What’s A Degree In _____ Worth? by Mark J. Perry, Foundation For Economic Education
There’s a new website called “Launch My Career Colorado” that went live on June 10 and is a first-in-the-nation, interactive web tool that allows students and parents to determine the estimated “Return on Investment (ROI)” from various post-secondary college degrees and certificates.
ROI is defined here not as a percent return, but rather as the estimated additional income during the next 20 years earned by a college graduate over and above the earnings of a high school graduate. The website is endorsed by the state of Colorado (Gov. John Hickenlooper helped introduce the website) and was partly funded by the US Chamber of Commerce.
It will eventually be expanded to 12 other states “to help students and their families, policymakers, and post-secondary institutions make more informed decisions about the training and skills that provide the greatest value to students and their communities.” According to a US Chamber of Commerce spokeswoman:
At a time when student debt is mounting and employers are struggling to find the right people with the right skills, it is imperative that students make informed decisions about the best way to prepare for in-demand jobs. This tool will allow consumers to easily identify careers, majors, and institutions of interest and compare the value of each program.
Funding for the multi-state initiative was also provided by the Colorado Association of Commerce and Industry, College Measures, USA Funds and Gallup. Various news outlets have reported on the innovative interactive website including the Denver Post, Denver Business Journal, and Inside Higher Ed.
Based on data obtained from the website, the table above (click to enlarge) displays a sample of various 2-year and 4-year college degrees from colleges in Colorado, along with the average number of years to complete the degree, the ROI (from highest to lowest), the starting post-graduate salary, and the total student cost to earn the degree. A few comments:
- As might be expected, there is probably no other 4-year college degree with a greater financial payoff than petroleum engineering, which is amazingly expected to generate more than $2 million of earnings over the next 20 years, in excess of what a high school graduate would earn, making it well worth the hefty tuition charges of more than $100,000 (highest among the degrees listed).
- It’s also not surprising that degrees in computer science and other engineering fields (electrical and mechanical) have pretty high ROIs, in excess of $700,000. And of course it’s also no shock that degrees in fields like African-American studies, women’s studies, communication, history, and psychology have pretty low starting salaries (less than $24,000 for women’s studies and psychology) and pretty low ROIs ($131-$185,000 over 20 years), especially considering that students at the state’s flagship public university (UC-Boulder) pay nearly $100,000 for tuition, fees, textbooks, and room and board over 4.5 to 5 years to earn those degrees.
- What is most surprising, perhaps, is the financial attractiveness (in terms of starting salaries and ROIs) and relatively low cost (both in terms of money and time to complete the degree) of many 2-year, community college degrees in Colorado (highlighted in bold above). For example:
a. Two-year degrees at the Community College of Denver in both nursing and dental hygiene have ROIs (above $600,000) and starting salaries (above $55,000) that far exceed the ROIs and starting salaries of many 4-year college degrees, including even accounting, business, economics, and chemistry. And the cost to students of less than $16,000 get those 2-year degrees is significantly more affordable than any 4-year college degree at UC-Boulder that costs students (and their parents) nearly $100,000.
Further, students can complete a 2-year degree in two years and start working at well-paying jobs several years ahead of their counterparts in programs for bachelor’s degrees that sometimes require 5 years or more (African-American studies, political science, chemistry and accounting).
b. Two-year degrees from community colleges in fields like computer science and emergency medical technology have starting salaries ($45,056 and $43,662) that are nearly twice as high as starting salaries for 4-year degrees in fields like psychology ($23,963), women’s studies ($23,461), and history ($23,963). And the ROI for EMTs of nearly $400,000 is more than two times greater than the ROIs for 4-year degrees in many fields including women’s studies, communications, history, and psychology. Even a 2-year degree in automotive mechanics has a higher ROI ($319,224) than many 4-year degrees in liberal arts fields like political science, biology, and sociology.
If colleges are going to boast about how much a degree is worth to graduates, then they shouldn’t be irritated when someone takes them at their word and examines the actual data. And then publishes the findings for all to see. That’s what Launch My Career Colorado has done, and the result is a valuable contribution to transparency in higher education.
Especially now that student loan debt has reached an all-time record high of $1.3 trillion and burdened the graduating student in the Class of 2016 with an average of $37,172 in debt (and monthly payments of nearly $400 for ten years), the transparency in higher education from the Colorado web tool couldn’t come at a better time. Kudos to Colorado for taking the lead on this much-needed effort for transparency, and let’s hope that similar interactive websites spread to other states as soon as possible.
Let’s also hope that information about the ROI on college degrees causes some serious re-thinking about:a) the over-selling and over-emphasis of pushing too many high school graduates into 4-year college degree programs, b) the under-selling of 2-year degrees to high school students, especially considering that many community college graduates have higher starting salaries and higher ROIs than many students with 4-year degrees at a significantly lower monetary and time cost and with much lower (or no) student debt, and c) the value of many 4-year degrees in fields that have limited demand and very low salaries, which often come at a very high cost (both monetary and time) and with the crushing financial burden of unaffordable student loan debt.
This article first appeared at the Carpe Diem blog at AEI.org. Reprinted with permission from the American Enterprise Institute.