Recently, I read that former U.S. Secretary of Education, William Bennett, said only 150 of the 3500 colleges in the United States are worth the investment. His numbers are based on the PayScale.com college education ROI (return on investment) rankings. Immediately upon seeing this, I took offense and decided that I needed to dig deeper to find out how he could even make that claim.
The 150 colleges Bennett is referring to would be the top 150 on the PayScale.com list, ranked by their 30-year net ROI. To get to this figure, PayScale first took the average expected 30-year earnings for a graduate with a bachelor’s degree only. (Anyone who earned a higher degree was excluded. This also meant that any jobs requiring an advanced degree, like law or medical doctors were excluded. Also anyone who was self-employed was excluded.) Second, they subtracted the cost to attend the school through graduation – tuition, fees, room and board, books and supplies. The 4, 5 and 6-year graduation rates at each school were taken into account and prices were calculated accordingly. Finally, the average expected 30-year earnings for high school graduates were subtracted. This provided the 30-year net ROI for the school. The top 150 schools’ 30-year ROIs range from $2,113,000 for #1 down to $852,200 for #150.
Only 1511 schools are ranked on the PayScale list and the bottom 30 all have negative 30-year ROIs, meaning that conceptually if you paid for a degree there, you came out earning less that a high school graduate over the next 30 years.
What bugs me most is – HOW CAN THEY KNOW ANY OF THIS? Sure, PayScale posted a page describing the methodology employed in the study, but it doesn’t really tell that much. Some of it seems to make sense, but a lot of the questions I have are not really answered, including:
- What career fields are they basing these post-graduate salaries on? If you click on the link to each school on the list, you get to a page for that school. It lists a handful of median salaries by job. Are these the only jobs that were considered for the study? They never really say.
- What cities are they basing the post-graduate salaries on? Again, on the school’s page you see a list of popular cities for graduates. Did they take an average for the cities listed? They don’t talk about this either.
- The methodology page says all data used for the survey came from employees who completed PayScale’s employee survey. How many people completed the survey? They don’t tell you. Did they do anything to validate the survey responses? They don’t tell you that either. How did the number of respondents compare among schools? No answers on this either.
- Why was room and board counted in the total cost for a school when there was no comparable cost considered for high school graduates? Both groups had living expenses. How is it fair to assume room and board into the 4, 5, or 6 years a student was in college, but no living expenses if someone decided not to go to college?
- What happened to the other 1989 schools in the country? Are none of those 4-year colleges? PayScale doesn’t talk about that either.
When I look at the lack of information regarding the validity of the data, this whole study seems like more of a publicity stunt for PayScale.com than a study on which to base opinions of which colleges are “worth it.” Yet the former U.S. Secretary of Education thinks it is evidence that only 150 colleges in the country are “worth the investment.” What message does this send to high school students entering the college search process? “Hey kids, guess what? Less than 5% of our colleges and universities are worth spending your money or your parents’ money on! And the majority of those 150 schools are the toughest to get into in the country and have the most applicants. Now good luck with your applications!”
Wow, what does that really say about the higher education system in our country?