8 ms·

ROI on a college degree depends what you study, not where

99 points by Osiris30 11y ago

HarryHirsch 11y ago
That is very scary if it's true. If a degree in the experimental sciences from a top-10 institution does not pay better than a degree from Tumbleweed State then the employment market for scientists is completely broken.
- tyingq 11y ago
  It may pay better, but they are calculating the overall return, meaning the cost of that top-10 degree is a factor as well.
  - cmdrfred 11y ago
    I agree this might indicate that top tier institutions simply extracted all of the value difference that separated them from the others.
    - humanrebar 11y ago
      Well, maybe they extracted all the cash difference. Some people use degrees as status symbols. What's the old joke? How do you know if somebody went to Harvard?
- nerga 11y ago
  Why is this scary? Experimental sciences typically don't pay well, regardless of where you go. Increasingly you need a masters to even get a lab bench job. PHDs very rarely pay well either unless you are in a few specific fields. People from the math and sciences who want to make money go into software or finance, its been this way for well over10 years.
- khaolak 11y ago
  This is very encouraging if true. The difference between a 17 year old applying to "a top-10 institution" and a 17 year old applying to "Tumbleweed State" is almost exclusively what their parents income is (both directly for ability to pay, and indirectly through living in a desirable school district throughout their K-12 education). I did my undergrad at a "tumbleweed state" school and grad school at a top-10. The difference in the average student at each school was privilege, not ability. Turns out, best and brightest from Idaho to Ohio and Minnesota to Mississippi are just as smart and just as hardworking as the best and brightest from California and Massachusetts.
- bglazer 11y ago
  Is it broken or working like it's supposed to? I've never understood the desire of scientists to rank and self-segregate themselves into "elite" and "Tumbleweed State". First, it's not in scientist's self interest to give up chances at career progression to an elite cabal of admissions panels. Secondly, it actively restricts the flow of ideas to artificially limit the pool of respected scientists to only those people at a few institutions, even while the total number of scientists continues to grow. Finally, science is science, whether you're in Wichita Kansas or Cambridge Massachusetts. Why is it bad that scientists are judged on their objective output rather than the place they went to school?
- kamaal 11y ago
  >>If a degree in the experimental sciences from a top-10 institution does not pay better than a degree from Tumbleweed State then the employment market for scientists is completely broken. It is the the other way. Why do you think a guy who can produce a good algorithm from Tumbleweed State be paid less than a person who studied hunting habits of native americans in Stanford? You are not going to college to buy aristocracy, that you will get lifelong rights to a nice pay regardless of your skills.
jerf 11y ago
In addition to the obvious 0 line, it's worth taking the article's observation that S&P has returned 7.8% and mentally drawing a line there too. Also, for anyone in the position of deciding which to do, I'd add the observation that it is way easier to go to college and get a formal education in science, math, or engineering, and pursue an ongoing adhoc self-directed education in the arts and humanities in your remaining decades of life, than the other way around. Locally to HN's interests, this calculation is a bit distorted by the way that programming can actually be learned via adhoc self-directed education, but as science, math, and engineering goes, I'd suggest it's on the short list of exceptions, not the rule.
- lilbobbytables 11y ago
  Yeah, the comparison with S&P was for fun, I hope. Because in one case you're sacrificing 4 years of opportunity cost, then working full-time to make the ROI numbers that the author use for comparison. Whereas, my understanding of the S&P is that you don't have to work 40 hours per week for it to give you returns ;). So, if you had your college money as cash you could put all that in the S&P, then work full time without a degree to then, most likely, have an even higher ROI. Of course, most don't have the significant cash for college lying around.
- kriro 11y ago
  The 7.8% line is to be taken with a grain of salt though. If you decide to invest all the theoretical college money and work without said education you'll (hopefully) still earn >0$. It would have also helped if the article said what degree/how long it takes (BA, MA) and what the investment cost for the degree actually is (provide median or something). A typical BA takes 2 years and is in the ballpark of 50k$ on the lowish end (I heard that as a low end average for in-state public schools). Had I invested that fictional amount at 7.8% since universities are "free" here I'd have about 225k...yay
  - morgante 11y ago
    > A typical BA takes 2 years Do you mean 4 years? It's extremely rare for someone to get their Bachelor's in fewer than 4 years.
incongruity 11y ago
Do those ROI calculations include the cost of borrowing? I'd expect they don't - and if not, it means that most degrees are no longer worth it if you have to borrow a significant portion of the money. With federal loans ranging between 6-8.5% (last I looked) it means that for the first 10-20 years, the government is the one capturing the gains from many people's college educations. There may well still be a positive ROI for some degrees but the loan picture means it comes on a much longer timeline, doesn't it?
- roymurdock 11y ago
  They do. Here's the website that compiles the data: http://www.payscale.com/college-roi http://www.payscale.com/college-roi Average loan amount is factored into the ROI calculation.
  - incongruity 11y ago
    Awesome. Thanks for the pointer. The concern is definitely still there for folks who take above average loan amounts.
known 11y ago
