Colleges With The Highest Return On Investment: PayScale Report

Which colleges are worth their often more than $200,000 price tag?

According to PayScale.com's annual survey of college return on investment rates, the California Institute of Technology is the school that ends up paying its students the most in lifetime dividends.

The bastion of technology, with a sticker price of $198,700, boasts a 12.2% annual return on investment and promises more than $1.7 million in return to its grads over 30 years.

PayScale culled data from 1.4 million pay reports from persons who obtained bachelors degrees in the last 20 years. BusinessWeek has more on PayScale's unique methodology:

Like many ROI models, to calculate the cost of a college degree it includes all college expenses--tuition and fees, room and board, books and supplies. But instead of assuming students all graduate in the standard four years, it multiplies those expenses for however long it took 2010 graduates of each school to obtain their degrees, whether in four years, six years, or something in between. Unlike many ROI calculations that reckon the value of a degree, the PayScale analysis tots up the return on a college investment, over and above what a high school graduate would earn during the same period. When someone attends college but fails to graduate, there's an investment but little or no financial return, so the PayScale analysis incorporates graduation rates, in effect adjusting the return for the risk of not graduating. How big is that risk? On average, two of every five students who entered the colleges in the ranking never participated in commencement.

Below, see the 15 colleges with the highest return on investment. See PayScale's complete methodology here, and a full chart of ROI rates here.

Did your college make the cut? What do you think of this report? Weigh in below.

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California Institute of Technology

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2010 cost: $198,700 30-year net return on investment: $1,713,000 Annual return on investment: 12.2%

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2010 cost: $198,700
30-year net return on investment: $1,713,000
Annual return on investment: 12.2%

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Comments

[soylentcorp]

07:30 PM on 04/11/2011

I went to a top-10 regional university at $80,000 over 4 years, with an ROI of $500,000 in less than 15 years thus far which is slightly below par with the ivy league. Either I'm kicking butt, reached a fairly typical level of 'success', or ivy league grads aren't all laughing to the bank as most people think.

[MickleVonTickle]

03:34 PM on 04/20/2011

If you're calculating your ROI in the same manner as the people who put this together are-- factoring in what the median high school graduate would have earned, including the years you were in school, subtracting the cost of your education, etc., then you probably are kicking butt. If you didn't, then you are an example of the value of an Ivy League education -- they probably would have.

[Acert]

01:19 AM on 04/10/2011

There is more to the value of an education than the money it generates. Some people would rather have a job they like than a better-paying job, which they hate.

[Moravecglobal]

12:21 AM on 04/10/2011

World class preeminent public research and teaching University of California Berkeley (Cal) ranking drops. In 2004 the London-based Times Higher Education ranked Cal the 2nd leading research university in the world, just behind Harvard; in 2009 that ranking tumbled to 39th. By 2011 Cal had not returned to 2nd place.
University of California Berkeley Chancellor Robert J Birgeneau and Provost Breslauer need to go

Chancellor Robert J Birgeneau’s ($500,000 salary) eight-year fiscal track record is dismal indeed. He would like to blame the politicians, since they stopped giving him every dollar asked for, and the state legislators do share some responsibility for the financial crisis. But not in the sense he means.
Every year Birgeneau would request a budget increase, the regents would agree to it, and the legislature would provide. Finally, Birgeneau engaged some expensive ($3,000,000) consultants to tell him and Provost Breslauer what they should have known as leaders or been able to find out from the bright, engaged Cal. people. (A prominent east coast university is accomplishing the same without consultants)

But you never want a crisis to go to waste. Merely cutting out inefficiencies does not have the effect desired. Cal has been badly damaged. Good people are loosing their jobs. Cal’s leadership is either incompetent or culpable.

Increasing the budget is not enough. Take aim at the real source of Cal’s crisis by honorably retiring Chancellor Birgeneau and Provost Breslauer.

[JScott]

10:57 AM on 04/09/2011

I thought Harvey Mudd was called Claremont McKenna now.

[HenryT2]

10:02 PM on 04/09/2011

I believe it's still Harvey Mudd - it's just part of the Claremont College Consortium. That's a group of 5 colleges that share resources (Harvey Mudd, Pomona College, Claremont McKenna, Pitzer, and Scripps, plus I believe there's a graduate school).

[absolument]

02:52 AM on 04/13/2011

You are correct.

[AbeMartin]

07:17 AM on 04/09/2011

Pay Scale's statistical methodology is not described in the article, but the conclusion they arrived at seems to be based on an arithmetic mean of a fairly significant population, which is one of the most easily skewed measurements in descriptive statistics.  It is used to indicate a central tendency but only measures a single variable rather than investigating other factors that could impact the conclusion.

This is very  misleading.  An arithmetic mean shows that 50% of the sample did not achieve the reported ROI. But this could easily be effected by where the graduates live.  Do graduates who are working in Hays, KS earn equivalent incomes to those living in Cambridge, MA, or Palos Verdes CA?  There are lots of Harvard and Princeton graduates who are teaching in high schools or community colleges or in Civil Service positions inside the Beltway, or not working at all.  It also does not represent the skewing that occurs when the income of those graduates who fall fall two standard deviations from the mean control a bunch of the uber-rich.

