State Schools vs. Private College: What's the Smarter Investment?
Ever wonder if your college degree was a sound investment?
It’s a question that haunts people years after graduation, especially if they’re one of the 44.7 million Americans still trying to pay off student loan debt. And while there is research to show that more education equates to a higher weekly income, the rising cost of higher education can make it more difficult to justify the expense.
In a recent report entitled “A First Try at ROI: Ranking 4,500 Colleges,” the Georgetown Center on Education and the Workforce (CEW) set out to find some answers to questions like Is college worth the money? And: What kind of college is the best investment?.
In order to compare the economic value of degrees from 4,500 different colleges, the research and policy institute relied on a metric called the "net present value," calculated using data from the U.S. Department of Education’s College Scorecard (a consumer information tool put in place by the Obama administration).
Basically, the report is trying to assess how much a college degree from each institution is truly worth, after factoring in education costs, student loan debt, career earnings, and inflation.
The researchers found that at the end of the first decade, public colleges (specifically ones that primarily award certificates) topped the list in terms of economic gains for their graduates, beating out nonprofit and for-profit private colleges. The report attributed this difference to lower tuition and less debt.
While the median economic gain for all colleges ten years after enrollment is $107,000, public college Putnam Westchester BOCES-Practical Nursing Program had the highest net present value at $431,000.
But four decades after school, it’s the private nonprofit colleges that reportedly triumph. Eight out of the top 10 gainers for the 40-year mark are private nonprofit colleges (Albany College of Pharmacy and Health Sciences ranks highest). The remaining two are public institutions, or more specifically maritime academies (Maine Maritime Academy and the US Merchant Marine Academy). And all 10 have net present values that are double — if not triple or nearly quadruple — the median $723,000.
What you're not seeing on this list are for-profit private colleges, which had an economic gain of $551,000 in all, compared to all public colleges’ $765,000, and all private nonprofit colleges’ $838,000.
Of course, it’s worth noting a few caveats: Like the fact that these trends exist until you get to the center of the list, at which point it’s a healthy mix of all types of institutions. There's a heavy concentration of STEM-focused schools at the top of both the short- and long-term lists, which means the high returns could be a product of the area of study rather than the college itself. Naturally, people who major in science or engineering tend to make more money right after graduating, and in the long run, than those who earn liberal arts degrees.
Lastly, we must point out that the new report does not control for student body demographics — a crucial element in Money’s own value-based college ranking. Private schools tend to enroll wealthier students who have access to more resources, but a student who doesn’t come from a wealthy family might not see the same long term net present value 40 years after graduation.