For MBA it depends on where you study
- bryanlarsen 11y ago
  MBA's also have a much wider variance on costs, so return per dollar spent may also be similar between good/expensive and bad/cheap schools.
- PakG1 11y ago
  They are counting return on investment though. Great MBA is super expensive.
emodendroket 11y ago
I find it disheartening that the only way it seems we can think about college anymore is a sort of vocational school where we train for careers.
- Vraxx 11y ago
  Unless you're lucky enough to already have enough resources to spend both time and money attending a school without any expectation of return, it seems to be the natural conclusion to me. Without the incentive of higher paying jobs backing colleges, something tells me they would be quite a bit less successful in recruiting students.
- 11thEarlOfMar 11y ago
  That is a side effect of the cost. In-state public university costs are up 296% over the last 20 years[1]. It is no surprise that a family spending that much money, per child, will consider the return on that spending. It is far more than a typical car and more in the realm of buying a home. [1] http://www.usnews.com/education/best-colleges/paying-for-college/articles/2015/07/29/chart-see-20-years-of-tuition-growth-at-national-universities http://www.usnews.com/education/best-colleges/paying-for-col...
  - emodendroket 11y ago
    Well, is it, or is the rising cost a result of us thinking of it as some "investment" in a future career? I think it's a sort of vicious cycle.
    - mtberatwork 11y ago
      The rising cost is a direct result of cutbacks in public funding. http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high...
      - emodendroket 11y ago
        Yes, no kidding. But why are those happening?
tehabe 11y ago
On one hand it is nice to see that the school doesn't matter as much as people think but on the other hand it is sad that people see their studies only through the eyes of ROI. As if education has no value of its own. I'm probably just naive and an idealist.
- mjlangiii 11y ago
  Meh, it isn't black and white where you see one or the other but not both. Ignoring the ROI factor and being ignorant of it is a risky business, reckless IMO and coming from someone who intrinsically loves to learn.
- rayiner 11y ago
  Education might have some value to some people, in the same way that snowboarding or mountainbiking may have some value to some people. But the reason we make everybody do it is for the ROI.
- imgabe 11y ago
  I could take out a $150,000 loan to buy a splendid piece of art. It might uplift me spiritually and enlighten me in untold ways. But if the loan payments leave me unable to pay for rent or food, it's kind of moot. As long as college is financed with debt, there needs to be a return that will outpace the debt interest or we end up with a generation of debtors who have no freedom to make use of the enlightenment they gained from their liberal arts degrees because they're forced to scramble and kowtow to the people who majored in business if they want to eat.
- cableshaft 11y ago
  Naivete and idealism is how we have a whole generation saddled with student loans they can barely afford to pay, forcing them to stay in jobs they'd rather not have, delay buying a home or getting married for decades. I know some people on the other end of six figure student loans (I'm not, thankfully, but I'm still going to be paying mine off for four or five years still). These people are not doing what they'd like to do, what they studied to do (because they can't find a job in it) and are praying for a windfall. In some cases, hoping their family members die and leave an inheritance just so they can pay off a chunk of the loans. This is going to have profound effects on the economy and society for a long time. So yes, idealists should know what they're volunteering themselves for and how one simple decisions can make life really difficult for them for the next 20-30 years. This isn't the era where you could pay for a year of college with a part-time summer job anymore, like the baby boomers had.
ebbv 11y ago
This "article" is barely two paragraphs, and doesn't have any new information. There's a reason Art History majors working as baristas is a well worn cliche.
codingdave 11y ago
This article is about statistics, not individuals. While it certainly shows trends, for any individual person, their ROI depends on what they do with their own lives. (And ROI might not even be their #1 goal.) As for me, I got a degree in Fine Arts from a small liberal arts school, then become a coder. I have almost zero regret about that choice, 20+ years down the line. Actually, if I had to do it again, I am more likely to skip the coder part, not the college part. (20+ years behind a desk... I could probably find a better path.)
fredley 11y ago
It also depends on how much your parents earn: https://www.cam.ac.uk/research/news/graduate-earnings-what-you-study-and-where-matters-but-so-does-parents-income https://www.cam.ac.uk/research/news/graduate-earnings-what-y...
- utexaspunk 11y ago
  While cronyism and nepotism are probably significant factors, beyond those I don't know if what your parents earn matters as much as it may be an indicator of your manners, knowledge of social customs, proper grammar, etc.. Perhaps those raised in wealthy homes tend to know better how to behave among wealthy people than those who come from poor backgrounds. All else being equal, those who comport themselves better are more likely to get ahead.
  - fredley 11y ago
    > Comport themselves better I have to disagree, manners are not a linear scale from bad to good, certain behaviours will ingratiate you to certain groups while ostracising you from others. If you (as some people do) consciously decide to mimic the behaviours of richer groups then yes, this may help your ROI. I'm in Britain, and the class system here is probably a lot more linear than most. One of the issues with just behaving better is that there's a huge amount of snobbishness (from everyone, at every level), and many of the defining behaviours of the upper classes require having a great deal of money to even participate.
