ranked institutions using a weighted score that took into account the percentage of Pell Grant recipients at the college, their graduation rates, and their long-term ROI. The top 20 for that weighted ranking includes only one highly selective private institution, Columbia University. University of California and California State University schools captured 11 of the top 20 slots.
The findings reinforce that there are many public institutions “that do a really good job of giving increased social mobility,” said Martin Van Der Werf, an author of the report and the CEW’s associate director of editorial and postsecondary policy. He added that college advisors play a crucial role in steering low-income families toward institutions likely to generate the best economic outcomes.