Archives for March 16, 2015

ROI of Brand Name Colleges? It’s What You Study In College That Matters, Not Where You Go

Soon high school seniors will start receiving their college acceptance letters. This week’s issue of The Economist has an article discussing the results of a PayScale study of the relationship between the financial return on investment (ROI) of a college degree with the selectivity of the college itself. Via NextDraft.

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The two trendlines above support the conclusion that what you study matters far more than where you study it. The flatness of the lines show that selectively doesn’t improve ROI much for degrees of the same major, while the gap between them shows that the type of major has a significant effect on average future salary.

Engineers and computer scientists do best, earning an impressive 20-year annualised return of 12% on their college fees (the S&P 500 yielded just 7.8%). Engineering graduates from run-of-the-mill colleges do only slightly worse than those from highly selective ones. Business and economics degrees also pay well, delivering a solid 8.7% average return. Courses in the arts or the humanities offer vast spiritual rewards, of course, but less impressive material ones. Some yield negative returns. An arts degree from the Maryland Institute College of Art had a hefty 20-year net negative return of $92,000, for example.

You can also play around with the PayScale ROI rankings here.

Take from this data what you will, but perhaps it will soothe the pain of rejections and help relieve the societal pressure to get a “brand name” degree.

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