  - frobozz 11y ago
    In the broad middle, I don't think there is much of a manners/customs/grammar distinction. Any well-brought up middle class child should be perfectly capable of interacting with all but the wealthiest nobility. Of course, there are a few upper-middle class snobs who will think less of you for your lack of oenological prowess or your off the peg suit, but such people are not a common direct influence on that many people. There are other factors: * One thing is simply understanding the opportunities available to you. The idea that "People like me don't (go to university | start companies | go for promotion beyond a certain level)" is quite harmful. * It is not uncommon that people go into the same field as one of their parents, simply because of how big an influence they are on your life as a child. If one is a doctor, and the other a barrister, then if you follow one of them, you'll make more money than if they are both in minimum-wage jobs. * If you do follow your parents in their careers, you will have had early exposure to some of the concepts. You may therefore perform better at university intake interviews, and the relevant prerequisites. They will also know about how to progress through the career in the best way. * Regardless of nepotism, your parents' friends are another source of examples to follow in a similar way, and may be able to dispense similar advice. * Even if you don't follow your parents in their careers. Having a parent who graduated from a competitive course at a prestigious university (which might be indicated in their lifetime earnings) means that you still have an example to follow, and their experience to draw on. One of the reasons for poor state school intake at Oxford is that most youths don't actually know how to apply. Also, if you know what to expect from such a place, you can make more of it, particularly in terms of the extra curricular offering - e.g. networking, bursaries and careers service. * A youth with wealthy parents may be able take better advantage of low-paid and unpaid internships. If your parents can't support you through university and early career, then you may have to make more short term decisions - e.g. taking a low-paid summer job at a bar, instead of a lower or even unpaid job at a law firm, or working evenings and weekends instead of studying. * At the extreme end, a child in poverty is likely to have fewer books and poorer nutrition when those things matter most.
IkmoIkmo 11y ago
Financial ROI of a degree primarily depends on whether the degree is in a high or low paying field... In other news, the ocean is full of water. No story there. But then they draw almost flat lines, indicating the selectivity of the university (as a proxy for all kinds of things, prestige, quality of education/network etc) plays no role. But I find it misleading. It makes sense I think to consider that they're not looking at earning potential, but at ROI. That means a selective school that costs $100k a year, and nets you a $100k annual salary, yields the same ROI as going to a 10k a year state school that gets you a 10k salary. You'd get a flat line on selectivity/ROI, as if it doesn't matter where you study. You can be the judge of whether you think those are equal or not, and whether you'd be indifferent because they have the same ROI, particularly when you can afford the investment or get the investment subsidised.
an4rchy 11y ago
This would be very interesting to see when compared with schools outside of the US where higher education is free or very cheap. I'm curious about how many people go to the standard (STEM) fields of education because of the cost, and ROI vs they are interested in them. If people had 0 debt maybe more people might choose alternative fields of education/careers that can impact the world in other ways.
optforfon 11y ago
So does this mean that the mediocre and expensive private colleges end up paying off a lot more than state schools? (the "I" being higher and therefor the "R" being higher too) That's deeply unsettling...
- mywittyname 11y ago
  This was the takeaway that I had too. I'm surprised to see your comment is not at the top of this thread. If a more exclusive college (x-axis) is proportionally more expensive, then this graph suggests that everyone, regardless of field, is better off going to a more expensive college. Getting a 12% annualized return on a $100k private bachelors is better than getting the same return on a $30k public university education.
dpierce9 11y ago
Because this compares present day cost to all earners (not sure how they normalized for graduate degrees, etc.), there is a huge recency bias. I majored in humanities and minored in sciences/math about ten years ago. Even counting my piddly graduate stipend (again, in humanities) for several years, my return rate of return is over 20% (IRR). If my school had cost twice as much, as it does just ten years later, the rate of return would have been less than 10% as predicted.
bluthton 11y ago
Bear in mind this is 20 years and not lifetime earnings. Many studies have come out that across majors lifetime earnings are anywhere from USD 300k to USD 1 million higher than those with only a high school diploma.[1] [1] https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci20-3.pdf https://www.newyorkfed.org/medialibrary/media/research/curre...
- bluthton 11y ago
  Also the payscale report may not be peer-reviewed, which should give caution when going against many peer-reviewed studies on the subject.
golergka 11y ago
I would love to also see the data linking ROI and whether you went to study something out of love for the craft or just because you wanted a well-paying job.
bisRepetita 11y ago
