College ROI

Over the last decade costs associated with higher education have been under intense scrutiny by pretty much everyone. This has led some writers and commentators to look at higher education in relation to the private sector and for some, as an investment. This led to the 2014 College ROI Report for undergraduate education, a service of to Payscale.com. Below is what Payscale states about the College ROI Report:

“How do you measure the value of a college education? PayScale has the salary data to rank hundreds of U.S. colleges and universities based on total cost and alumni earnings. Find the best returns on investment by school type, location, major and more.”

Return on investment is a simple concept; how much of a return did you get versus how much invested. Great when you are talking about how much you invested in Ford or Apple but does it work with a college education? As PayScale states in their methodology; the College ROI is based on the costs associated with attending college, easy to find; and the return, or earnings is based on having surveyed 1.4 million alumni. I will not comment on surveying alumni earnings, I will assume the data is solid.

For my evaluation of the College ROI Report, I used the following criteria when I used the ROI in May of 2014:

- With financial aid (most people get some sort of help when going to college);

- On campus housing (assuming you have the typical college experience);

- All institutions (looking at all institutions);

- Deleted all Out-of-State costs (assuming you are going in-state or will get a scholarship/aid to make tuition equivalent to in-state).

Chart 1: All Schools; Cost per Year with Financial Aid.

Chart 1 contains where all 897 schools fall in relation to cost per year. This chart is pretty close to what one would expect; most schools are below $25k per year with the median $19,192 and the average $20,271.

Next, I am going to look at the College ROI Report and focus on the top-100 20 Year Net ROI and top-100 Annual ROI schools and compare the two lists. Note; 57 schools are shared from the top-100 20 Year Net ROI to the top-100 Annual ROI.

The reason I decided to look at the top 100, or top 11% of the College ROI Report is to get an idea of what prospective students and parents see when they peruse the report. Most people, when presented with data that contains over 1,000 rows and several columns will not look over every single datum; they look at the top, the bottom, what is around them locally, and what is already on their ‘radar’.

Chart 2: Cost per Year; Top-100 20 Year Net ROI and Top-100 Annual ROI

Chart 2 shows where the top-100 20 Year Net ROI and top-100 Annual ROI schools fall when looking at cost per year. The results are standard: schools with better 20 Year Net ROI are more expensive while schools with better Annual ROI are varied with most many being less expensive.

Chart 3: Size of Schools; Top-100 20 Year Net ROI and Top-100 Annual ROI

Chart 3 shows the enrollments, or size of the schools of the top-100 20 Year Net ROI and top-100 Annual ROI. Again, pretty standard. Schools with higher 20 Year Net ROI are more often than not smaller compared to schools that have better Annual ROI with the exception of the large flagship and large private institutions.

Chart 4: Graduation rates; Top-100 20 Year Net ROI and Top-100 Annual ROI

My final chart, Chart 4 shows the graduation rates for the top-100 20 Year Net ROI and top-100 Annual ROI. Expected. More Annual ROI schools have lower graduation rates while 20 Year Net ROI schools have better graduation rates.

Table 1: Private or Public; Top-100 20 Year Net ROI and Top-100 Annual ROI Ranked

Table 1 shows the top-100 20 Year Net ROI and top-100 Annual ROI and divides them in top 25, 50, and 100 to see the division between public and private institutions. By far the majority of schools on the 20 Year Net ROI are private and the majority of schools on the Annual ROI are public. I assume graduates of these private institutions get an income bump giving them a higher 20 Year Net ROI while graduates of these public institutions do not benefit from an income bump but have a higher Annual ROI because their schooling did not cost as much.

Table 2: Majority Undergraduate or Graduate? Top-100 20 Year Net ROI and Top-100 Annual ROI

Table 2 shows if the top-100 20 Year Net ROI and top-100 Annual ROI have majority undergraduate or graduates. The majority of the institutions for both lists are, by enrollment, majority undergraduate. This is good but this does not mean that all of these schools solely focus on undergraduates; Vanderbilt has more undergraduates than graduates but most of the money the school has goes to research rather than purely undergraduate education.

Table 3: Sci/Tech or Traditional/Liberal Arts? Top-100 20 Year Net ROI and Top-100 Annual ROI

Table 3 contains how many of the top-100 20 Year Net ROI and top-100 Annual ROI have a science or technology focus rather than being a traditional or liberal arts college. Science and technology jobs generally pay more so it makes sense that schools like Harvey Mudd College and Rose-Hulman are on the top-100 20 Year Net ROI while a few of them would not be on the top-100 Annual because they are more expensive to attend.

Discussion:

Payscale’s College ROI Report is a nice tool; it allows prospective students and parents to look at schools around the country and compare them to each other when it comes to simple financial means.

With that said the schools that occupy the ‘top’ spots are all the usual suspects; Ivy League, Ivy League equivalents, baby Ivies, Sci/Tech schools and flagship public schools. The information that the College ROI Report tells us is not that unique; Harvey Mudd College, Ivy League schools, Cal Tech, Williams College, and John Hopkins deliver excellent 20 Year Net ROI and the University of Virginia, Ivy League Schools, Cal Tech, Williams, and John Hopkins deliver excellent Annual ROI (57 schools are the same from 20 Year Net ROI to Annual ROI).

