Princeton #1, But Public Universities Also Do Well In New College Ranking Based On Economic Returns

Princeton University is ranked #1 in a new analysis of the economic returns students receive from attending college, but public universities also perform well in the new ranking, claiming over half of the top 25 spots.

The just-released rankings are the work of DegreeChoices, a relatively new company that provides students, families and consumers with information about their college and career options. (Full disclosure: I serve as a consultant on webpage content for DegreeChoices.)

Using public sources of data – specifically the U.S. Department of Education’s College Scorecard and the Integrated Postsecondary Education Data System (IPEDS) – DegreeChoices researchers ranked over 2,000 undergraduate colleges and universities based on the mathematical combination of two outcomes.

The first is payback – a measure of how long it takes students to recoup their educational investment after attending a given school. The second is earningsplus, a calculation of how much more or less students from a particular college earn when compared to the weighted average of students from all colleges in that state.

Payback is essentially the same measure used by Third Way in its scoring of colleges, which is understandable given that Michael Itzkowitz, a senior education fellow at Third Way who developed its payback methodology, served as a consultant to DegreeChoices for its ranking system.

Payback is calculated by dividing how much money a student pays out-of- pocket to attend a given institution by the average salary boost they receive. The salary boost is determined by comparing the average salaries of the college attendees to the average salaries of peers with only a high school diploma in the state where the college is located.

Dividing net costs by the premium that college attendees earn vs. high school graduates shows the number of years it takes for students to recoup the net costs of their education.

Earningsplus calculates the difference in median earnings for students from a particular college by deducting the state’s weighted average earnings from the school’s median earnings.

To arrive at what is called an institution’s economic score, the factor on which DegreeChoices ranked schools, the school’s payback is divided by the percentage advantage/disadvantage of its earningsplus factor.

Here’s an illustration. The payback for a student attending California State University – Fullerton is 1.37 years. For a student attending the University of California, Los Angeles, it’s 1.49 years. Cal State looks a little better because it’s payback period is shorter.

But wait. Compared to the average earnings of all students ten years after attending a California college ($50,770), Cal State students earn an average of $54,586, 107.5% of the state average, while UCLA students earn $73,744, or 145.3% of the state average. Now, the longer term picture provided by those earnings looks more favorable to UCLA. Dividing Cal State’s payback by 1.075 yields an economic score of 1.27; dividing UCLA’s payback of 1.49 by 1.453 gives an economic score of 1.02.

Whether payback or earningsplus is more important will vary depending on individual circumstances. Payback reveals how soon educational costs can be recovered on average, while earningsplus conveys relative economic advantages later down the road.

Just remember that schools that earn more than 100% of the state average will see an economic score lower than their payback rate. And in this ranking system, the lower the economic score the better.

The Top 25 National Universities

Here are the top 25 national universities, ordered by their economic score. In addition, each listing displays admission rate, graduation rate, net cost, payback, average earnings, and earningsplus.

1. Princeton University .31
2. Stanford University .36
3. CUNY City College .39
4. University of Florida .45
5. Georgia Institute of Technology .49
6. Massachusetts Institute of Technology .50
7. California Institute of Technology .52
8. University of Michigan .70
9. Duke University .70
10. University of Pennsylvania .71
11. University of California, Berkeley .74
12. Missouri University Science and Technology .74
13. Vanderbilt University .75
14. Rice University .77
15. Georgetown University .82
16. University of California, Los Angeles .83
17. University of California, San Diego .85
18. University of North Carolina, Chapel Hill .86
19. University of Washington .88
20. Harvard University .89
21. University of Virginia .89
22. University of Illinois, Urbana-Champaign .90
23. Florida International University .91
24. Columbia University .91
25. Yale University .91

Noteworthy about this top 25 list is that 13 public universities are included, far greater than the number that make other popular rankings like U.S. News (four public universities in its top 25), Wall Street Journal/Times Higher Education, (only one public school in the top 25) or Forbes (six public institutions in its top 25).

DegreeChoices uses the same methodology to rank:

Liberal Arts Colleges (The top three are: Claremont McKenna College, Harvey Mudd College and Washington and Lee College)

Hispanic-Serving Institutions (top three: CUNY Lehman College, CUNY City College, and CUNY Hunter College)

Historically Black Colleges and Universities (top three: Elizabeth City State Uivesity, Fayetteville State University, Xavier University of Louisiana)

Women’s Colleges (top three: Texas Woman’s College, Barnard College, Mount Saint Mary’s University)

For-Profit Institutions (top three: Columbia Southern University, West Coast University-Dallas, Neumont College of Computer Science)

__________

Consumer interest in how much economic return on investment a college degree conveys continues to run strong, and there are now several methodologies available for calculating those returns. That’s due in no small measure to concerns about the high costs of a college education, the ensuing debt that many college students and their families shoulder, and the fact that most students say that getting a good job is their main motivation to go to college.

David Levy, who developed the DegreeChoices methodology, said that his objective was to put the data about the economic outcomes from attending different colleges “into an easy-to-use format so students can quickly compare performance metrics between their target schools. This is a gap in current college rankings. Addressing this gap is increasingly important as educational costs skyrocket.”

Economic benefit is not the only reason to pursue a college degree, and it’s not the only measure of what makes a good college. But in an era where financial considerations have become so important to students’ decision-making, the DegreeChoices economic score provides a particularly comprehensive comparison of the economic returns of the nation’s universities and colleges.