How to Measure College ROI – The Enlightened College Applicant’s Approach

As we march toward 2019, the term return on investment (ROI) has officially reached full-fledged buzzword status in the higher education community. Many admissions professionals, recognizing the flawed nature of traditional quality indicators such as the U.S. News rankings, are now actively seeking outcomes-driven data, quantifiable information that will help to answer a question essential to anyone’s college selection process—what do colleges actually do for their graduates?

It turns out that this is far from a straightforward inquiry. Various non-profit and government organizations have devised algorithms to try to accurately measure higher education ROI, yet there is no one correct measure.

Comparing graduate salaries

The most obvious way to measure a college’s return on investment is to simply compare alumni income across post-secondary institutions. has done just that. Using this information, it is easy to see that the average Harvey Mudd graduate makes $155,800 by mid-career, while the average Boston College alum earns $115,300. Harvey Mudd is ranked 2nd overall on the Payscale list while BC is 117th. So, we can conclude that Harvey Mudd has a better ROI than Boston College, right?

Not really —at least not in any valid way. Harvey Mudd College produces a disproportionately high number of graduates in engineering, computer science, and software development, all of which are relatively lucrative fields. While Harvey Mudd’s graduates may earn high incomes, their salaries are attributed, at least in part, to their major and chosen field, rather than their undergraduate institution. Thus, it becomes difficult to provide for meaningful comparisons between institutions who emphasize different disciplines. Boston College’s most popular majors include less lucrative areas of study, such as English, Communications, Psychology, and Human Development.

Comparing like majors

College Scorecard and both provide colorful, easy-to-navigate databases that allow users to compare institutions with similar characteristics by alumni salary, debt repayment, and graduation rate. Unfortunately, the data is limited only to students who received federal financial aid, which leaves out a sizable portion of the population. Additionally, neither are able to disaggregate salary information by major, the key to solving our Harvey Mudd vs. Boston College issue from before.

For a salary comparison of students with like majors attending different schools, one has to delve further in Payscale’s website. However, their methodology leaves a lot to be desired. For example, all of Payscale’s salary data is submitted voluntarily and without documentation by users, so it all must be taken with a massive grain of salt.

What 30 million tax returns say:

Research currently being led by Harvard’s Raj Chetty, as part of The Equality of Opportunity Project, examined more than 30 million tax returns of individuals born between 1980 and 1991. While the purpose of the study is multifaceted, this data source offers the most comprehensive look to date at alumni salary data. Interestingly, the numbers are markedly lower than those on

Looking at institutions in Georgia, for example, we see that at age 34 (the start of what is referred to as mid-career) Georgia Tech grads have the highest median income at $79K. Emory grads placed second with median earnings of $68K; flagship UGA comes in fourth at $50K. Meanwhile, alumni of Kennesaw State, which serves an undergraduate population of nearly 33,000, have a median income of just $37K at the start of their mid-career phase.

How ROI can mislead

Another complicating factor in trying to determine ROI is that many students attending elite colleges come from high-income, well-connected families. After all, these familial and social connections can significantly influence one’s career trajectory, raising the question—how much of the ROI can a college really claim responsibility for?

Once again, The Equality of Opportunity Project’s data is useful in parsing this factor out. The study revealed that many top colleges matriculate more students hailing from the economic 1% than from the bottom 60%. Some of these figures are truly astounding. For example, the median family income of a freshman at Colorado College is over $277,000 per year. It seems fair to wonder if an institution like Colorado College can truly be credited with landing a student with wealthy and powerful parents a high paying job when family connections or nepotism might deserve more credit.

To remedy this problem, they devised an algorithm attempting to measure the “highest upward mobility rate.” Predictably, many schools of engineering sit atop this list, but they are joined by liberal arts institutions such as Rhodes College, Mount Holyoke, and Union College.

Practical steps for using ROI data

It may be an imperfect science, but existing ROI data can still be useful to teens and their parents during the college selection process. Let’s walk through a couple of examples of how one might integrate ROI into their decision-making process:

Example #1: Psychology Major

Jill, a New York resident, knows that she wants to major in psychology. She is aware that this will likely entail pursuing advanced degrees down the road, since opportunities for those possessing only a bachelors in this discipline are limited and often low-paying. She is debating whether to attend a state university like SUNY Binghamton or a private university like the University of Rochester.

For more data, she checks out Payscale’s ROI rankings for psych majors. Here, she is able to determine that at SUNY Binghamton the 4-year cost will be $126,000 and the 20-year ROI will be $247,000. This is calculated by measuring the average psych grad’s pay over two decades versus the average high school grad’s pay over 24 years. At University of Rochester, she will pay $258,000 for her degree and the 20-year ROI will be $176,000. Using this information, Jill concludes that attending SUNY Binghamton for her undergraduate degree is a superior financial investment.

Example #2: Engineering Major

Mark, a Washington resident plans on studying engineering. He is choosing between three schools. Gonzaga, a nearby private university, the University of Washington—Seattle campus, and his dream school, UC Berkeley. He checks out Payscale’s ROI rankings for engineering majors to see how graduates of his three prospective colleges fare.

He sees Berkeley at the very top of the ROI rankings. Engineering graduates from out-of-state take home a 20-year net of almost $1.1 million dollars. Gonzaga is all the way down in 408th place, with a 20-year return of $663,000. UW-Seattle boasts an ROI of $951,000 and will cost $130,000 less in tuition than Berkeley. Mark emerges undecided between UW and Berkeley (even though UW makes more financial sense), but investigating ROI figures helped him eliminate Gonzaga—an important step in his college search.


Measuring a college’s return on investment, at present, remains an imperfect science. No single calculation or rating system is going to definitely tell you that attending University A will result in a more lucrative career than attending University B. This is especially true given the fact that the data sources available all have significant limitations. However, the flood of new data on ROI from the multitude of sources referenced throughout this article can, when considered as whole, still help you adopt a more consumer-minded approach to the college selection process. Merely accepting the notion that you should be judging colleges every bit as much as they are judging you is a step in the right direction.

Dave Bergman and Andrew Belasco are co-founders of College Transitions, a team of college planning experts committed to guiding families through the college admissions process. They are also co-authors of “The Enlightened College Applicant: A New Approach to the Search and Admissions Process.” Learn more at

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