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Return on Investment and Why It Matters for Higher Education

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Oregon Tech has received quite a few accolades for early and mid-career salaries of our graduates and the Return on Investment (ROI) of our degrees. Largely as a result of the recent economic downturn, coupled with growing student debt, there also have been quite a few recent commentaries and discussions about the ROI for various academic degrees, both outside of academia and within academia. ROI is often deemed by proponents to be critical in the current economic environment for students to know so they can determine what degrees will allow them to obtain higher-paying jobs to maximize their ROI as soon as possible after completing a degree or certificate. By contrast, ROI is often discredited by critics as a short-sighted measure of degree worth (or value) that ignores the importance of a broader educational experience, and that critical-thinking skills and a broad college experience are more important than simply being able to find a high-paying job after college.

Many of these discussions on the relative importance of ROI when considering an undergraduate degree program are laced with underlying assumptions about the utility of ROI with regard to evaluating the value of a post-secondary degree. Simply put, ROI is more important to students and families when it comes to deciding what college to attend for an undergraduate degree than it has been in many years. ROI matters. But not to the exclusion of the range of understanding and perspective that form integral parts of a broader educational experience. After all, creativity is enhanced with experience, perspective, and the ability to think in different ways. However, rising tuition and increased student debt, coupled with the recent recession, have moved the focus of families and students alike away from the overall student experience and increasingly toward immediate degree relevance and perceived value.

I view higher education ROI as more complex than simply looking at salaries and ignoring the value of acquiring a broad educational experience and critical-thinking skills. I also view higher education ROI as more focused than experience, perspective, and critical-thinking skills, many of which can be obtained without the benefit of post-secondary education. And because of this view, ROI really is in the mind(s) of whoever is purchasing that post-secondary education. For most of us in higher education, that conjures up visions of students and parents. In actuality, the investors in post-secondary education are far more varied than ever. Various foundations, through grants and scholarships, have their own requirements and expectations. State and local governments are invested in higher education, especially if the post-secondary institution receives state or local tax support. The federal government is deeply vested in higher education, especially for veterans and other students who receive some form of direct federal support for their post-secondary education, but also because of the non-profit status and tax breaks afforded donors who give to support students. Finally, individual university foundations, many of which tout the successes of students and alumni that they support to leverage additional resources from additional alumni, parents, and friends of the college/university. Each of these stakeholders in higher education will have their own distinctive definition of ROI, and each exerts a different effect on the course of higher education depending on the level of their investment, influence, or persuasion.

Given this range of complexity for ROI, and the variety of components within ROI for any given person, group, university, or other stakeholder, I'm reminded of then-Supreme Court Associate Justice Potter Stewart's well-known response to defining pornography in Jacobellis v. Ohio, in which he stated,

I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description, and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.

In academics, ROI will be different for different constituents. For some, it will be critically important to have a realized income as soon as possible after graduation with as little expense as possible needed to obtain a degree. For others, it will be the connections made with classmates and their families, irrespective of the expense.

That said, there are two common themes inherent in the personal ROI for any student at any university: (1) more professions than ever require some higher education just to get a foot in the door, much less to succeed within the organization; and (2) if universities are doing their jobs correctly, they provide environments where students learn to embrace failure as a learning experience and to not make the same mistakes in the so-called real world of post-college employment. Making mistakes and learning from them is the critical-thinking component of higher education, which is not the exclusive venue of any particular discipline or related disciplines.

Simply put, ROI really is in the eye of the beholder. All of the stakeholders involved want what they view as a good investment. Consequently, a simple measure of so-called ROI is only as good as the underlying assumptions and data used. In much the same way that the students at Oregon Tech are different from the students at other post-secondary institutions, the ROI that our students value will be different from the ROI valued by students at other types of schools. And the ROI that the state wants may be different from the ROI that a philanthropist, or the federal government, wants.

I have heard in many venues that students vote with their feet. If true, and I believe it is more true than many universities want to admit, then universities have to understand the underlying assumptions and data to match their ROI strengths (whether it is connections, employment success, professional or academic niches, etc.) to their current and future student bodies. Those universities that match the ROI expectations of their student bodies will flourish into the future, and those that do not will become increasingly marginalized over time.