But new research suggests that the monetary value of a college degree may be vastly overblown. According to a study conducted by PayScale for Bloomberg Businessweek, the value of a college degree may be a lot closer to $400,000 over 30 years and varies wildly from school to school. According to the PayScale study, the number of schools that actually make good on the estimates of the earlier research is vanishingly small. There are only 17 schools in the study whose graduates can expect to recoup the cost of their education and out-earn a high school graduate by $1.2 million, including four where they can do so to the tune of $1.6 million. At more than 500 other schools, the return on investment, or ROI, is less—sometimes far less. College, says Al Lee, director of quantitative analysis at PayScale, "is not the million-dollar slam dunk people talk about" [Francesca Di Meglio, "College: Big Investment, Paltry Return," Bloomberg Businessweek, 2010.06.28].
The study analyzes ROI for in-state and out-of-state students separately, so public schools get two rankings. It measures ROI at three South Dakota schools: South Dakota State University, School of Mines and Technology, and Black Hills State (alas! no comparisons with DSU or Augie).
School of Mines comes out on top in South Dakota and pretty good nationwide. the ROI resident students get ranks 288th out of 852 rankings in the analysis. Non-resident ROI ranks 294th.
South Dakota State University ranks 580th by resident rates and 598th by non-resident rates. SDSU's ranking is helped by its 51% graduation rate, compared to a 37% graduation rate at Mines. But interestingly, SDSU graduates make little more than Mines students who don't graduate. Among non-residents, Mines non-grads actually edge SDSU grads in ROI. Sometimes, winning is just a matter of showing up.
The worst way to invest your educational dollar is to come from another state and attend BHSU. The ROI for non-residents at Spearfish ranks 852nd out of 852. South Dakotans attending BHSU do only marginally better, producing an ROI that ranks 850. In other words, if you're concerned strictly about earning potential and you're thinking about attending Black Hills State, you might do just as well to skip college, go straight to work, and make up the earning difference by putting in extra hours for a couple summers at Zesto's.
The best investment in the region is private Carleton College over in Northfield, Minnesota. And alas, even with lower tuition, SDSU lags behind the flagship public universities of Minnesota, Nebraska, and North Dakota.
Now a couple notes on methodology:
- This analysis examined 1.4 million graduates, but the data is self-reported, allowing for all sorts of inaccuracy.
- The return on investment includes assumes earning power is delayed, figuring that if you don't go to college, you spend those first four years out of high school working your tail off.
- The overall ROI is more a measure of the institution's performance, not specific graduates. Having lots of students who don't graduate counts against a school's ranking, but it doesn't change the fact that if you get that degree, you will earn more.