So your family has a young scholar who will head to college.
Whether that's next year or further in the future, odds are he'll
weigh costs for each school he considers attending.
You can help him with this calculation by pointing out the
importance of measuring not just each school's list price, but
the return on investment for each of his prospect colleges.
That's the typical earnings over a number of years divided by
the cost of getting an undergraduate degree from each school.
And there can be a big difference between a college's return
on investment (ROI) in sheer dollars and its rate of ROI.
For instance, look at net ROI over the first 30 years after
The list of schools whose undergraduates rack up the most net
pay -- pay beyond a high-school graduate -- minus the cost of
attending school in those three decades is led by Harvey Mudd
College, Caltech, Polytechnic Institute of New York University
and MIT, in PayScale.com's annual ranking.
MIT grads average a cumulative net ROI of $1.6 million. Harvey
Mudd's average $2.1 million.
But when you convert that into an annual rate of return, all
four fall from the top tier. Harvey Mudd's 8.3% is only 38th best
, which is still good.
Tops is City University of New York Bernard Baruch College's
10.6%, for which net ROI is $924,100.
Financial Aid Factor
It is also essential to factor in financial aid. PayScale.com
counts grants, but leaves loans out. "Loans can be complicated,
and many must be paid back with interest," said payscale.com lead
economist Katie Bardaro. But you can easily find loan data for
many schools at nces.ed.gov/collegenavigator and add the costs to
ROI with grants factored in reflects typical out-of-pocket
costs such as room and board, not just list price. On that basis,
CUNY-Baruch still ranks No. 1 with a 15% annual ROI.
For ROI with grants, the top 11 schools are public. Williams'
11.3% annual ROI ranks 12th. The top-ranked Ivy League school,
all of which are private, is Harvard. Its 11% annual ROI ranks
22nd, tied with Caltech and MIT.
So is a public college the only way to go? "As long as you go
to a school with strong studies in an area you want to focus on,
public education makes sense because public is inherently
cheaper," Bardaro said.
PayScale dropped graduation rates from this year's
number-crunching to get rid of certain statistical biases. Ivy
League schools ranked higher than many engineering schools in
last year's ROI-rate-with-grants list, due to higher graduation
Your major goes a long way in determining your income
Look again at the schools whose graduates earn the most in the
decades after receiving their sheepskins. All of the top four --
Harvey Mudd, Caltech, NYU-Poly and MIT -- are top-heavy with
"Engineering majors and STEM studies are heavily demanded in
the workforce," Bardaro said, referring to science, technology,
engineering and math academics. "It tends to be easier for
graduates in those fields to get jobs. And because demand for
their skills outstrips the supply of graduates, pay is
Harvey Mudd grads rank first among engineering majors in
30-year net ROI in dollars, at $2.4 million. McNeese State's
11.7% is the No. 1 rate of ROI for that major.