Calculating the Return on Your College Investment

College costs continue to rise above the rate of inflation, and many people are beginning to wonder at what point they really get a return on their investment. In the article “Money Matters: Can You Truly Calculate the Return on the College Investment?” Jeff Selingo, editor at large of The Chronicle of Higher Education, takes a closer look (Selingo, Jeff. LinkedIn.com. 11/30/12).

Many economic tools assess the value of higher education, and most make it clear that, in general, a college education does pay off. Varied sources estimate that the difference in lifetime earnings for college versus high school graduates can range from $250,000 to $1 million.

Some states are attempting to go a step further by calculating the return on investment of specific majors and specific colleges. Currently, Arkansas, Tennessee, and Virginia are providing data on average wages earned for graduates within particular majors at their state colleges and universities.

Using this Data

This state-specific data could be a useful tool. For example, a student who’s interested in studying business and considering two colleges in Virginia can start by comparing the difference in tuition at both colleges. Next, he/she could compare each college’s student graduate database for average wages earned by business majors. The results could show one college’s degree leading to a bigger financial payoff after graduation, and that could influence the student’s decision on which college to attend.

Considering Shifts in the Economy

When reviewing results, keep the data in perspective. Remember, the economic outlook is always changing. This could mean that the ten highest paying majors this year may not be the same in future years. Plus, some programs offered today weren’t around ten years ago, thereby yielding little or no data for comparing these programs.

Remember the Limitations of the Data

At this point, only Colorado, Nevada, and Texas are expected to join Arkansas, Tennessee, and Virginia in using student graduate databases. Also, students need to consider that these databases may not have information about graduates who are self-employed or who left the state.

However, even with limited data, this trend is pointing to one more college search tool that may be helpful for students in the future.