Most four-year degrees pay off by paving the way for graduates
to recoup the cost of their education relatively quickly, a new analysis finds.
But that’s particularly true for some programs, while others may offer little
economic advantage over a high
school diploma.
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The findings are part of a report on some 38,000 post-high
school degree and certificate programs published this week by Third Way, a
center-left public policy group. The report analyzed data collected for the
federal Education Department’s “College Scorecard” tool to measure the “return
on investment” offered by various higher education programs.
The report found that almost two-thirds of the 26,000 bachelor’s
degree programs in the study enabled a majority of their graduates to make
enough money to recover their costs in 10 years or less after graduation.
Bachelor’s degree programs, which typically take four years, are
generally more expensive but are most likely to show at least some return on
investment — meaning graduates earn enough to pay off their college costs
reasonably quickly — for those who complete a degree, compared with two-year
associate degrees or shorter certificate programs.
That’s good news for students who completed those four-year
programs, said the report’s author, Michael Itzkowitz, senior fellow for higher
education at Third Way and a former director of the College Scorecard.
Certain fields of study, however — typically those in
higher-paying fields like engineering or health care — are substantially more
likely to lead to a speedier economic boost than fields like the arts, religion
or
biology.
All of the largest programs in electrical and communications
engineering, for instance, allowed most of their graduates to recoup their
educational investment in five years or less. But many programs in some fields,
like drama and dance, show no return on investment, the report found, meaning
most of their graduates are earning less than a typical high school graduate.
“It’s not surprising,” Itzkowitz said. “But it is depressing.”
It doesn’t mean, his report said, that programs with little
economic return on investment provide no “societal value.” But it does suggest
that the economic return in certain fields may be “limited,” perhaps because
available jobs pay too little or offer unstable career opportunities.
Lisa Sohmer, an independent college consultant near St.
Petersburg, Florida, said such findings needed to be kept in 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 learn
about strengths and interests they didn’t know they had.
“It’s about exploring, learning, growing,” she said. “The goal
is not to come out the way you went in.”
The report found that most graduates of “the vast majority” of
bachelor’s programs, regardless of the field of study, were likely to earn more
than if they hadn’t enrolled.
Programs at public institutions offered the highest likelihood
that graduates would be able to recoup their investment within 5-10 years, the
report found.
Programs offered at for-profit colleges are the least likely to
offer a good return on investment to their graduates, the report found. Just 40
percent of for-profit programs show graduates recouping costs within 10 years,
compared with 73 percent for public programs and 56 percent for private,
nonprofit programs.
Here are some questions and answers about college costs:
How much does a four-year college degree cost these days?
The average published cost of a four-year public university,
including in-state tuition, fees, room and board, is now about $22,000 a year,
according to the College Board. Average annual costs at four-year private,
nonprofit colleges are well over twice that amount.
How did the report measure “return on investment” for a college
education?
The report estimated how long it takes to recover a student’s
net college costs, based on the earnings “premium” a student gains by attending
college. Here’s an example: If a student graduates with a degree in business
and earns $15,000 more than the typical high school graduate in the state, the
earnings premium is $15,000. If the degree cost $60,000, it would take four
years to recoup the cost. If a majority of students who graduated 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 roughly 2.2 million students who graduated
in 2015 and 2016. Their earnings were measured two years later (2017 and 2018),
then adjusted to 2019 dollars. It looked at out-of-pocket costs that a graduate
would pay, after deducting grants and scholarships.
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