Why College ROI Investment Studies Are Worthless

April 2, 2014 § Leave a comment

Payscale recently published a report of the return on investment for just about every American college and university. There’s no doubt that this was an interesting study that may prove useful to many prospective students. Had this sort of information been around when I was searching for colleges it certainly would have affected my decision.

And while the report is interesting to read a mildly informative for prospective college students it’s useless without the right perspective. The first thing to notice is that almost everyone of the top schools on the list has a high percentage of STEM students. Take a look at the top 25 and tally the number of tech schools.

This makes an important point: what you major in is much more important than where you go to school. Take my alma mater as an example. Per the report, Akron grads can expect a 20 year net ROI of $255,300 and an annual ROI of 6.5%. Compare that to engineering grads at Akron. Akron engineering grads can expect a 20 year ROI of $528,300 and an annual ROI of 9.6%. To put that into words, the average Akron engineering grad makes twice as much as the average Akron graduate. I can guarantee you would find similar trends at universities across the country when you compare historically high earning majors versus the student body at large. Perhaps the gap wouldn’t be as large (Akron is a weird situation as tends to accept everyone but manages to maintain a strong engineering college) but there’s no question this is a widespread phenomena.

This is really just a long winded way of saying that what you go to school for is far and away a better indication of potential ROI than where you go to school. This is backed up by Payscale’s data as well as common sense.

tl;dr – Don’t go to art school.

 

Advertisements

Tagged: , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

What’s this?

You are currently reading Why College ROI Investment Studies Are Worthless at The Liberty Minded Individual.

meta

%d bloggers like this: