With higher education costs escalating faster than traditional inflation, it’s important to treat the college selection process as the serious investment it is. Whether you, your child, grandchild or other loved one is researching colleges and universities, calculating the actual value of higher education can help whittle down the options and justify the escalating costs.
You should approach this like any other financial investment you may make. Look at the facts. Consider the costs. And determine your personal ROI (Return on Investment). Relying on your gut or emotions can lead you into a financial death spiral.
Here are three interesting college rankings worth considering:
- Total Debt at Graduation — Earning an undergraduate degree is a crucial milestone, but starting a new life chapter saddled with tremendous debt can disrupt that momentum. States and institutions can take different approaches to student loans, so pay attention to the student debt trends at each university or college to set realistic expectations. Ideally, students should aim to have debt that is equal to or less than what they expect to earn after graduation in their chosen field of study. That amount will be higher for an engineering student compared to an art major for instance.
- Alumni Earnings Above Expectations — While U.S. News & World Report provides a popular college ranking list each year, the minds behind The Economist created their version with a unique, finance-oriented premise. The magazine’s first-ever ranking of four-year, nonvocational colleges is based on how much money graduates earn compared to how much they could have made had they studied elsewhere. While not everything comes down to cold-hard cash decisions, this is something to consider. A nursing student at a public in-state college will likely earn as much as a nursing graduate from a more ‘prestigious’ and expensive private college or Ivy but without the debt.
- Highest 4-Year Graduation Rates — While overall graduation rates matter, the ideal situation is earning the degree in as little time as possible since college costs can skyrocket as more semesters are added. Looking at graduation rates for those who completed college in four years can help prospective students find campuses with similar work ethics. It generally takes more than five years to earn a four-year college degree. That means more tuition costs and one-year less time to be earning in the job market. And if you see a low 4-year graduation rate it’s likely that students either are spending more to get that degree or transferred or have left burdened by debt without one.
College is a booming business, and it’s critical to consider the financial impact from a variety of angles, especially if your goal is to help yourself or someone else on the path to lasting success.
Thank you for reading my newsletter, I look forward to connecting with you on social media. And if you want to find out more on how planning ahead can help you pay less for college later, please call me directly at 617-398-7494.
