November 25, 2022Read More
The Economic Times recently published a data-focused perspective on the return on investment (ROI) for undergraduate education for schools in the United States.
One of the most interesting insights came from the U.S. Department of Education data on average annual cost (tuition, living costs, books/supplies for 2020-2021) against median annual earnings 10 years after starting college at Top 25 U.S universities for students who received federal financial aid (FFA).
Ranked #1 in return on investment is MIT, where undergrads who receive FFA experienced an annual cost of $5,084 versus median annual earnings after 10 years of $124,213. Eight Top 25 schools had annual costs of $15,000 or less, including notable schools such as Penn, Harvard, Columbia, Princeton and Stanford. The worst Top 25 school for ROI was NYU with an annual cost of $39,565 and median annual earnings after 10 years of $79,812.
Here are several additional insights from the article:
- Major matters significantly: schools where students chose more technical and hard science based majors such as engineering had much better ROI, hence MIT’s #1 ranking. Although NYU is a highly ranked school, its lower average earnings were affected by its much higher rates of visual and performing arts majors who earn significantly less.
- Financial resources matter: there was a relationship between schools with larger endowments and the financial aid students received. Harvard, Princeton, and Stanford are in the top 5 for endowment size and their annual costs of under $15,000 are representative of their financial resources and how they prioritize allocation of those resources.
- Most students now receive financial aid: the percentage of students at all colleges who receive federal grants rose from 43% in 2017-2018 to 52% in 2019-2020.
- Elite private institutions are a bargain compared to top public universities: for students who qualify for federal aid (determined by weighing income, assets, family size, and other factors), the richest private institutions are now a bargain compared with most top public universities (compared to the in-state tuition rate: many top public universities have annual costs in the same range or slightly higher than the most elite private institutions.
- Even less well-known universities that focus on STEM and healthcare have high ROIs: four Top 25 schools that focused on science, engineering, and healthcare had higher median annual earnings after 10 years than MIT: Samuel Merritt, University of Health Science and Pharmacy, Harvey Mudd, and Albany College of Pharmacy and Health Science.