Costs and Benefits

Is college worth it?

As millions graduate and face a sub-par job market, many are looking at their degree and their bills for student loans and wonder whether it all the time and effort and money are going to pay off.

There’s now a web site that tries to quantify this return on educational investment by school. The methodology of the return number is deeply flawed—it depends on self-reported surveys and eliminates anyone who later earns a graduate degree—but at least it’s a start. For the past several decades college costs have been released from the bonds of economic gravity—which is why now only about half of Americans see college as affordable.

Most of the information in the survey is fairly common-sense: top colleges cost more but return more; excessive costs lead to a lower ROI; low-rated colleges are less expensive, but often don’t enhance earnings all that much; and engineering -focused schools tend to have higher returns. But there are some surprises as well: a highly-rated four-year private school with tuition under $10 thousand per year; or many public universities that offer double-digit returns—to both in-state and out-of-state residents.

Cardinal Newman once wrote that you go to college to save your soul and enlarge your mind. But with prices so high, you’d be foolish not to look at the financial consequences as well.

Douglas R. Tengdin, CFA

Chief Investment Officer

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