The schools listed are among the most expensive in terms of tuition, room and board, etc., with the exception of Cal Tech and a few other publicly funded schools.   I point out, too, that every one of them is located on the Atlantic or in California.  Hmmmmm.

But are we really to believe that a CPA with an undergraduate accounting degree from a middle of the pack business program earns appreciably less than a CPA with a degree from Pennsylvania's Wharton School of Business?

[absolument]

03:06 AM on 04/13/2011

I'm not convinced any of that is misleading. High admission standards logically should mean fewer wash-outs and underachieving graduates. The results seem consistent with that. Better schools, the ones with higher admission standards, also tend to cost more. This is surprising why?

[Rahlow James]

07:36 PM on 04/08/2011

The contractual schools at Cornell need to be distinguished (like the out of state students from Berkeley), which will increase the ROI.

[James McGill]

03:22 PM on 04/08/2011

Tuition is not really the significant part of the cost of education. The cost of housing, food, transportation combined with the opportunity cost of foregoing employment prospects and the cost of being fixed in a location, all dwarf the cost of tuition. I went back to school at age 40 to finish my masters. The cost of tuition, fees, books and so forth was nearly irrelevant to me. The actual costs were elsewhere.

[AbeMartin]

07:23 AM on 04/09/2011

And some schools such as Yale are now waiving tuition for increasing numbers of students to make the school more attractive to them.  I worked my way through my three degrees at a university and got huge discounts in tuition and by serving as a residence advisor in exchange for significantly reduced Room and Board.  I therefore show a huge Return on Investment over the course of my career, even though both of MzAbeMartin and my children, exceeded by best earning years within a few short years of their graduation.

I think think this PayScale, Inc. analysis smells as fishy as Sheepshead Bay at low tide.

[MSaxe]

02:16 PM on 04/08/2011

There are a couple I'm very surprised are not on the list, including Cornell and Georgetown. Those grads do very, very well.

[Senseid]

02:42 PM on 04/08/2011

Cornell is a safety school.

[realpragmatist]

04:12 PM on 04/08/2011

I would appreciate if you can explain what a "safety" school is? Does it mean it is less regarded at 18% selectivity, like a second-tier Ivy? How about Brown and University and California Berkeley? Are they like Cornell too - "safety schools"?

Thanks in advance.

[capeman2]

11:08 PM on 04/12/2011

Yeah, Cornell is barely ivy league.

[MSaxe]

02:10 PM on 04/08/2011

And the rest are just post-high school holding ponds to allow the working adults to get a little breathing room in creating their career path.

[Bluedanube]

01:45 PM on 04/08/2011

The only people that would want to go to one of the Poison Ivy League schools are those that aspire to the plutocracy. The equivalent of modern day slave masters.

[springsm]

02:25 PM on 04/08/2011

Not true when it started and not true now. 

[LAGirl1]

02:47 PM on 04/08/2011

Sometimes the Ivies get it right and admit students from diverse disadvantaged backgrounds.

[Fercho]

01:38 PM on 04/08/2011

A truly idiotic piece.

[Exfl]

12:32 PM on 04/08/2011

ROI is an absurd metric to compare universities. Students are not randomly assigned to universities. People attend these elite and expensive schools either because they are (1) born rich or (2) unusually gifted. Children of rich people make high incomes because of family connections and inherited assets. Young people who are extraordinarily capable certainly benefit from these universities, but probably would do nearly as well at many other less expensive universities. A student who borrows heavily to attend one of these elite schools ought to be analyzing whether this is a good educational investment pedagogically, not thinking about lifetime ROI.

[Angelus2007]

04:26 PM on 04/08/2011

I agree. I could have a great ROI if I spend $1 on school and make $15,000 a year for 30 year, my ROI would be mich better than any of those. That doesn't make it a good choice.

[supergenius02]

12:23 PM on 04/08/2011

Actually the return can even better better at a school like Stanford.  Stanford has eliminated tuition for students who come from low and middle income families. Harvard and Princeton have similar programs I believe. With those schools, the ROI is insanely high. Really shows the power of alumni contributions.

[bluechao]

12:01 PM on 04/08/2011

It's pretty clear from this list the best money to be made is generally in the tech area. So many of these are either top tech schools, or have top tech programs, like Stanford.

[smp65]

11:55 AM on 04/08/2011

Mostly Ivy league schools, or a Lehigh, which is $50,000. Average Joe/Jane can't afford it. Nice.

[supergenius02]

12:24 PM on 04/08/2011

Actually schools like Stanford, Harvard and Princeton have programs to eliminate tuition for low and middle income families.

[baybeebluz]

01:05 PM on 04/08/2011

I went to Notre Dame. I knew several people that were there on scholarships which greatly subsidized their costs.