How you use the College ROI Report depends on what schools you are looking at. If you are looking at the Ivy League, Ivy League equivalents, or baby Ivies then this report will bolster your already high opinion of these schools. If you are look at the flagship publics then this report will help you see subtle difference between them. If you are looking at this report for provincial schools or smaller not as ‘well known’ private institutions then this report will confuse you and/or discourage you from looking at some schools.

When you go to the bottom of the 20 Year Net ROI and see Seton Hall, University of North Carolina at Pembroke, Morehead State University, and Savannah State University are you not going to look at these schools because they are at the bottom of this list? They could be at the bottom of this list because Payscale did not survey enough of their graduates to get a true picture of alumni earnings. What if the school you want to attend is not on this list?

Conclusion:

Like all tools out there Payscale’s College ROI Report is just one of many. Use it to get a snapshot of potential ROI of a college degree from specific college but understand that like many predictive tools, it is helpful only to a point.

Addendum:

The following are all the tables that I used to create the charts used in the article.

Table 4: All Schools with Cost per Year Ranges

Table 5: Cost Per Year for the Top-100 Schools 20 Year Net ROI and Top-100 Schools Annual ROI

Table 6: Size of Top-100 20 Year Net ROI and Top-100 Annual ROI schools

Song/Week: How to Make a Hit Pop Song, Pt.1 by The Brett Domino Trio

Best how-to video ever! I love it from the use of bassoon, playing Jason Derulo riffs on the kazoo, writing the perfect song lyrics, and magic production dust. 

You have to watch it to experience the brilliance.

I *heart* Taylor!

I have to say, I *heart* Taylor Swift! Throughout the years I have liked her music; it is quality music backed by a good voice, and a delightful personality. It seems like with Taylor what you see is what you get. I was especially impressed by her Wall Street Journal article about her optimistic view of music and the music industry.

First of all Taylor does not have to write anything if she doesn't want to. Her opinion piece is very much a big picture article about her, her opinion of music, and how she views the music industry. It is from the perspective of someone who has been very successful making money with music and because of that success has the time to think about music and the music industry without economic restrictions. These are all good things!

Below are my my favorite quotes from Taylor’s article:

“Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.”

I agree! Musicians spend years and sometimes their entire lives studying, practicing, and writing music; music is valuable; music is art. But, the funny thing about music is that it exists but does not exist. If you want to buy a Coach purse you can buy an original for $1000 or buy a knockoff or a ‘lesser brand’ for $60. In music, especially because of the internet there is no luxury pricing except for live performances. You can sell a limited edition vinyl or CDs for a premium but that is risky; vinyl is a niche market and how much longer will CDs be around?

“The way I see it, fans view music the way they view their relationships. Some music is just for fun, a passing fling…Some songs and albums represent seasons of our lives, like relationships that we hold dear in our memories but had their time and place in the past.”

I agree! I have many different relationships with many different artists. My favorite artist today is Daniela Andrade; a very talented singer/songwriter who I greatly enjoy; her originals and covers make me think and tap my fingers. I am also Classically trained so one of my favorite composers is Anton Bruckner and one of my favorite works of his is his Eighth Symphony. I found an incredible YouTube video of Karajan conducting the Wiener Philharmoniker that is for me, spiritual.

“Another theme I see fading into the gray is genre distinction. These days, nothing great you hear on the radio seems to come from just one musical influence. The wild, unpredictable fun in making music today is that anything goes. Pop sounds like hip hop; country sounds like rock; rock sounds like soul; and folk sounds like country—and to me, that's incredible progress.”

I agree! I know few people today that are only influenced by one genre; most artists were raised listening to every type of music. Because hip hop and rap have been in the mainstream for over one generation most rock, country, and pop musicians have a list of favorite hip hop and rap artists that influence their output. Rarely today will someone just list off their influences to The Beatles, The Stones, Ray Charles, Led Zeppelin, James Brown, and the Velvet Underground but will list ten different artists from different decades and different genres. (Also, why would you want to just limit yourself to the 60s and 70s...from 1965 to 1975 does not hold the key to music perfection.)

“In recent years, you've probably read the articles about major recording artists who have decided to practically give their music away, for this promotion or that exclusive deal. My hope for the future, not just in the music industry, but in every young girl I meet…is that they all realize their worth and ask for it.”

This is the main point of Taylor’s article; don’t let the music industry control you and for Taylor, don’t let the music industry undervalue young female artists.

To finish my article I will list a few of my thoughts in relation to this article and Taylor:

- Music is art; music is valuable.

- Money is power; money is freedom.

- Artist freedom allows you to express yourself; self-expression allows for art

- Mainstream music can limit self-expression; mainstream music can make lots of money.

- Every artist, especially young female artists need to value themselves; don’t undervalue yourself and your art.

- Music is valuable; music is art.