Last year Bloomberg Businessweek
, in conjunction with PayScale
, launched "What’s Your College Degree Worth?" The annual ranking of U.S. colleges and universities was based on a new way of analyzing the return on investment of a college education, and it came to a startling conclusion: As investments, most college degrees leave a lot to be desired.
To some readers, the ranking itself left a lot to be desired, so we went back to the drawing board and made several changes to the way we calculate return on investment, or ROI. We increased the number of ranked schools by 25 percent, to nearly 700. And in addition to a 30-year ROI, we calculated a 15-year ROI. But the big change had to do with financial aid. Last year, we used each school’s "sticker price" to determine ROI. We did that again this year, but we also did a second calculation using the "net price," which takes into account the amount of grant aid each school awards. We think the two different calculations more accurately reflect the actual experience of students and their families—those who don’t qualify for financial aid, and those who do.
ROI is a function of two things: how much one spends getting a degree, and how much graduates earn over the course of their careers. PayScale, which collects pay information from individuals who use its online pay comparison tools, examined a huge database of 1.4 million pay reports and information on college costs. It then determined how much graduates of each school earned (after deducting the net cost of their degrees) above the typical pay for a high school graduate over the same period. In a very real sense, this is what a college degree from each institution is "worth" in dollars and cents.
Unlike most other rankings of this type, this one takes into account each school’s six-year graduation rate, providing a more accurate way of assessing a school’s ROI. If graduates of two schools earn exactly the same amount over the 30-year study period, after deducting the cost of their degrees, but one has a 90 percent graduation rate and the other graduates only 50 percent of its students, the one with the poor graduation rate will have a much lower ROI, reflecting the diminished likelihood of graduating.
What follows is a state-by-state breakdown of the schools with the best ROI. For each state we list the school with the best ROI and up to three runners-up. For the complete ranking of all 693 schools, check out our interactive table
. For a more detailed description of the methodology and findings, see "College ROI: What We Found"
Note: The ranking was prepared by PayScale and is based on self-reported pay data obtained through its online pay comparison tools; on average, pay reports from about 1,000 alumni from each school were used in the return on investment calculations. Sticker Price is the total cost of attendance (tuition and fees, room and board, books and supplies) for the average length of time required to obtain a bachelor’s degree at each institution for a 2010 graduate. Net Cost subtracts from that amount the average local, state, federal, and institutional grant aid awarded to full-time, first-time undergraduates. Annual Out-of-Pocket Cost includes 2009-10 tuition, housing, books, and other supplies for a student living on campus. Graduation Rate is a six-year rate for the cohort entering in the fall of 2003. Each state’s schools were ranked according to the 30-Year Net Return on Investment, which represents the average earnings of a graduate (in excess of those of a high school graduate) in 2010 dollars after deducting the net cost of the degree and adjusting for the school’s graduation rate. The 30-Year Net Return for Graduates Only is the same figure, assuming a 100 percent graduation rate. Annualized Net ROI is based on the ratio of the earnings gain from a college degree to the cost of the degree; it takes into account the school’s graduation rate and includes wage inflation of 4.3 percent per year. In the PayScale study, state schools are ranked twice, with ROI calculated using in-state and out-of-state tuition. ROI data shown for public schools was calculated using in-state tuition. ROI for public schools using out-of-state tuition can be found here.
Data: PayScale, Integrated Postsecondary Educational Data System, College Board, Bloomberg Businessweek