Caveat Emptor

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Caveat Emptor

In education, as in just about everything else, high price is considered a hallmark of quality, and in many ways it is: If you pay more, you get smaller classes, better teachers, a more prestigious pedigree, and fancier digs. But does high price translate into a lifetime of earning power for college graduates? Not always.

To determine what a college degree is worth, PayScale examined its database of 1.4 million pay reports from individuals who used its online pay-comparison tools and calculated a 30-year net return on investment for more than 500 schools. It represents the amount earned by graduates of each school beyond what a typical high school graduate would have earned, after deducting the cost of their education and taking into account the school's six-year graduation rate. We parsed the PayScale data to find schools with above-average costs and below-average return on investment. The result: a group of schools where a college degree will set you back, on average, about $190,000, more than 50 percent above the average for all the schools in the study, but where 30-year net return on investment comes in below $280,000, nearly 30 percent less than the average for all the schools.

A few things to keep in mind when reading the slide show: The total cost for each program represents the "sticker price" for a college degree, without deducting financial aid, which many students at these schools receive. There was only one school eliminated from the list—a school whose poor showing was the result of the out-of-state tuition paid by only 8 percent of incoming students. The schools that made the cut are all private institutions that for the most part have excellent six-year graduation rates, including one highly ranked, elite liberal arts college.

Finally, ROI is important, but it isn't everything. There's something to be said for making a bundle, but there's also something to be said for getting an excellent education that expands the mind, serves as an introduction to the world of ideas, and instills a lifelong love of learning. The good news: You can get that almost anywhere.

Note: The slides that follow present each school's 30-Year Net Return on Investment, 30-Year Net Return for Graduates, and Annualized Net ROI. All are based on self-reported pay data gathered by PayScale through online pay-comparison tools; for the 554 schools in the study, PayScale used pay reports from an average of approximately 1,000 alumni from each school to determine net return. The 30-Year Net Return on Investment is in 2010 dollars and represents the average earnings of a graduate (above those of a high school graduate) after deducting the cost of the degree and adjusting for the school's graduation rate. The 30-Year Net Return for Graduates is the same figure, but assuming a 100 percent graduation rate. Annualized 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. Total cost includes tuition and fees, room and board, and books and supplies for the number of years it takes most students to graduate from each institution. It is not adjusted for financial aid awards. The graduation rate is the percentage of students who entered in the fall of 2002 and graduated within six years. Although the PayScale study included 554 schools, public schools were ranked twice—once calculating ROI using in-state tuition and again using out-of-state tuition. As a result, there are 852 ranks. The benchmarks shown are averages for all schools in the PayScale study (including both calculations for each of the public schools). ROI data and total cost supplied by PayScale. Annual tuition and fees, average financial aid package, applicants admitted, and most popular majors supplied by the College Board. For the complete ranking and a more detailed description of the methodology, check out our interactive table.

Data: PayScale, Integrated Postsecondary Education Data System, College Board