Bachelor’s degrees from private nonprofit colleges provide students with a higher return on investment than degrees from public colleges in the long-term, according to a new report from Georgetown University’s Center on Education and the Workforce (CEW).
Researchers examined the Education Department’s latest College Scorecard data from 4,500 colleges, finding that at 10 years post-enrollment, students attending community colleges and certificate programs have the highest return on investment, due in part to those program’s short duration and lower cost. Bachelor’s degree programs, however, surpass certificate and associate’s degrees in the longer term. Students who attend private nonprofit colleges see the highest return on their investment 40 years post-enrollment, even though they take out, on average, twice as much in loans as public college students, Education Dive reports.
Noting that Georgetown University ranked ninth among the 4,500 institutions for 40-year ROI, Georgetown Provost Robert Groves wrote on his blog that “[i]t is heartwarming to see Georgetown’s long run value empirically estimated. Of research universities, only MIT, Stanford, and Harvard have higher ROI at the 40-year mark. Hence, Georgetown is a long-term value, as measured by income achievement.”
Calculating financial returns on college
The CEW determined its rankings based on net present value—how much a sum of money in the future is valued today, taking into account costs, future earnings, and the length of time it would take to invest and earn a certain amount of money over a fixed horizon—using data gathered by the Department of Education since 2015 for its College Scorecard. The College Scorecard expanded this year to include schools that award non-degree credentials and to examine student debt levels in conjunction with the student’s field of study. The report’s sample included for-profit institutions and training academies. In addition to the report, the Center generated a digital tool that allows the public to examine tuition, median student debt, and median earnings for each school.
Outcomes by institution type
The report compares the short- and long-term gains associated with students’ investment in college. The CEW’s press release states that “a degree from a private nonprofit college is worth $8,000 more annually 10 years after enrollment” than one from a public college, and on the 40-year horizon, “the average graduate of a private college has a net economic gain of $838,000, even after paying off higher amounts of debt, compared to $765,000 for a graduate of a public college.”
The CEW found several exceptions to these patterns. For instance, Maine Maritime Academy and the United States Merchant Marine Academy, both public four-year institutions, have some of the overall highest long-term returns. And St. Louis College of Pharmacy and Albany College of Pharmacy and Health Sciences, both four-year private colleges, made it into the top 10 for short-term returns, as well as long-term returns. Theological institutions, beauty schools, and art schools had some of the lowest long-term returns.
Looking at the 50th percentile, researchers found a variety of institution types posting middle-range outcomes at the 40-year mark. “In the middle of the distribution of the American postsecondary institutions, it’s a fair fight between four-year schools, two-year schools, for-profit schools, not-for-profit schools,” said report author Anthony Carnevale, lead author and CEW director.
Overall, the report’s findings “reinforce the idea that college is worth the investment,” writes Inside Higher Ed. The CEW authors, meanwhile, say they hope students and parents will “take advantage of data by institution to make more informed financial decisions about where to attend college.”