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Best Return on Investment for Bachelor’s Degrees

Since a college degree is the baseline for most middle-class jobs for people not yet old enough to have equivalent experience, and getting that experience in the first place would be difficult without a college degree, it always surprises me that people question the value of getting a college degree at all. While it’s true that the group of degree-holders is not as exclusive a club as it once was, that’s just a reason to strive for even more education. From a societal viewpoint, it’s clear that college degrees aren’t for everyone because the world relies on work that does not require that level of education.

In the financial world, people are often looking for a return on investment. This is a filtered lens for viewing society, and it’s limited. When you’re the proverbial hammer, everything looks like a nail. As I’ve been writing for shizennougyou since 2003, finance is only a small part of the world I live in, and I try not to limit my worldview to just this one lens. While finances are certainly an important aspect of someone’s life — and with limited finances, the importance is even greater — money does not form 100% of every decision one makes in one’s life.

There’s more to an education than just the income it will provide over time, over and above the income you would earn without that education. Whenever I think about this topic, I remember the time I spent working with a drum and bugle corps, touring the country for eight weeks over the summer. Our caravan consisted of four buses, three vans, two eighteen-wheel tractor-trailers, and one box truck. I don’t remember the context as this was many years ago, but one of the truck drivers said to me he doesn’t understand why people would go to college when they could easily make a living earning $40,000 a year driving a truck.

While I’m sure truck driving has its moments that test any brave soul, it may not be the right challenge for everyone. Depending on skills and interests, someone could go to college, spend money to earn a degree, and not reach an annual salary of $40,000 for many years, if ever. They may recover their tuition costs over time, and if student loan debt is involved, that could be a long time. Even if they make their way up the latter to become the CEO of a non-profit organization, they may be financially worse off in the end than if they skipped college and got a job driving a truck across the country.

Each year, there is a new report ranking colleges — and ranking colleges is such a popular topic in the media — in terms of the best return on investment. The methodology of the popular survey by PayScale is interesting in that it completely ignores those who have continued their education to earn a degree beyond a Bachelor’s degree. Only those who have completed their education with a standard four-year degree are considered. The survey also neglects to include self-employed individuals, small-business owners, and contractors. Keep in mind, also, that these are actual data based on people who have been working for thirty years — so this reflects what graduate degrees were worth in the 1970s and early 1980s, while using today’s tuition costs. This basically keeps all values as 2011 dollars, but ignores changes in each college’s reputation over the past thirty years.

The California Institute of Technology tops the list of colleges ranked by best ROI over thirty years with thirty-year net return of $1,713,000. Princeton University is the first Ivy League school on the list with a net ROI of $1,494,000, and is fourth overall. Here are the top ten:

  1. California Institute of Technology (Caltech)
  2. Harvey Mudd College
  3. Massachusetts Institute of Technology (MIT)
  4. Princeton University
  5. Stanford University
  6. Dartmouth College
  7. Duke University
  8. Harvard University
  9. University of Notre Dame
  10. University of Pennsylvania

As Zac Bissonnette, author of Debt-Free U and recent guest on the shizennougyou Podcast, points out, the data and methodologies are questionable. Regardless of the quality of data, beyond determining whether you can afford college or not, it’s mostly pointless to consider return on investment as a point in favor in one school over another. If a student’s two legitimate choices are Princeton and Stanford, figures like these are meaningless. Additionally, a student who is considering the school with the lowest ROI on this list won’t necessarily be also considering Caltech.


Updated May 5, 2014 and originally published April 15, 2011.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 24 comments… read them below or add one }

avatar 1 wylerassociate

good column flexo although going forward most graduates will also need a master’s degree to compete in the infromation economy.

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avatar 2 Apex

I have seen no evidence this is true. If have been in IT for 18 years and have worked for very technical software development companies. There is nothing I have done that I needed any education beyond the first 1.5 years of my degree. I have also worked with some people who have master’s degrees. Never once seen it be important. If you want to work in a research lab you need a PhD. A Master’s degree doesn’t really mean much in IT.

If it is true in any sense it won’t be because the master’s degree provides critical eduction. It will be as a way to separate oneself from the morass of barely qualified people getting a bachelor’s degree. This is a poor way of determining qualification.

Of course since many people could not get jobs in the last 2 years and thus went on for a master’s degree, there might be a morass of those too. Doesn’t mean they are any better qualified.

