Heading off to college is an exciting time, but one thing many college-age students don’t consider is their college ROI (return on investment). What kind of return will you see on your investment into your college degree ten years from now?
It might seem like 2025 is a long way away, but this is an important question to consider, and it may impact your decision about which college to attend.
Public, private college ROI quite different
PayScale put together projections of college ROI for bachelor's degrees from the average public and private colleges over the next decade. In March, the same firm released a study showing that Harvey Mudd offered the highest college ROI.
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The numbers from this new study indicate that while the return on investment will increase steadily over the next ten years, the rate at which it increases is very different for public and private colleges.
As you can see from this table, the average tuition at a private college this year is $88,000, while the average public college tuition is $30,000. Looking at the college ROI for each of them, there's a $58,000 difference between them, which is exactly the same as the difference between their average tuitions.
However, looking out to 2025, there's a $74,000 difference between their projected tuitions. The difference between the college ROI of public and private colleges is $122,000.
Why such a difference in college ROI?
In other words, the 20-year net ROI of a bachelor's degree of a private school is going to increase 4%. The college ROI of private school is expected to increase 4%, while the ROI of a bachelor's degree from a public school is projected to increase 17% (Infographic is courtesy PayScale).
Analysts at PayScale suggest that part of the reason for the difference in college ROI is because of how much more expensive tuition at private schools is compared to public schools. They also point out that these numbers illustrate how important it is for students to factor in costs and weigh them with their career goals and the outcome of past graduates of the colleges they are considering when deciding where to attend.
It should be noted that one thing PayScale can't factor into these numbers is the sentiment surrounding a particular college. For example, an engineering degree from MIT is seen as being much more prestigious than one from an unknown college or even a small community college. As a result, the earnings projection from an MIT graduate will probably be higher than that of a community college graduate.