This study, like pretty much all the ones I have read on such topic, seems to compare income people going to college vs people not going to college. And they attribute all the benefits and ROI to college. While often it just measures that people that are smarter and motivated (because they can and want to go to college) do better financially than the one less smart and less motivated. I wish I could find a study of similarly smart and motivated people who decided themselves to go or not to college. As a choice. And see what the difference in earnings over life would be. That would measure the added value of college education. Anybody knows any such study? I would think a smart, motivated person skipping college, having no such costs, plus 4 extra years of income and (hopefully) savings, would have a good ROI compared to college-educated peers. And even if they would start at a lower level initially, they would accumulate work experience earlier, moving up the ladder sooner. Differently said, after 4 years, in addition to having a much healthier bank account, could this person be the person hiring the new college graduate?
- jhspaybar 11y ago
  I consider myself smart and motivated, I was in sales for about 8 years by choice rather than going to college. I was good at it, but 2 years of college(a double major), and a few years in industry and I'm now making 5x what I did. It's an anecdote sure, but I haven't changed at all, my degree simply qualified me for a different industry.
  - TDL 11y ago
    "2 years of college..." This bit right here might need some clarification. I believe the current U.S. average time in college is more than 4 years. I'm guessing you were motivated to get your degree as quickly as possible. I don't believe young adults in developed nations have the same motivation. 8 years in the real world will disabuse anyone of a desire to spend more time then necessary in school.
    - jschwartzi 11y ago
      Or they got an associate's degree, which is a 2-year degree which typically requires some lower-division coursework.
coldcode 11y ago
I spent 6 years studying chemistry (BS and MS) and worked as a chemist for 3 months, then became a programmer in the 80's. Was my degree worth it? No. Would I be here without a degree, unlikely even back then.
geebee 11y ago
This is interesting, and it came up recently in a WSJ study that showed that the eliteness of your college doesn't matter - if you major in engineering or CS. I started to wonder if maybe there's another distinction that is hidden in the data. I think we can all agree that there is a difference between earning 150k a year as a senior software engineer and as a director of the American Musical Heritage foundation. Some people could reasonably see those as very different outcomes, one job far more desirable than the other. Here's the thing - do those distinctions actually exist within computer science as well? There's a big difference within tech. Think about being a data scientist who writes a lot of code, but has a tremendous amount of autonomy and freedom, who gets to initiate projects, direct his or her own work, make presentations, speak at conferences, and so forth. Now imagine being a senior crud bug fixer who checks JIRA every morning and works (under constant pressure to provide updates about whether we'll still meet the "deadline") to figure out why some payroll calculations are sometimes included twice in the pdf report but not the excel report. Say both jobs pay 150k. There's a big difference between that first job and the second one. Is it possible that elite schools make it more likely that you'll get that first job? I'm not saying this is the case, just that a hidden distinction similar to the humanities/engineering divide may exist here...
nepstein 11y ago
Worth noting that selective schools also tend to be more expensive. Even if the ROI isn't markedly higher, high price tag means a "larger investment" into the high ROI option of college education. That's a substantive advantage (to those that can afford it) given that 12% return opportunities are scarce.
vparikh 11y ago
This is very encouraging to read. I have had a sense of this all along - that which college you attend has very little to do with your intelligence or your capabilities. In my opinion it has more to do with how much your parents make then anything else. E=mc^2 wether you go to Princeton or you go to Caldwell Community.
deleted 11y ago
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kamaal 11y ago
This is true not just in US, but in India as well. Most people who studied Computer Science, Electronics, Electrical engineering are taking way better salaries than other courses. Most of my friends in Civil/Mechanical/Other engineering branches barely have a good full time paying job. I remember friends who opt to study Mechanical/Civil engineering courses in better colleges instead of Electrical/Electronics/CS are now worse. A few made a shift to a programming career, Most regret the decision to chose college over courses. MBBS is a torture, if you don't make it to being a MD and then to work at a corporate controlled hospital. Dentistry is the absolute worst. Only people who could afford to study 1.5 decades and gather a specialization seemed to have done well on the longer run. Finally people who for 'passion', 'interest' and such stuff went into studying history, literature, law, commerce etc. A few of those people went into teaching, a few are now desk clerks, but a good part doing small time jobs or running small shops. The absolute worst I have seen is my friend who did architecture from a reputed college in Bangalore, went on to do his MS from a college in sydney in architecture, he now competes with local masons for projects, people who have never been to school or at best have high school education.
Cypher 11y ago
Depends on where you work too....
s0uthPaw88 11y ago
The report[0] this article reference has some puzzling exclusions to its data set. For example, why is Harvey Mudd included, but its next door neighbor Claremont McKenna College not? Some other notable liberal arts exclusions are Amherst College, Swarthmore, Bowdoin and Davidson. [0]http://www.payscale.com/college-roi http://www.payscale.com/college-roi
Kinnard 11y ago
I'd be curious to see results from the uncollege program but they may be too new for the data to make any sense: http://uncollege.org http://uncollege.org

