What’s the Value of a College Degree?

When my parents bought their first house in the early 1960s, they focused on buying a place to live in and raise their children. By the time I purchased my first house early last decade, buying a house was as much about the “investment” as it was about buying something in order to put a roof over your head. Flipping homes turned into something people did for a living. "Return on investment" became as important a metric as the number of bedrooms and bathrooms in the house.

Return on investment has now become an important metric for another big purchase in life: the college degree. For generations we’ve been told that going to college was worth it both from an economic standpoint (higher earnings) and for improved quality of life (better health and civic engagement). College enrollment surged by one-third last decade. Going to any college, at any cost was the ticket to a better life.

Now as incomes lag and college prices continue to rise--average tuition eats up 40 percent of median income these days--the conversation about going to college has evolved into figuring out the return on investment of going to a specific school to major in a particular degree program.

Better data tools now allow prospective students and parents to measure colleges based on the salaries of their graduates. This is just one measurement of value, and shouldn't solely be used to judge a school. But as expected, college leaders are vocal in their opposition to such measurements. Some want to return to the old days where they told families that the degree was worth it based solely on trust.

For me, it’s a win for prospective students and their families to have salary information available to them during the college search, along with the answers to other key questions: How long will it take me to graduate? How much student loan debt will I need to take on? When viewed together, such information helps consumers measure the return on investment. Here’s why that's a good thing for students and colleges:

Forces colleges to better measure "the experience."

College leaders say the campus experience is about so much more than the degree and what you earn after graduation. But most colleges can’t quantify that “value added,” and even if they can through measures such as the National Survey of Student Engagement or the Collegiate Learning Assessment, schools don’t want to release the results. If schools dislike earnings information being made available, it might force colleges to come up with other ways to measure value.

Helps differentiate colleges.

If college A has a much higher graduation rate than College B and graduates of College A have higher earnings than that of College B, the ROI helps students and parents better separate schools that might look similar on many other factors, such as majors, size, and location.

Puts potential loan debt in context.

The idea of loan payments are unfamiliar to potential college students if they never had debt in their lives. What’s more, student loans are often expressed in total debt rather than monthly payments, the way most of us think about paying back debt. If schools are requiring you take on $30,000 in debt to go there, then they should be able to tell you what graduates from that college in your field are earning in order to pay off that debt.

Jeffrey Selingo is editor at large at The Chronicle of Higher Education and author of the forthcoming book, College (Un)Bound: The Future of Higher Education and What It Means for Students, scheduled for release on May 7.

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