Some Mass. college degrees pay off – but many others don’t
Arts, humanities have low rates of economic return
DOES ATTENDING college pay off?
It depends which college you go to and what you study, according to a new report released by College101, a nonprofit focused on higher education advocacy.
The report finds that a majority of college degrees in Massachusetts are a good investment – but not all of them are. Students who study the arts and humanities are less likely to earn high enough wages to pay back their investment in their degree, while students in engineering and computer science will almost certainly earn back the cost of their education in less than five years. Massachusetts’ private universities that are not well-ranked nationally are less likely than both public universities or nationally-ranked private universities to give graduates the skills they need to earn back the cost of their degree.
Stig Leschly, a Harvard Business School lecturer and the CEO and founder of College101, who wrote the report, said he would never suggest that a return on investment or the economic value of a degree are the only factors that matter when choosing a college. But, Leschly said, “They are near the top of the list in my experience for a very, very large percentage of students and families when they decide where to go to college and how to pick a major.”
The report found that a majority of those in the sample – 55 percent of programs and 63 percent of graduates – earned enough of an extra wage due to their college degree that they could recoup the cost of college within 10 years.
However, 26 percent of programs, accounting for 19 percent of graduates, either got no additional wages due to their degree, or the increase was small enough that it would take more than 20 years to pay for their degree.
“While most degree programs pay off really quickly, we can see over one-quarter that either take a tremendously long time to pay off or, even worse, have no return on investment altogether,” said Michael Itzkowitz, a senior fellow with Third Way, a public policy think tank, and a former Obama education official, who supplied the data for the study.
There were some stark differences even within different types of programs. For example, among certificate degree programs, around two-thirds of graduates (68 percent) earned back the cost of their certificate in less than five years. But just under one-third (30 percent) never earned back that money.
Itzkowitz said this points to the fact that some shorter-term programs can get students graduated and into the workforce quickly – but others are likely to have no return on investment whatsoever.
Two factors that were particularly relevant were field of study and type of school.
For graduates who obtained bachelor’s degrees in the arts, like music or film, 73 percent would take 20 years or would never earn back the money they paid for their degree. The humanities (fields like literature, psychology, or philosophy) and the sciences (like biology or chemistry) also had lower rates of return. In contrast, graduates with bachelor’s degrees in business and management; engineering and computer science; and economics, math, and statistics were virtually guaranteed to earn back the cost of their degree within 10 years.
Leschly said plenty of students might still choose to get a costly bachelor’s degree in the arts. But he said the information about earnings should be available to them so they can make an educated choice. “Students need to be aware that the typical outcome for them in the labor market is what it is,” he said.
The study also compared different types of schools: community colleges, public universities, and private colleges, distinguishing between private colleges that were nationally ranked (in US News and World Report’s top 100 lists of national or liberal arts colleges) and those that were not.
The report found a similar return on investment between public, four-year colleges and private, nationally ranked colleges. In each case, 65 to 66 percent of graduates earned back the cost of a degree within 10 years. This does not mean their wages are the same, since if a private college is more expensive, the wage premium paid must be higher to recoup that cost.
For private, four-year colleges that were not nationally ranked, just 53 percent of graduates recouped the cost of a degree in less than a decade.
The study has important implications for students considering college, as it makes clear that the cost of a college degree does not necessarily correlate with its value. The report’s authors argue that students should ask for information from colleges about earnings outcomes, and colleges should share this information and consider it when deciding what programs to invest in. The report also suggests that accrediting agencies take earnings outcomes into account when regulating schools.Yazmin Guzman, a researcher on the report, said she herself was a low-income, first-generation student of color. She attended MIT. She has siblings who attended two-year schools and a local state school.
“For a lot of us, we’ve been told that college is the way to actually succeed and gain the money you need to support yourself and your family,” Guzman said. “But one of the things we found out with this data is 20 percent of all students who went to Massachusetts colleges, even if they graduated, they take at least 20 years to recoup the cost of college or never recoup it at all. That’s very important for students in similar situations as I was in to understand and know and have the information more widely available.”