With college costs ranging from $25K to $100K annually, a natural question for any parent to ask is “what will be the Return On Investment (ROI) for my kid’s college education?” ROI is the measurement of the difference between total earnings in the 10 years post-graduation, divided by the total cost of college. The higher the ROI, the better a financial bet the school is on average. As you weigh your family’s final college choice, your job is to weigh both the actual costs as well as the potential profitable/fruitful return on investment.
Prior to making a final choice be sure you have been able to compare colleges on:
Total cost
Projected debt (if any)
Graduation rates (4-year, 5-year, 6-year)
Co-op or internship opportunities and salaries.
Job placement rates and mid-career earnings by major.
Loan default rates of recent graduates, ideally by major.
Career services and job placement efforts at the college.
Other Considerations
Funding a college education can feel overwhelming due to varying costs, non-standardized aid packages, and short-term versus long-term realities and speculation. While this sounds impossible, do not take it personally if a college that you want for your child to attend does not offer what you believe you need or they deserve.
Our hope is that you took our advice in Chapter 3 and clearly laid out conditions, expectations, and limitations about choosing a certain college or major. If that is not the case, now is the time to be abundantly clear about this final choice and how your return on investment factors into that decision.
Tools to evaluate ROI
College Navigator provides insight into a school’s graduation, job placement, and student loan default rates.
College Scorecard provides information on how much money a school’s graduates earn, the student loan debt average students carry and how many students can keep their loans in good standing.
Occupational Outlook Handbook provides information on different jobs, projected growth, median salaries, and necessary education.
Use the table below to compare the colleges on the student’s short list and based on the information you have from the sources above and your own research, assign each an ROI score of 1--Poor Return on Investment to 10--Excellent Return on Investment
College | | | |
Annual cost to your family | | | |
Median annual earnings of students two years after graduation | | | |
4-year graduation rate | | | |
Projected total debt after 4 years (if any) | | | |
Other notes | | | |
ROI score | | | |