For a generation of young Americans, choosing where to go to college — or whether to go at all — became a complex calculation of costs and benefits that often revolves around a single question: Is the degree worth its price?
Public confidence in higher education plummeted amid high tuition prices, skyrocketing student loan debt and a dismal job market — plus ideological concerns from conservatives. Now, colleges scramble to prove their value.
Borrowed from the business world, the term "return on investment" appears on college advertisements across the U.S. New rankings grade campuses on the financial benefits they deliver. Some states started publishing yearly reports on the monetary payoff of college, and Texas now factors it into calculations for how much taxpayer money goes to community colleges.
"Students are becoming more aware of the times when college doesn't pay off," said Preston Cooper, who studied college ROI at the American Enterprise Institute, a conservative think tank. "It's front of mind for universities today in a way that it was not necessarily 15, 20 years ago."
Bachelor's degrees
Research indicates a bachelor's degree still pays off, at least on average and in the long run. Yet there's growing recognition that not all degrees lead to a good salary.
A new analysis by the Strada Education Foundation found 70% of recent public university graduates can expect a positive return within 10 years — meaning their earnings over a decade will exceed that of a typical high school graduate by an amount greater than the cost of their degree. Yet it varies by state, from 53% in North Dakota to 82% in Washington, D.C. States where college is more affordable fared better, the report says.
It's a critical issue for families who wonder how college tuition prices could ever pay off, said Emilia Mattucci, a high school counselor at East Allegheny schools near Pittsburgh. More than two-thirds of her school's students come from low-income families, and many aren't willing to take on high debt. Instead, more head to technical schools or the trades, she said.
Education Secretary Linda McMahon is among those questioning the need for a four-year degree. At the Reagan Institute think tank last month, she praised programs that prepare students for careers right out of high school.
"I'm not saying kids shouldn't go to college," she said. "I'm just saying all kids don't have to go in order to be successful."
Tuition vs. earnings
American higher education grapples with both sides of the ROI equation — tuition costs and graduate earnings — as colleges compete for decreasing numbers of college-age students as a result of falling birth rates.
Tuition rates stayed flat on many campuses in recent years to address affordability concerns, and many private colleges lowered their sticker prices in an effort to better reflect the cost most students actually pay after factoring in financial aid.
The other part of the equation — making sure graduates land good jobs — is more complicated.
A group of college presidents recently met at Gallup's Washington headquarters to study public polling on higher education. A chief reason for flagging confidence is a perception that colleges aren't giving graduates the skills employers need, said Kevin Guskiewicz, president of Michigan State University, one of the leaders at the meeting.
"We're trying to get out in front of that," he said.
He gathered a council of Michigan business leaders to identify skills that graduates will need for jobs — to mold degree programs to the job market's needs and to get students internships and work experience that can lead to a job.
Job market disconnect
Bridging the gap to the job market has been a persistent struggle for U.S. colleges, said Matt Sigelman, president of the Burning Glass Institute, a think tank that studies the workforce. Last year the institute, partnering with Strada researchers, found 52% of recent college graduates were in jobs that didn't require a degree, including in higher-demand fields such as education and nursing.
"No programs are immune, and no schools are immune," Sigelman said.
A federal rule first established in 2011 aimed to cut federal money to college programs that leave graduates with low earnings, though it primarily targeted for-profit colleges.
A Republican reconciliation bill passed this year requires most colleges to hit earnings standards to be eligible for federal funding. The goal is to make sure college graduates end up earning more than those without a degree.
The College Scorecard, started in 2015, is a federal website that shares broad earnings outcomes for college programs. Recently bipartisan legislation in Congress sought to give the public even more detailed data.