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avatar 3 Anonymous

“Logical and precise, left-brain thinking gave us the Information Age. Now comes the Conceptual Age – ruled by artistry, empathy, and emotion.”

*Great* article on Wired called Revenge of the Right Brain. Take a look.

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avatar 4 Apex

left brain gave us the stone age, the bronze age, the steel age, the industrial revolution, mass production, the information age, but now productivity will come from the right brain. Artistry & Emotion? So this time its different from all of history right?

Beware of suggestions that this time is different.

We have not reached utopia where productivity doesn’t matter and artistry does and artistry is not going to drive productivity. This is wishful thinking by those who are right brain minded. Nothing wrong with right brained thinking, its valuable. But its not going to drive the economy or the jobs.

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avatar 5 Anonymous

The article doesn’t talk about whether left or right will drive the economy, and it definitely states that logical analytic thinking is still indispensable. The article talk about how to get ahead, and being just left brained, or just right brained, is no longer enough… need both. And, as you say, left brain has dominated, while right brained has fallen by the wayside, so it’s time we start getting the right side back in action.

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avatar 6 Luke Landes

The ability for any “Age” to advance and thrive is due to what you’re calling “left-brain thinking” as well as “right-brain thinking” — a distinction I believe most modern neurologists say isn’t all that accurate in its proverbial sense. The “Information Age” is absolutely NOT a result of only — or even primarily — logical and precise thinking.

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avatar 7 shellye

Agreed…I would just add that IMHO, colleges and universities need to rethink the requirement that students take two years’ of core classes first. So many of those are a waste of time. We need to produce graduates who can communicate clearly, do math correctly, and learn the technological skills necessary to stay competitive with other countries.

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avatar 8 Anonymous

I completely disagree with this. If you’re a science major, maybe. If you’re not, you need to learn how to read and write critically and have a solid background in the liberal arts, such as history, english and literature. The core classes are a blessing, not a problem.

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avatar 9 Apex

This is always a point of contention. The solution is easy. Why do universities not offer a liberal arts based degree and a straight program degree, which is the same as the liberal arts degree without the “liberal arts”.

Then for professions where the liberal arts based degree is important those degrees will be more valuable. My bet is most professions would not care about the liberal arts portion (history, cultural studies, etc).

I someone wants to expand their mind, great, get the liberal arts based degree. There is no reason to require it.

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avatar 10 Anonymous

“which is the same as the liberal arts degree without the “liberal arts”.”

The engineering degree I got was already 90% science, math and engineering. The handful of social science electives that I had to take were an interesting diversion and break from the hard work in my major.

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avatar 11 OrchidGirl

I think it is valuable to take courses in different fields throughout college. I majored in both biology and history. Professors from the two disciplines appreciated the skills and view points I brought from one subject to the other. One biology professor mentioned she would like to see more science students take history because it had such a positive impact on my writing. A history professor liked how I used and mathematically evaluated an unusual set of primary sources (and was rather disappointed that I wanted to go onto a career in biology).

Sure you might never need to know what year the Cultural Revolution began in China, nor may you ever need to recall the function of a peroxisome in a cell. But the approaches to critical thinking, collecting information, and clear communication vary between fields and being able to use approaches from several separate fields can be incredibly powerful. Excluding the top three on this list (that deal primarily with science and math geniuses), I believe the rest of the institutions listed are liberal arts (of effectively so with the degree requirements).

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avatar 12 Anonymous

A couple of comments. First, it’s not a surprise that the 3 best engineering schools and 7 of the top-50 schools in America have a great ROI for college. If you get into any of those schools and chose not to go to college at all instead, you’re crazy.

The question really becomes whether it’s worth attending third- or fourth-tier schools. And more specifically, the question is whether it’s worth attending those schools to pay north of $150k in tuition, fees, room and board, etc. Most people would be better off going to a cheaper state school, either pocketing the difference (or not borrowing as much), and just trying to do better than to attend a private school with high tuition that isn’t worth it.

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avatar 13 faithfueledbennetts

I enjoyed this article. My husband has gone back to school and is currently enrolled for his Bachelors. Although his school is not listed here, I know the ROI will be worth it compared to the options he had prior to going back to school, for the long run at least. I am curious though, as he is majoring in Web Design, if he got a Masters, how much of a difference it would make in the return long term?

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avatar 14 Apex

Almost none.