99 points by Osiris30 11y ago

That is very scary if it's true. If a degree in the experimental sciences from a top-10 institution does not pay better than a degree from Tumbleweed State then the employment market for scientists is completely broken.

tyingq 11y ago
It may pay better, but they are calculating the overall return, meaning the cost of that top-10 degree is a factor as well.
- cmdrfred 11y ago
  I agree this might indicate that top tier institutions simply extracted all of the value difference that separated them from the others.
  - humanrebar 11y ago
    Well, maybe they extracted all the cash difference. Some people use degrees as status symbols. What's the old joke? How do you know if somebody went to Harvard?
nerga 11y ago
Why is this scary? Experimental sciences typically don't pay well, regardless of where you go. Increasingly you need a masters to even get a lab bench job. PHDs very rarely pay well either unless you are in a few specific fields. People from the math and sciences who want to make money go into software or finance, its been this way for well over10 years.
khaolak 11y ago
This is very encouraging if true. The difference between a 17 year old applying to "a top-10 institution" and a 17 year old applying to "Tumbleweed State" is almost exclusively what their parents income is (both directly for ability to pay, and indirectly through living in a desirable school district throughout their K-12 education). I did my undergrad at a "tumbleweed state" school and grad school at a top-10. The difference in the average student at each school was privilege, not ability. Turns out, best and brightest from Idaho to Ohio and Minnesota to Mississippi are just as smart and just as hardworking as the best and brightest from California and Massachusetts.
bglazer 11y ago
Is it broken or working like it's supposed to? I've never understood the desire of scientists to rank and self-segregate themselves into "elite" and "Tumbleweed State". First, it's not in scientist's self interest to give up chances at career progression to an elite cabal of admissions panels. Secondly, it actively restricts the flow of ideas to artificially limit the pool of respected scientists to only those people at a few institutions, even while the total number of scientists continues to grow. Finally, science is science, whether you're in Wichita Kansas or Cambridge Massachusetts. Why is it bad that scientists are judged on their objective output rather than the place they went to school?
kamaal 11y ago
>>If a degree in the experimental sciences from a top-10 institution does not pay better than a degree from Tumbleweed State then the employment market for scientists is completely broken. It is the the other way. Why do you think a guy who can produce a good algorithm from Tumbleweed State be paid less than a person who studied hunting habits of native americans in Stanford? You are not going to college to buy aristocracy, that you will get lifelong rights to a nice pay regardless of your skills.

jerf 11y ago

In addition to the obvious 0 line, it's worth taking the article's observation that S&P has returned 7.8% and mentally drawing a line there too. Also, for anyone in the position of deciding which to do, I'd add the observation that it is way easier to go to college and get a formal education in science, math, or engineering, and pursue an ongoing adhoc self-directed education in the arts and humanities in your remaining decades of life, than the other way around. Locally to HN's interests, this calculation is a bit distorted by the way that programming can actually be learned via adhoc self-directed education, but as science, math, and engineering goes, I'd suggest it's on the short list of exceptions, not the rule.

lilbobbytables 11y ago
Yeah, the comparison with S&P was for fun, I hope. Because in one case you're sacrificing 4 years of opportunity cost, then working full-time to make the ROI numbers that the author use for comparison. Whereas, my understanding of the S&P is that you don't have to work 40 hours per week for it to give you returns ;). So, if you had your college money as cash you could put all that in the S&P, then work full time without a degree to then, most likely, have an even higher ROI. Of course, most don't have the significant cash for college lying around.
kriro 11y ago
The 7.8% line is to be taken with a grain of salt though. If you decide to invest all the theoretical college money and work without said education you'll (hopefully) still earn >0$. It would have also helped if the article said what degree/how long it takes (BA, MA) and what the investment cost for the degree actually is (provide median or something). A typical BA takes 2 years and is in the ballpark of 50k$ on the lowish end (I heard that as a low end average for in-state public schools). Had I invested that fictional amount at 7.8% since universities are "free" here I'd have about 225k...yay
- morgante 11y ago
  > A typical BA takes 2 years Do you mean 4 years? It's extremely rare for someone to get their Bachelor's in fewer than 4 years.

incongruity 11y ago

Do those ROI calculations include the cost of borrowing? I'd expect they don't - and if not, it means that most degrees are no longer worth it if you have to borrow a significant portion of the money. With federal loans ranging between 6-8.5% (last I looked) it means that for the first 10-20 years, the government is the one capturing the gains from many people's college educations. There may well still be a positive ROI for some degrees but the loan picture means it comes on a much longer timeline, doesn't it?

roymurdock 11y ago
They do. Here's the website that compiles the data: http://www.payscale.com/college-roi http://www.payscale.com/college-roi Average loan amount is factored into the ROI calculation.
- incongruity 11y ago
  Awesome. Thanks for the pointer. The concern is definitely still there for folks who take above average loan amounts.

known 11y ago

For MBA it depends on where you study

bryanlarsen 11y ago
MBA's also have a much wider variance on costs, so return per dollar spent may also be similar between good/expensive and bad/cheap schools.
PakG1 11y ago
They are counting return on investment though. Great MBA is super expensive.

emodendroket 11y ago

I find it disheartening that the only way it seems we can think about college anymore is a sort of vocational school where we train for careers.

