For the nearly 18 million high school students enrolling in college this year, their college education will likely be the most consequential investment they make.
Sadly, that investment calculus has become increasingly challenging due to the continuous rising cost, regardless of whether one attends a leading state college like the University of Michigan, with an annual tuition cost of $17,000 for in-state residents, or an elite private college like Yale University, with an annual tuition of $65,000. Students need to determine whether an institution not only represents the “right choice” but also delivers the best value or highest return on investment.
Investing in college has historically yielded significant benefits, including greater career opportunities, higher earning potential and a better quality of life for millions of Americans. The data has also reinforced the value of a college education, both financially and otherwise. The Economic Data Initiative reveals that the return on investment of a bachelor’s degree over a 20-year period has been 38.1%, with a lifetime ROI of 287.7%. Multiple studies have also shown that students gain in non-pecuniary ways, including enhanced quality of life, a deeper sense of purpose, exposure to diverse populations and developing lifelong friendships.
But is that still true? As Secretary of Education Miguel Cardona has advocated, “We need a system that’s inclusive, that delivers value, and that produces equitable outcomes. … It’s time to focus on what truly matters; delivering value and upward mobility.”
That question whether higher education is delivering on its promise of value and upward mobility is under intense scrutiny given the pending Supreme Court ruling on student loan debt and the pressures of repayment. Today, more than half of students leave school with debt, resulting in 45 million Americans holding student loan debt totaling approximately $1.7 trillion.
Calculating the precise value of education is certainly challenging as it depends on many personal factors such as a student’s post-graduation choices and career earnings potential. Some careers, such as nursing or teaching, may have significant value to society despite not paying high salaries. Nevertheless, an emphasis on outcome irrespective of job choice is the right one.
On the downside, students still face difficulties evaluating the true cost of their college education. Often, the cost that colleges list for tuition does not accurately represent what most students will ultimately pay, as the actual amount for each student varies widely for the same education. According to a recent U.S. Government Accountability Office report, 41% of colleges do not provide any net price estimate, and only 9% of colleges accurately estimate the net price of attending college.
That cost and debt burden has meant more students are unwilling and unable to make the investment and sacrifice. According to Secretary Cardona, “Nearly 60% of Black college students and nearly half of Latino students never complete their degrees, usually because of financial challenges.”
It is crucial that our colleges equip students with the necessary skills to earn a living in the rapidly evolving economy of the future. Sadly, this is not always the case. Take Micron Technology, which is building a $100 billion semiconductor production campus in upstate New York. To meet Micron’s needs, civic leaders are seeking to build a new workforce by pushing upstate colleges and universities to not only revamp their education and training programs and produce more engineers but to also teach the requisite technical skills.
President Joe Biden recognized this issue in his recent State of the Union address: “Let’s finish the job,” he said, “connect students to career opportunities starting in high school, and provide two years of community college, some of the best career training in America, in addition to being a pathway to a four-year degree.”
What to do? To reverse the trend of declining student enrollment and push the benefits of a college education, such as value and ROI, we must prioritize the measurement of relevant data. As former New York City Mayor Mike Bloomberg often says, “In God we trust. Everyone else, bring the data.”
Eric Gertler is Executive Chairman and CEO of U.S. News & World Report and a former President & CEO of Empire State Development in New York State.