Amidst a sluggish economy and steadily rising tuition, Return on Investment (ROI) has become an increasingly popular tool for analyzing the effectiveness of schools and programs of study.
Forbes magazine, using data collected by Payscale, recently released a list of 25 Colleges with the best ROI. Topping their list is Harvey Mudd College, a small California school with a focus on science and engineering. Payscale reports that Harvey Mudd College boasts a 30-year ROI of $2.3 million. Perhaps unsurprisingly, this list is dominated by schools with a strong focus on science, engineering, and other technical degrees; the list includes the California Institute of Technology, Polytechnic Institute of NYU, Massachusetts Institute of Technology, and Stevens Institute of Technology. On the flip side, Salary.com released a report of the 8 degrees with the worst ROI. The list includes sociology, fine arts, education, religious studies, hospitality, nutrition, psychology, and communications.
Ostensibly, these types of reports are intended to be sources of information for parents of prospective college students and the students themselves. However, it is difficult to trust these types of reports. In order to calculate a long-term ROI, researchers need to delve into the past for data. It is near impossible to build an accurate ROI estimate to reflect the ever-changing job market, especially when taking into consideration the proliferation of new technologies and the careers that support them.
As an example, historically, a law degree was thought to be a solid option for securing a steady job with high pay. This perception has been shattered in recent years. In 2008, the economic collapse prompted many firms to downsize their staff and to pull back on recruiting efforts. Unfortunately, law school attendance was at a historic high in 2006-07. Those students didn’t feel the sting of the sour economy until after their graduation in 2009-2010. The resulting glut of unemployed and indebted lawyers has lead to widespread reports of dismal job prospects and ballooning debt for law students, turning many would-be lawyers to other paths. As a result, the 2013 academic year may usher in the smallest law applicant pool since 1983.
Some pundits claim that the problem with law school – too many graduates, not enough jobs – is not unique. They are of the opinion that there is a widespread issue of supply and demand in higher education, that there are simply too many degrees being awarded. Financial columnist Robert J. Samuelson says, “The college-for-all crusade has outlived its usefulness. Time to ditch it. Like the crusade to make all Americans homeowners, it’s now doing more harm than good.”
While some politicians and pundits argue against widely accessible higher education, a 2011 study by the Pew Research Center showed that college graduates are still out-earning their less educated peers, even though most Americans reported that they feel that their college degree was not a “good value” and too expensive for most. The study found that college graduates earn an estimated $20,000 more per year than they would without a degree.
And while ROI can be an indicator of the financial implications on an individual, this doesn’t take into account the ‘big picture.’ In the end, passion drives progress, and a successful education system is not measured with the Return on Investment of individuals. It is reflected in a balanced society with citizens contributing to the economy by utilizing their own unique talents, regardless of profitability.