Money is turning 50! To celebrate, we’ve combed through decades of our print magazines to uncover hidden gems, fascinating stories and vintage personal finance tips that have (surprisingly) withstood the test of time. Throughout 2022, we’ll be sharing our favorite finds in Money Classic, a special limited-edition newsletter that goes out twice a month.
This excerpt, featured in the 10th issue of Money Classic, comes from a story in our August 2014 edition.
One recent morning, as they were bracing themselves to write the first check for the more than $50,000 tab for their son’s freshman year at the University of Chicago, Lisa Thorp, an attorney in St. Louis, and her husband, Andrew, who runs a nonprofit, happened to hear a radio story about recent college grads who couldn’t find jobs. Thorp remembers being appalled: “We looked at each other and said, ‘How do we make sure that is not our kid?’”
That’s the top-of-mind question for millions of parents of college-bound children these days. Even after a standard financial aid package is factored in, the cost of a degree from a public school for in-state students starting this year will run between $70,000 and $130,000, according to a MONEY analysis. (That estimate also takes into account the average time to graduation, since many students need longer than four years to complete their courses.) At private colleges the bills will typically run between $120,000 and $250,000. Meanwhile, the New York Federal Reserve recently estimated that about a third of college grads may be un- or under-employed.
Little wonder, then, that parents across the country are stressed about how to find affordable colleges that really help launch students into well-paid careers. In the past year surveys have found that more than 70% of parents report being worried about funding college. More than a quarter say college-financing worries keep them awake at night. And polls also show that the majority of families now believe that at today’s high prices, the most important reason for a college education isn’t to be able to think deep thoughts, but to land a good job that leads to financial security.
The concerns have even reached the White House. President Obama, whose older daughter is a rising high school junior, has ordered a new federal rating of colleges by 2015 to “create better incentives for colleges to do more with less, and deliver better value for students and their families.” Sounds great. The project, however, has been plagued by delays and faces stiff opposition from colleges over plans to cut funding for schools that get bad grades. How much insight the ratings will provide, and how soon, are open questions.
To offer families more immediate guidance and to help inform and advance the national conversation on this subject, we have developed a new and unique way of ranking colleges that identifies schools that deliver great value. Nine months in the making, MONEY’s Best Colleges whittled the country’s 1,500 four-year schools down to 665, after screening out those with below-average graduation rates and financial problems. Then we assessed the colleges on 17 measures in three areas: educational quality, affordability, and career earnings.
The factors are based on the most reliable and objective data available, using the most recent research about what really produces the best results in higher education. Among the indicators: a true cost-of-a-degree calculation that takes into account all school aid (including merit grants and athletic scholarships), as well as the time students at each college typically take to earn their diplomas, plus “value added” measures that assess how much better graduates of each institution perform in areas such as career earnings than would be expected given the economic and academic profile of the student body.
For assistance in developing the rankings, MONEY partnered with Mark Schneider, former commissioner of the Department of Education’s National Center for Education Statistics, who was named one of the country’s 10 most important education influencers by the Chronicle of Higher Education last year. Schneider is now a vice president at the American Institutes for Research and president of College Measures, which collects and analyzes data to drive improvements in higher ed. Schneider and the team at College Measures worked with MONEY to choose and develop the ranking factors. Major contributions also came from Payscale.com, which provided the earnings data and helped develop a measure to see if alumni of a particular college earn more or less than the average grad, no matter what type of majors (say, engineering vs. English) predominate at the school.
The result, as you’ll see, is a mix of well-known institutions (MIT, No. 3; University of Virginia, No. 16) and less familiar names (Bentley, No. 28; University of Washington at Bothell, No. 37) that share a common bond: They offer a top-notch education at an affordable price (or at least more affordable than their peers) that usually leads to a well-paid career.
Consider our overall winner, Babson College, in suburban Boston. Quality of education? Check. Babson specializes in business and entrepreneurship but also gives students a well-rounded education in liberal arts and sciences and lots of opportunity for hands-on project-based learning (see above). Big financial payoff? Check again. Babson grads go on to earn hefty salaries, and the list of ventures they’ve started is impressive, including Home Depot and Zumba Fitness. Reasonable people may disagree with the idea of ranking colleges or the specific methodology we’ve used. Certainly, it’s tough to boil down something as complicated as a college education into a series of data points, and the differences among schools ranked even within 20 places of one another can be slight, Schneider points out. Some of the data, while the best available, are imprecise.
Our measure of the net price of a degree, for instance, is based on averages; your costs will be higher if your child gets little or no aid and could be substantially lower if your offspring graduates sooner than the school’s typical student or gets a more generous financial package, either from the school or from federal, state, or private scholarships. Meanwhile, the earnings data from Payscale are self-reported by alums who chose to fill out a survey, not the average salary of a school’s entire student body. And some people may object to placing so much emphasis on grads’ financial success.
Yet there’s growing agreement, even in the higher-education community, that “college is an investment, and you have to start treating it as one,” says Anthony Carnevale, director of the Georgetown Center on Education and the Workforce. “The purpose of higher education is to live more fully. But you can’t live fully under a bridge. You have to earn your keep.”
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