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avatar 15 Sarah

Unsuprisingly, the top 3 are big engineering schools.

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avatar 16 Anonymous

There are many professions that do not require a degree and you can do very well. The trades (electrician, carpenter, [lumber, & mechanic (all)) for example. In many instances, these trades surpass what a college degree may provide monetarily. I don’t think it is a competition between college and other professions. A college education prepares you for a multitude of careers. It is up to the individual to do something with the education.

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avatar 17 Anonymous

As a holder of a bachelor’s degree from one of the above institutions, I have a couple of points that I think bear mentioning…

1. The earning power of a degree is highly connected to the reputation of the program it comes from.
Alumni who rise high in their disciplines are more likely to recognize and help younger graduates (by hiring them, mentoring them, or donating to the university). Hiring managers are likely to weight interview opportunities in favor of candidates with more “prestigious” degrees as well–the provenance of my degree leads people to expect a certain level of intelligence and expertise. Looking good on paper has honestly helped me get in the door for EVERY job opportunity I’ve had post-college.

2. A broad education with a strong base in theory is necessary for being able to weather changes in the job market over time.
My institution doesn’t offer degrees in Web Design, Biotechnology, or Environmental Engineering. Rather, students are expected to learn the fundamental principles of their chosen field and ultimately understand and apply those principles as they grow through the workforce. I have a degree in Computer Science, and I’m qualified to be a web designer, mobile application developer, systems software engineer, or roboticist. I only have the one bachelor’s degree, but I’ve been able to apply what I learned in my college education to build and demonstrate skills in all of these areas. Who knows what the “hot” careers will be 40 years from now, but I’m excited about my field, and I feel very prepared to handle the changes and challenges that will come up throughout my working life.

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avatar 18 Anonymous

Well I like this methodology because my alma mater has the #1 ROI in annual ROI terms. Go Jackets!

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avatar 19 Anonymous

Great article. I included it in my Yakezie roundup for the week.

I do, however disagree on the ROI for most college graduates. The BLS consistently indicates that a higher level of education results in higher pay, less unemployment, and greater job security.

Just saying.

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avatar 20 Ceecee

And then there’s Bill Gates and Mark Zuckerberg—exceptions, of course, but….? College is not for everyone, and I wish that I had waited to attend until later in life. I didn’t appreciate it at the time, and didn’t use it to full advantage.

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avatar 21 Anonymous

The danger is that you take on more debt that you can afford in order to attend the higher ranked schools. Buying (or borrowing, as is too often the case) into these schools is really a form of personal branding that you hope will pay off later with higher pay. Another factor-could it be that easy student loans drive the higher cost of education? They makes it way to easy to take on more than you can really afford. There’s a close analogy to the 0% down mortgage market that drove the housing bubble.

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avatar 22 Cejay

I got my bachelors a few years ago as a nontraditional student. When I graduated I received a $2,000.00 a year raise. Not nearly what I wanted. But the satisfaction of doing something and reaching a goal that I have always wanted was worth more than a raise. I would not trade my degree for anything. Thinking of taking more classes.

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avatar 23 Donna Freedman

I, too, was a nontraditional student (52 upon completion of the B.A.). Before that I had worked as a newspaper reporter; for three of my four years in school I was writing for MSN Money.
Unfortunately, some people interpret that as, “See, you didn’t need a degree after all!” But I keep telling people that I got in under the wire. Young people are highly unlikely to be hired as writers without at least a four-year degree.
Writing your own blog or guest-posting for other people’s blogs would be different; you don’t necessarily need a degree. But it’s pretty tough to make a consistent living at it. How many of today’s “hot” sites will be around for the long haul? Nothing’s as dull as yesterday’s sensation.Some will continue and succeed but I bet the majority fall by the wayside.
I’m not “using” my degree in that I didn’t go out and get another job with it. But college isn’t just about the diploma. What I learned there informs everything I do, in both my work and personal lives.
And in my case the ROI don’t signify: I got through completely on grants and scholarships. Many of my classmates are looking at some scary, scary payback.

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avatar 24 Cejay

I was a nontraditional student and I went to college because it was something I wanted to do. Something on my bucket list as it were. I did have to change my major since I could not keep up with the school work and my full time time and family obligations. But, I am now thinking of going back and getting that accounting degree, Not because I will get a lot of ROI but because of personal satisfaction.

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