Is a College Education Worth the Money?
"College tuition." Those two words together strike fear into the hearts of parents and students across the country, struggling to pay for a degree before entering the job market. Many schools now charge over $100,000, or even over $200,000, in tuition, room and board, for that precious graduation certificate. But, in the end, is it worth the expense?
Online salary database PayScale.com decided to take this issue head on and figure out how valuable a 4-year college degree is over a 30-year period of work for 554
PayScale figured out how much more a college graduate of a certain school makes in 30 years of working compared to a high school graduate, then subtracted tuition, room and board costs, factored in the school's graduation rate (non-graduates see little improvement in pay over high school graduates), did some number crunching and came up with a handy guide for potential students and their funders: a breakdown of whether college tuition is worth the investment.
Which schools are worth your precious cash?
According to PayScale's research, you should look for nationally-recognized, private schools, particularly those with an engineering focus. Hence, M.I.T. is at the top of the list, followed closely by Ivy League schools like Harvard, Stanford, and
And, to help those writing tuition checks feel better about where they're putting their money, PayScale also calculated an annualized ROI for each school's tuition. Continuing with the M.I.T. example, PayScale found that the money spent on a degree there returns 12.6 percent per year over 30 years. Compared to the stock market, that percentage of return is competitive. Over the last 30 years, with dividend earnings included, the S & P 500 has returned about 11 percent, according to Yale economist Robert Shiller.
"For every year of work, the typical M.I.T. grad earns $50,000 more than the typical high school grad," says Al Lee, PayScale's director of quantitative analysis, who led the study. However, M.I.T. isn't a typical school in terms of money growth. In fact, only 16 percent of schools on PayScale's list beat the S & P 500.
Is tuition a worthwhile investment at a small, private school? Lee recommends that if you're paying full price for a less well-known, private school, you need to think hard about whether the non-financial advantages of attending that college make up for the lower return.
However, if you can get financial aid, it completely changes the picture. Finding scholarship money really improves your long-term return calculation. Or, if you're really fortunate, you could take advantage of offers like Stanford's University Scholarship, where students who are accepted to the school and whose families earn under $60,000 a year receive tuition, room and board for free.
Keep in mind, each student is unique so a low-earning graduate from a highly-ranked school like Stanford may earn less than a high earner from a public school like the
If you want to spend a little as possible on your tuition and earn back as much as you can, an in-state, public school with a technical focus, like Georgia Tech, is your best bet, according to PayScale's research.
Which 10 schools are the best investment?
See the list below. They are all private and well-recognized by most Americans. The closest public school to the top is
|Rank||School||Average Cost in 2009||30 Year ROI (2010 Dollars)||Annual ROI|
|1||Massachusetts Institute of Technology (MIT)||$189,300||$1,688,000||12.6%|
|2||California Institute of Technology (CalTech)||$181,100||$1,644,000||12.6%|
|4||Harvey Mudd College||$187,700||$1,627,000||12.5%|
|9||University of Notre Dame||$181,900||$1,384,000||12.1%|
|10||University of Pennsylvania||$191,300||$1,361,000||11.8%|
Bridget Quigg is the web content editor for online salary database PayScale.com.
Located in Seattle, Wash., Bridget specializes in writing and editing content for blogs, websites and feature articles.
Bridget graduated from Stanford University with a degree in English. She teaches creative writing and is also a songwriter who regularly performs music and comedic story-telling in the Seattle area and beyond. Her most recent one-woman show was titled, "Almost Female: A Jockette's Awesome Journey."