If the only value of higher education is the money you earn throughout your lifetime with your college degree, then SmartMoney’s recent study might help you decide where to matriculate. Ivy League schools don’t pay off as much as one might expect. The magazine surveyed the annual salaries earned by graduates of 50 of the most expensive four-year schools, three years and fifteen years after graduation. The data were used to determine a “payback ratio.” You can compare payback ratios of different schools to get an idea of whether and how fast the cost of tuition will pay off in terms of income earned.
Here is what SmartMoney has to say about this survey’s approach:
Ultimately, we weren’t trying to measure the quality of education or colleges’ selectivity. Other rankings take ample care of that, and dedicated students will thrive at any of these fine schools. But with boutique private colleges coming under heavy criticism for spiraling costs, our payback numbers certainly raise questions about the actual “return” on an educational investment.
“Return” is more than the financial benefits you receive from an education, and putting that aside to look just at the dollars creates an interesting comparison. But this shouldn’t be the only factor or the deciding factor when choosing a college. There is a tendency for business-minded folk to measure everything through “ROI” (return on investment) or to look purely at numbers through a “cost/benefit analysis.” Decisions based on pure financial anlysis don’t necessarily result in happiness or satisfaction with long-term goals.
Here are the top 5 public schools, liberal arts schools, and Ivy League schools based on SmartMoney’s “payback ratio.”
Top 5 public schools
- University of Georgia: 338%
- Texas A&M: 315%
- University of Texas, Austin: 306%
- Georgia Tech: 263%
- University of Washington: 225%
Top 5 liberal arts schools
- Washington and Lee: 145%
- University of Richmond: 130%
- Lafayette College: 115%
- College of the Holy Cross: 114%
- Bucknell College: 114%
Top 5 Ivy League schools
- Princeton: 132%
- Dartmouth College: 131%
- Yale University: 127%
- Harvard University: 124%
- University of Pennsylvania: 124%
Updated January 16, 2010 and originally published December 18, 2008.