Is a college degree worth it?

Will That College Degree Pay Off?

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A new report measures the “return on investment” offered by various higher education programs.

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.

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,” Mr. 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, Fla., 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 five to 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.

Previous reports from Third Way examined the financial benefit of attending different educational institutions, while the latest report attempts to examine the economic return of specific programs or majors across colleges. (The new report doesn’t rank specific programs or majors by institution. That comparison may be the subject of a future report, Mr. Itzkowitz said.)

The cost of college is on the minds of students and families, particularly after a year when many students attended class remotely because of the pandemic. Four in 10 high school students say cost is the “most important” factor in choosing where and how to pursue their college education, according to a survey released this week by Fidelity Investments.

While more than half of students said “getting a job in a field I’m passionate about” was their top goal in pursuing a college education, about half said they sought “a job that pays well enough to support me and my long-term goals.” The survey of 4,004 high school students, recent college graduates and their parents was conducted online in May and June.

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.

How should students and families consider information on a program’s “return on investment”?

College consultants caution against choosing a course of study solely because of its potential salary. It’s often difficult for high school juniors, for example, to know what areas or careers will interest them six years later (or longer, if they attend graduate school), said Jeff Levy, an independent educational consultant in Santa Monica, Calif.

And exposure to new ideas and topics in college may spur interest in career paths that they don’t yet know about, he said. “I would advise families to ignore the data,” Mr. Levy said. “It’s noise.”

He did suggest that students who are interested in a degree because it currently appears lucrative — say, nursing — seek volunteer experience in the field. That will help determine if they really want to pursue the degree and will help them when applying, because such programs are often highly competitive.

Carrie Warick, director of policy and advocacy at the National College Attainment Network, a nonprofit group working on behalf of low-income and minority students, said pursuing a degree that a student didn’t have an affinity for, simply because it paid well, was probably unwise.

“You don’t want students to make this decision based on finances alone,” she said.

But such information can be useful, Ms. Warick said, when it comes time to compare financial aid packages. If a student is interested in a field that tends to have lower earnings, keeping borrowing costs down is important — so the amount of grant and scholarship aid a college offers should be weighed carefully when comparing offers from different schools.

(Students should also bear in mind, she said, that federal student loans come with repayment plans that can lower monthly payments and even forgive college debt if students go into lower-paying fields.)

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