Vraxx 11y ago
Unless you're lucky enough to already have enough resources to spend both time and money attending a school without any expectation of return, it seems to be the natural conclusion to me. Without the incentive of higher paying jobs backing colleges, something tells me they would be quite a bit less successful in recruiting students.
11thEarlOfMar 11y ago
That is a side effect of the cost. In-state public university costs are up 296% over the last 20 years[1]. It is no surprise that a family spending that much money, per child, will consider the return on that spending. It is far more than a typical car and more in the realm of buying a home. [1] http://www.usnews.com/education/best-colleges/paying-for-college/articles/2015/07/29/chart-see-20-years-of-tuition-growth-at-national-universities http://www.usnews.com/education/best-colleges/paying-for-col...
- emodendroket 11y ago
  Well, is it, or is the rising cost a result of us thinking of it as some "investment" in a future career? I think it's a sort of vicious cycle.
  - mtberatwork 11y ago
    The rising cost is a direct result of cutbacks in public funding. http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high...
    - emodendroket 11y ago
      Yes, no kidding. But why are those happening?

tehabe 11y ago

On one hand it is nice to see that the school doesn't matter as much as people think but on the other hand it is sad that people see their studies only through the eyes of ROI. As if education has no value of its own. I'm probably just naive and an idealist.

mjlangiii 11y ago
Meh, it isn't black and white where you see one or the other but not both. Ignoring the ROI factor and being ignorant of it is a risky business, reckless IMO and coming from someone who intrinsically loves to learn.
rayiner 11y ago
Education might have some value to some people, in the same way that snowboarding or mountainbiking may have some value to some people. But the reason we make everybody do it is for the ROI.
imgabe 11y ago
I could take out a $150,000 loan to buy a splendid piece of art. It might uplift me spiritually and enlighten me in untold ways. But if the loan payments leave me unable to pay for rent or food, it's kind of moot. As long as college is financed with debt, there needs to be a return that will outpace the debt interest or we end up with a generation of debtors who have no freedom to make use of the enlightenment they gained from their liberal arts degrees because they're forced to scramble and kowtow to the people who majored in business if they want to eat.
cableshaft 11y ago
Naivete and idealism is how we have a whole generation saddled with student loans they can barely afford to pay, forcing them to stay in jobs they'd rather not have, delay buying a home or getting married for decades. I know some people on the other end of six figure student loans (I'm not, thankfully, but I'm still going to be paying mine off for four or five years still). These people are not doing what they'd like to do, what they studied to do (because they can't find a job in it) and are praying for a windfall. In some cases, hoping their family members die and leave an inheritance just so they can pay off a chunk of the loans. This is going to have profound effects on the economy and society for a long time. So yes, idealists should know what they're volunteering themselves for and how one simple decisions can make life really difficult for them for the next 20-30 years. This isn't the era where you could pay for a year of college with a part-time summer job anymore, like the baby boomers had.

ebbv 11y ago

This "article" is barely two paragraphs, and doesn't have any new information. There's a reason Art History majors working as baristas is a well worn cliche.

codingdave 11y ago

This article is about statistics, not individuals. While it certainly shows trends, for any individual person, their ROI depends on what they do with their own lives. (And ROI might not even be their #1 goal.) As for me, I got a degree in Fine Arts from a small liberal arts school, then become a coder. I have almost zero regret about that choice, 20+ years down the line. Actually, if I had to do it again, I am more likely to skip the coder part, not the college part. (20+ years behind a desk... I could probably find a better path.)

fredley 11y ago

It also depends on how much your parents earn: https://www.cam.ac.uk/research/news/graduate-earnings-what-you-study-and-where-matters-but-so-does-parents-income https://www.cam.ac.uk/research/news/graduate-earnings-what-y...

