Ranking Colleges by Return on Investment

The U.S. Department of Education’s College Scorecard, which became available in September 2015, provides prospective college students and their families with a useful tool for finding colleges and evaluating outcomes, such as graduation rates, median federal student loan debt at graduation and median and mean earnings. It is expected that this tool will eventually be integrated with the U.S. Department of Education’s College Navigator tool.

More importantly, though, is that the data used to create the College Scorecard will be used to enhance commercial college search web sites. Most of these web sites already use data provided by the U.S. Department of Education through the Institutional Postsecondary Education Data System (IPEDS). The College Scorecard data significantly expands the data that is available through IPEDS.

For example, it is now possible to calculate the return on a college investment for the first time. The College Scorecard data includes median and mean income for federal student aid recipients 10 years after the student first enrolled in college.

There are two main approaches to ranking colleges according to the return on investment.

  • One approach compares the median earnings after graduation with the median federal student loan debt at graduation. This ratio measures the extent to which the college’s graduates will be able to repay their student loans. So long as the total student loan debt is less than annual income, meaning that the ratio of income to debt is equal to or greater than 1, the borrower will be able to repay his or her student loans in ten years or less.
  • The other approach compares the median earnings after graduation with the average net price. The net price is the difference between the cost of attendance and gift aid, such as grants and scholarships. It is the amount the student and his or her family must pay, through savings, income and loans, to cover college costs. Although this does not directly measure the payback period for the college investment, it correlates well with it.

Since students who do not graduate do not benefit from the higher earnings that come with a college degree, both metrics are multiplied by the college’s six-year graduation rate. This yields an approximation of the expected value of the college education.

These metrics may then be used to rank colleges, as illustrated in the following two tables. The rankings were filtered to include only colleges with a graduation rate of at least 75%.

Some colleges ranked high on both lists, including Princeton University, Stanford University, Pomona College, Rice University, Yale University, UC Berkeley, Brigham Young University, Vanderbilt University, UCLA and Duke University.

Most of these colleges had low enrollment of Federal Pell Grant recipients, since graduation rates tend to correlate inversely with the percentage Federal Pell Grant recipients. There were, however, a few noteworthy exceptions that appear to have a high return on investment despite a high Federal Pell Grant percentage: Hamilton Technical College (82%), Ranken Technical College (69%) and several of the University of California schools at 43% percentage Federal Pell Grant recipients.

Some of these colleges may rank highly because they enroll predominantly wealthy students or because the mix of majors is tilted toward more lucrative academic majors. Eventually, the U.S. Department of Education will provide data at each college according to academic major.

Colleges Ranked by Earnings to Debt Ratio Rank Graduation Rate Percent Pell Grant Recipients
Duke University 1 94% 14%
Princeton University 2 96% 12%
Rice University 3 92% 17%
Stanford University 4 95% 16%
Pomona College 5 96% 17%
Cornell University 6 93% 16%
Dartmouth College 7 95% 14%
Yale University 8 97% 13%
Harvard University 9 97% 10%
Georgetown University 10 93% 13%
Claremont McKenna College 11 92% 12%
Vanderbilt University 12 92% 14%
Brigham Young University-Provo 13 78% 36%
University of California-Berkeley 14 91% 32%
California Institute of Technology (Caltech) 15 93% 11%
Washington and Lee University 16 90% 10%
Colgate University 17 90% 12%
Brown University 18 95% 14%
Columbia University 19 94% 22%
University of Pennsylvania 20 96% 14%
Wellesley College 21 92% 19%
University of California-Los Angeles (UCLA) 22 91% 36%
Davidson College 23 92% 13%
Hamilton College 24 92% 14%
University of California-Davis 25 81% 43%
Scripps College 26 87% 13%
Barnard College 27 90% 18%
Washington University in St Louis 28 94% 6%
University of Florida 29 86% 32%
University of North Carolina at Chapel Hill 30 90% 21%
Santa Clara University 31 85% 14%
University of Virginia-Main Campus 32 93% 12%
Ranken Technical College 33 80% 69%
University of California-Irvine 34 86% 43%
Harvey Mudd College 35 90% 13%
Amherst College 36 95% 20%
University of California-San Diego 37 86% 43%
University of Southern California 38 91% 23%
University of Richmond 39 84% 20%
Middlebury College 40 94% 11%
Grinnell College 41 88% 21%
Whitman College 42 88% 10%
Pitzer College 43 84% 16%
Hamilton Technical College 44 76% 82%
Carnegie Mellon University 45 87% 14%
Williams College 46 96% 19%
Cooper Union for the Advancement of Science and Art 47 82% 18%
Wesleyan University 48 91% 18%
Rensselaer Polytechnic Institute (RPI) 49 85% 17%
Vassar College 50 92% 22%
Colleges Ranked by Earnings to Net Price Ratio Rank Graduation Rate Percent Pell Grant Recipients
Princeton University 1 96% 12%
Stanford University 2 95% 16%
University of California-Berkeley 3 91% 32%
Pomona College 4 96% 17%
University of California-Irvine 5 86% 43%
University of California-Los Angeles 6 91% 36%
Texas A & M University-College Station 7 79% 22%
Yale University 8 97% 13%
University of California-San Diego 9 86% 43%
University of Florida 10 86% 32%
Brigham Young University-Provo 11 78% 36%
University of North Carolina at Chapel Hill 12 90% 21%
Rice University 13 92% 17%
Clemson University 14 82% 18%
University of Pennsylvania 15 96% 14%
Vanderbilt University 16 92% 14%
University of Michigan-Ann Arbor 17 90% 16%
University of Virginia-Main Campus 18 93% 12%
University of Washington-Seattle Campus 19 81% 25%
Colgate University 20 90% 12%
University of California-Davis 21 81% 43%
Columbia University in the City of New York 22 94% 22%
University of California-Santa Barbara 23 80% 38%
Washington and Lee University 24 90% 10%
Harvey Mudd College 25 90% 13%
SUNY at Binghamton 26 80% 27%
Davidson College 27 92% 13%
Georgetown University 28 93% 13%
Cooper Union for the Advancement of Science and Art 29 82% 18%
University of Delaware 30 81% 12%
California Institute of Technology 31 93% 11%
The University of Texas at Austin 32 79% 27%
Hamilton College 33 92% 14%
Duke University 34 94% 14%
Claremont McKenna College 35 92% 12%
Cornell University 36 93% 16%
James Madison University 37 81% 13%
Virginia Polytechnic Institute and State University 38 83% 17%
Michigan State University 39 78% 24%
University of Connecticut 40 83% 21%
Georgia Institute of Technology-Main Campus 41 81% 19%
University of Wisconsin-Madison 42 82% 15%
Florida State University 43 76% 31%
Brown University 44 95% 14%
University of Vermont 45 76% 19%
The College of New Jersey 46 86% 18%
Rutgers University-New Brunswick 47 80% 31%
SUNY College at Geneseo 48 79% 23%
Harvard University 49 97% 10%
University of Georgia 50 83% 24%
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