Dealing in Dreams

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It just seems absurd, to pay 60 grand a year so that you can read Rousseau. I mean I can read Rousseau right here. Hell, I can hire sometime to read it to me, teach me French, and then read it to me in French for that kind of money. It’s absolutely nuts!

By Kunal Jasty

We’re drilling down on the essential question around the higher ed challenge – namely why does it cost so much, and it is it worth it in the end?

Here are 1500 American colleges and universities plotted by their 4-year sticker price on the x-axis and 30-year net return on investment (based on the median salary of graduates) on the y-axis. All data is taken from Payscale’s annual report on the earnings of college graduates. Look to the top right of the graph for high-price schools with high future salaries, the bottom right for high-priced schools with low future salaries, and the top left for (relatively) affordable schools with high future salaries.

Notes:

  • Payscale has a great explanation of their methodology on their website.
  • The dataset is by no means perfect, but I believe it is accurate enough for illustrative purposes.
  • We’re not taking into account the net price of colleges (i.e. financial aid and grant aid).
  • Future earnings by no means the only way to judge a college or the “college experience.” It’s hard to put a price on the value of a college education, but I believe the average earnings of graduates is an extremely important data point.
  • Thank you to nsonnad for providing invaluable code examples.

  • Dave

    I think it would be an awesome idea to give a search bar so that people can search for certain colleges and see where they place.

    • Kunal

      That’s definitely the next step. Going to try to implement it ASAP

    • Lydia Frank

      We already have that view up on the PayScale site w/ a search box. http://www.payscale.com/college-roi/c/data-interactives/explore-the-data

      • Kunal

        That’s a cool tool! Didn’t even see that

      • SearchBroken

        Just to let you know, the search feature doesn’t seem to work. If you type in a school and select it you will receive an unexpected error notifying you to contact the server admin. If you scroll through the schools and select one, the view area will become blank. Happened on FF and IE. I run ghostery in FF but whitelisted the site and still received the issues.

  • Russ

    I guess it’s always better to have data than to not have data, but the problem with data is that it pushes us to focus on the things that are easy to quantify. Return on investment might be one relevant metric, but higher education is about a lot more than vocational training, isn’t it? How can we measure both (1) the intangible benefits to the student him- or herself — the overall incremental life satisfaction derived through the education even apart from income, and (2) what economists would call the “positive externalities” — the benefits that accrue to everyone else by virtue of Student X’s understanding of Rousseau or Monet or Tibetan dance? Those benefits are real, and we need to be careful that, in zeroing in on income, we don’t ignore everything else.

    (BTW, it will show this as being posted as “Russ,” but for these purposes I really prefer my old ROS handle, “Sutter.”)

    • Kunal

      I do agree with you, BUT I also think students need to be way more aware of how much their college costs and how much a graduate from that school can expect to earn over the next 30 years. Would you pay a $250,000 price tag for those “intangible benefits” when you could go to a public university for less than a fifth of the cost?

      As Thomas Frank writes in the Academy Fight Song, “universities deal in dreams.”

      • Russ

        As someone who spent more than a decade paying off student debt, I agree that students need to be more aware. That said, my answer to your “Would you pay” question is “maybe.” It depends. A lifetime of fulfillment might well be worth $200,000. Obviously, you can’t assume that fulfillment can only come with the $250,000 price tag, or that everyone would be able to even make the choice. I just don’t want to let those other values get lost in the debate. (Ultimately, I think my argument leads not to the clearly unrealistic “everyone should go to an expensive private college/university,” but to the (maybe just as unrealistic?) “We should move toward fully subsidized secondary education, recognizing that it’s a worthwhile investment for society.”)

        • https://www.flickr.com/photos/22549175@N02/ Robert W Peabody III

          I picked a dot that was the most expensive and had the lowest return on investment. I was wondering what they know that the bean counters don’t.

          The ultimate intangible might be to NOT care if you get a job after graduating.

        • Potter

          As well, I wonder how we can make studying and achieving a degree from, and also teaching at a public institution have cachet: through excellence. And/or in the process disenthrall everyone, students, teachers and employers from designer label worship. A tough hill to climb? Stars like Paul Krugman moving to CUNY from Princeton help. (Princeton will survive.)

    • Potter

      hola Sutter!!

    • anon

      We have the internet now – no need to pay hundreds of thousands of dollars to ‘understand’ Rousseau or Monet or Tibetan dance.