utexaspunk 11y ago
While cronyism and nepotism are probably significant factors, beyond those I don't know if what your parents earn matters as much as it may be an indicator of your manners, knowledge of social customs, proper grammar, etc.. Perhaps those raised in wealthy homes tend to know better how to behave among wealthy people than those who come from poor backgrounds. All else being equal, those who comport themselves better are more likely to get ahead.
- fredley 11y ago
  > Comport themselves better I have to disagree, manners are not a linear scale from bad to good, certain behaviours will ingratiate you to certain groups while ostracising you from others. If you (as some people do) consciously decide to mimic the behaviours of richer groups then yes, this may help your ROI. I'm in Britain, and the class system here is probably a lot more linear than most. One of the issues with just behaving better is that there's a huge amount of snobbishness (from everyone, at every level), and many of the defining behaviours of the upper classes require having a great deal of money to even participate.
- frobozz 11y ago
  In the broad middle, I don't think there is much of a manners/customs/grammar distinction. Any well-brought up middle class child should be perfectly capable of interacting with all but the wealthiest nobility. Of course, there are a few upper-middle class snobs who will think less of you for your lack of oenological prowess or your off the peg suit, but such people are not a common direct influence on that many people. There are other factors: * One thing is simply understanding the opportunities available to you. The idea that "People like me don't (go to university | start companies | go for promotion beyond a certain level)" is quite harmful. * It is not uncommon that people go into the same field as one of their parents, simply because of how big an influence they are on your life as a child. If one is a doctor, and the other a barrister, then if you follow one of them, you'll make more money than if they are both in minimum-wage jobs. * If you do follow your parents in their careers, you will have had early exposure to some of the concepts. You may therefore perform better at university intake interviews, and the relevant prerequisites. They will also know about how to progress through the career in the best way. * Regardless of nepotism, your parents' friends are another source of examples to follow in a similar way, and may be able to dispense similar advice. * Even if you don't follow your parents in their careers. Having a parent who graduated from a competitive course at a prestigious university (which might be indicated in their lifetime earnings) means that you still have an example to follow, and their experience to draw on. One of the reasons for poor state school intake at Oxford is that most youths don't actually know how to apply. Also, if you know what to expect from such a place, you can make more of it, particularly in terms of the extra curricular offering - e.g. networking, bursaries and careers service. * A youth with wealthy parents may be able take better advantage of low-paid and unpaid internships. If your parents can't support you through university and early career, then you may have to make more short term decisions - e.g. taking a low-paid summer job at a bar, instead of a lower or even unpaid job at a law firm, or working evenings and weekends instead of studying. * At the extreme end, a child in poverty is likely to have fewer books and poorer nutrition when those things matter most.

IkmoIkmo 11y ago

Financial ROI of a degree primarily depends on whether the degree is in a high or low paying field... In other news, the ocean is full of water. No story there. But then they draw almost flat lines, indicating the selectivity of the university (as a proxy for all kinds of things, prestige, quality of education/network etc) plays no role. But I find it misleading. It makes sense I think to consider that they're not looking at earning potential, but at ROI. That means a selective school that costs $100k a year, and nets you a $100k annual salary, yields the same ROI as going to a 10k a year state school that gets you a 10k salary. You'd get a flat line on selectivity/ROI, as if it doesn't matter where you study. You can be the judge of whether you think those are equal or not, and whether you'd be indifferent because they have the same ROI, particularly when you can afford the investment or get the investment subsidised.

an4rchy 11y ago

This would be very interesting to see when compared with schools outside of the US where higher education is free or very cheap. I'm curious about how many people go to the standard (STEM) fields of education because of the cost, and ROI vs they are interested in them. If people had 0 debt maybe more people might choose alternative fields of education/careers that can impact the world in other ways.

optforfon 11y ago

So does this mean that the mediocre and expensive private colleges end up paying off a lot more than state schools? (the "I" being higher and therefor the "R" being higher too) That's deeply unsettling...

mywittyname 11y ago
This was the takeaway that I had too. I'm surprised to see your comment is not at the top of this thread. If a more exclusive college (x-axis) is proportionally more expensive, then this graph suggests that everyone, regardless of field, is better off going to a more expensive college. Getting a 12% annualized return on a $100k private bachelors is better than getting the same return on a $30k public university education.

dpierce9 11y ago

Because this compares present day cost to all earners (not sure how they normalized for graduate degrees, etc.), there is a huge recency bias. I majored in humanities and minored in sciences/math about ten years ago. Even counting my piddly graduate stipend (again, in humanities) for several years, my return rate of return is over 20% (IRR). If my school had cost twice as much, as it does just ten years later, the rate of return would have been less than 10% as predicted.

bluthton 11y ago

Bear in mind this is 20 years and not lifetime earnings. Many studies have come out that across majors lifetime earnings are anywhere from USD 300k to USD 1 million higher than those with only a high school diploma.[1] [1] https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci20-3.pdf https://www.newyorkfed.org/medialibrary/media/research/curre...

bluthton 11y ago
Also the payscale report may not be peer-reviewed, which should give caution when going against many peer-reviewed studies on the subject.

golergka 11y ago

I would love to also see the data linking ROI and whether you went to study something out of love for the craft or just because you wanted a well-paying job.

