The cost of college has gone up dramatically over the last several decades. According to our research, the skyrocketing price-tag for a college education has far outpaced inflation and wage growth in the United States. So what should you look for when trying to get the best return on your investment in a college education? Read on to find out.
Return on Investment is the ratio of what you spend on something versus the value generated by that purchase over its lifetime. Return on investment is often abbreviated as ROI.
People used to think that a college degree is a worthwhile investment. But the rising cost of college has complicated the picture. Now, getting a good return on your investment depends on several factors, including:
You can get a great return on your investment by going to a prestigious college. Going to an elite school can significantly improve your job and salary potential. But you can also lower your expenses by choosing an affordable college. There are many excellent schools that charge less than $20,000 per year for tuition. Choosing an affordable school can reduce your student loan burden while still putting you in a great position to enter your profession.
Your ROI depends on your educational and professional goals. Before you can determine whether you will be getting a good return on your investment, you need to know what you are investing in. Are you investing in the credential? Are you investing in the prestige of your school? Or are you investing in the practical education that you will receive in school?
Your priorities will determine the value you get from your college degree.
If you already know that you will be shopping based on affordability, check out our look at the The Most Affordable Colleges and Universities in the US.
Otherwise, read on for tips to ensure that you are getting the best return on your investment in higher education...
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Every profession requires its own unique credentials. If you plan to become the CEO of a Fortune 500 company, a partner at a law firm, or a high-powered financial consultant, then you want to invest in a prestigious undergraduate school. Attending an elite institution puts you into contact with highly influential professors, ambitious students, and prominent employers. If your career goals include executive leadership, you may get a great return on your investment even if your degree is very expensive.
If your career is less ambitious, then earning a bachelor’s degree at an affordable school is good option. The prestige of your degree likely will not factor into your eligibility for your desired role. You would not likely see a greater return on your investment by spending more at an elite college. You can choose a more affordable institution and still achieve your career goals.
And of course, there are countless professions where you can achieve relatively high earnings without a college degree.”
There are many professions where you can achieve relatively high earnings without a college degree. For instance, you can advance in the hospitality, culinary, technology, and cosmetology industries on the strength of professional certification and vocational training. In some professions, a certification and some professional experience may be just as valuable, or more so, than a college degree.Back to Top
To decide what college should cost, think about what you intend to do with your degree. Is the expense necessary and appropriate given your career ambitions? As you ask these questions, you should be considering far more than your basic salary expectations. According to Forbes,
students should ask themselves ‘what do you like to learn about?’ and follow it up with ‘what do you enjoy about it?’ To test the answers out, they could try job shadowing, career programs offered through the high school, internships and working in that field.
Answer these questions as clearly as possible. These answers will help you select a college price point based on your career goals.
Start by determining which colleges are actually providing a measurable return on investment to the majority of their students. The Department of Education’s College Scorecard is an excellent tool for making this determination. This Scorecard provides data on every accredited college and university indicating its cost and the performance outcomes for its graduates.
This includes data on:
These statistics can give you a good sense of how effectively a given school is delivering outcomes in exchange for its cost. And the ability to search for “Salary After Completing by Field of Study” means you can get a direct sense of your salary potential with a given major at a given school.
You can also check out our ranking of colleges based on the innovative metric of Academic Stewardship. This measure tells you which schools actually reinvest student tuition in improved educational experiences and outcomes.Back to Top
Once you have estimated the cost of college, you should be aware of the likely pay for a career in this field. Your likely starting salary and long-term earning potential are a big part of college’s ROI
Forbes advises you to ask
What degrees or certifications are required for the profession you are interested in? What’s the starting and median salary? Are jobs in that field growing or shrinking?
Use the Bureau of Labor Statistics (BLS), which offers data on the median annual salary for a given career path as well as the rate of expected job growth in the field over the course of the next decade. You will also find information about degree requirements, occupational settings, and related careers through the BLS, and particularly, through its Occupational Outlook Handbook.
Salary is only one factor, but it is something you should be aware of as you calculate your college expenses. Is the cost of your college degree justified by the salary you are likely to earn upon graduation? Or will your likely earnings fall short of your college expenses? Even more pointedly, will you struggle to repay a heavy student loan burden because of the limitations in your earning potential?
For an even deeper dive, check out “How Much Should College Cost?”Back to Top
Since the majority of students leave college with student loan debt, you need to understand how debt impacts your life after college. If you accumulating debt during your college education, you will need to make sure your post-college career can pay for the debt.
Forbes says that
families [should] borrow no more than one year of a student’s anticipated income. If the starting salary is $30,000, a family should not borrow any more than that. Others suggest you can borrow up to 1.5 times your starting salary. Either way, focusing on a career the student wants, will help your family make an informed decision about how much to borrow.
To learn more about how financial aid works, take a look at our comprehensive Guide to Financial Aid in Higher Education.
Otherwise, jump to our more comprehensive Guide to Paying for College.