      • Kunal

        To be fair we always had public libraries too…

        • Rob Gibbons

          To be fair, the internet cannot be compared 1:1 to a library.

      • TheresaBedford

        It’s your fellow students who matter as much as the coursework and the extracurricular activities. Studying in the basement is often affordable, but it’s learning to understand others and work together that is of lasting value.

    • sirhotalot

      >but higher education is about a lot more than vocational training, isn’t it

      That’s propaganda the universities tell you to get you to pay the higher price for things you don’t need and will never use. College is a scam.

  • Maureen

    No control for selection bias.

  • Holly B. Anderson

    This would be more useful if the data were available by field of study–for instance, comparing all the social work programs to each other. Not surprisingly, there are a lot of schools with “tech” in the name at the top of the earnings list, but that doesn’t help someone who doesn’t want a STEM degree.

    • Kunal

      That graph would really be extremely helpful (along with job placement rates etc). Unfortunately the Obama administration hasn’t yet released all their reports, but hopefully they’l publish all that information soon. I think the more information high school grads get the better, with the caveat that no one data point can tell you everything

  • Sarah

    You can’t quantify dollars what I got back for my education because I’ve spent 20 years as a stay at home parent raising 3 kids – one with a disability. The things I learned, people I knew, and connections I made all contributed to my ability to raise and help my children. You may think this information is helpful; I think it is meaningless because it puts a price on fulfillment.

    • Rob Gibbons

      Now, imagine if you didn’t have to pay even 10% as much for all of that fulfillment.

    • Michael Beaton

      Do you think you would be as fulfilled by participating in the coursework from say, Coursera.org, iTunesU and other places? And if not, what would be the difference?
      I suppose this is to ask what is fulfillment? Is it a function of the knowledge and exposure to community on campus, or ??.

  • nixxer

    It’s been shown that people’s success is more dependent on the best school they were accepted to as opposed to the one they went to. Unless you get a fantastic scholarship and/or have some compelling attachment to a particular school you be insane not to go to the best in-state school available.

  • nixxer

    I went to a great private school 25 years ago, but I would *never* do so now unless it offered a huge scholarship to bring the price inline.

  • zacknichols

    Isn’t the ROI here mostly going to measure something like what proportion of students are in engineering and medicine? A fairer (but more difficult) comparison would adjust ROI by field (so a Stanford-grad engineer might make more on average than a UF-grad engineer, or a Yale-grad lawyer might make more on average than a University or Iowa-grad lawyer, regardless of the fact that Yale produces a lot of people who did liberal arts which will push the overall expected ROI down).

  • http://michaellydon.com/ Michael Lydon

    I went to Yale on a full scholarship, so my higher education investment was nearly nil. I draw on my excellent education every day in my work as a musician and writer, but I have made very little money in my forty-plus year career. So where does this leave me on your charts?

    • Michael Beaton

      I wonder what your answer is to your question? For example, maybe you could reflect as if you paid the rate, put yourself on the chart and see if the value is there for you.
      If someone offered me a house for free, I’d take it. If that same house cost me 500k I suppose it would cause me to think about it a little more…

  • Leah Silver Graves

    The most recent issue of ‘Boston’ magazine explains that the average adjunct professor in the USA makes $35,000 per year. Many live below the poverty level. The students I work with at Penn (Dental School) pay $100,000 per year plus living expenses. Temple University (Dental) charges $60,000/year. My average student graduates with $350,000 in school loans. The numbers just are not adding up. What are the schools doing with all of the funds? How much does it cost a student to pay off that $400,000+ for Penn plus undergrad?

    • Michael Beaton

      I hope they take up this question. I have wondered the same thing.

  • Leah Silver Graves

    Agree! And depending on where you live the vocational school is really great. The one in my town has programs in everything from design to culinary programs. You hit the ground running and you get to try other programs while in school. Vocational schools have come a LONG way. I know students that go on to start their own businesses and have no idea how to pay bills, hire staff, balance a budget (and make sure their employees are not stealing money from them and actually paying the bills). They are not learning basic skills that you learn in vocational school and they went through 4-8 years of college.

  • Kunal

    Barry Ritholtz of “The Big Picture” has a fascinating analysis of this scatterplot:

    http://www.ritholtz.com/blog/

  • mak_th

    this would be better if 1/3 of the flash presentation wasn’t blocked by the links hovering at the right.