bisRepetita 11y ago

This study, like pretty much all the ones I have read on such topic, seems to compare income people going to college vs people not going to college. And they attribute all the benefits and ROI to college. While often it just measures that people that are smarter and motivated (because they can and want to go to college) do better financially than the one less smart and less motivated. I wish I could find a study of similarly smart and motivated people who decided themselves to go or not to college. As a choice. And see what the difference in earnings over life would be. That would measure the added value of college education. Anybody knows any such study? I would think a smart, motivated person skipping college, having no such costs, plus 4 extra years of income and (hopefully) savings, would have a good ROI compared to college-educated peers. And even if they would start at a lower level initially, they would accumulate work experience earlier, moving up the ladder sooner. Differently said, after 4 years, in addition to having a much healthier bank account, could this person be the person hiring the new college graduate?

jhspaybar 11y ago
I consider myself smart and motivated, I was in sales for about 8 years by choice rather than going to college. I was good at it, but 2 years of college(a double major), and a few years in industry and I'm now making 5x what I did. It's an anecdote sure, but I haven't changed at all, my degree simply qualified me for a different industry.
- TDL 11y ago
  "2 years of college..." This bit right here might need some clarification. I believe the current U.S. average time in college is more than 4 years. I'm guessing you were motivated to get your degree as quickly as possible. I don't believe young adults in developed nations have the same motivation. 8 years in the real world will disabuse anyone of a desire to spend more time then necessary in school.
  - jschwartzi 11y ago
    Or they got an associate's degree, which is a 2-year degree which typically requires some lower-division coursework.

coldcode 11y ago

I spent 6 years studying chemistry (BS and MS) and worked as a chemist for 3 months, then became a programmer in the 80's. Was my degree worth it? No. Would I be here without a degree, unlikely even back then.

geebee 11y ago

This is interesting, and it came up recently in a WSJ study that showed that the eliteness of your college doesn't matter - if you major in engineering or CS. I started to wonder if maybe there's another distinction that is hidden in the data. I think we can all agree that there is a difference between earning 150k a year as a senior software engineer and as a director of the American Musical Heritage foundation. Some people could reasonably see those as very different outcomes, one job far more desirable than the other. Here's the thing - do those distinctions actually exist within computer science as well? There's a big difference within tech. Think about being a data scientist who writes a lot of code, but has a tremendous amount of autonomy and freedom, who gets to initiate projects, direct his or her own work, make presentations, speak at conferences, and so forth. Now imagine being a senior crud bug fixer who checks JIRA every morning and works (under constant pressure to provide updates about whether we'll still meet the "deadline") to figure out why some payroll calculations are sometimes included twice in the pdf report but not the excel report. Say both jobs pay 150k. There's a big difference between that first job and the second one. Is it possible that elite schools make it more likely that you'll get that first job? I'm not saying this is the case, just that a hidden distinction similar to the humanities/engineering divide may exist here...

nepstein 11y ago

Worth noting that selective schools also tend to be more expensive. Even if the ROI isn't markedly higher, high price tag means a "larger investment" into the high ROI option of college education. That's a substantive advantage (to those that can afford it) given that 12% return opportunities are scarce.

vparikh 11y ago

This is very encouraging to read. I have had a sense of this all along - that which college you attend has very little to do with your intelligence or your capabilities. In my opinion it has more to do with how much your parents make then anything else. E=mc^2 wether you go to Princeton or you go to Caldwell Community.

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kamaal 11y ago

This is true not just in US, but in India as well. Most people who studied Computer Science, Electronics, Electrical engineering are taking way better salaries than other courses. Most of my friends in Civil/Mechanical/Other engineering branches barely have a good full time paying job. I remember friends who opt to study Mechanical/Civil engineering courses in better colleges instead of Electrical/Electronics/CS are now worse. A few made a shift to a programming career, Most regret the decision to chose college over courses. MBBS is a torture, if you don't make it to being a MD and then to work at a corporate controlled hospital. Dentistry is the absolute worst. Only people who could afford to study 1.5 decades and gather a specialization seemed to have done well on the longer run. Finally people who for 'passion', 'interest' and such stuff went into studying history, literature, law, commerce etc. A few of those people went into teaching, a few are now desk clerks, but a good part doing small time jobs or running small shops. The absolute worst I have seen is my friend who did architecture from a reputed college in Bangalore, went on to do his MS from a college in sydney in architecture, he now competes with local masons for projects, people who have never been to school or at best have high school education.

Cypher 11y ago

Depends on where you work too....

s0uthPaw88 11y ago

The report[0] this article reference has some puzzling exclusions to its data set. For example, why is Harvey Mudd included, but its next door neighbor Claremont McKenna College not? Some other notable liberal arts exclusions are Amherst College, Swarthmore, Bowdoin and Davidson. [0]http://www.payscale.com/college-roi http://www.payscale.com/college-roi

Kinnard 11y ago

I'd be curious to see results from the uncollege program but they may be too new for the data to make any sense: http://uncollege.org http://uncollege.org