Measuring the return on investment of attending college (Part 1)

Last month I described my testimony at a U.S. House of Representatives hearing on getting better information about college. One of the topics mentioned by a few of the House committee members was the issue of the return on the investment in college as measured by what students are earning today. There has been much interest in getting better data about what graduates of different colleges earn when they enter the labor markets, so that prospective students can get an idea of what the return on their investment in postsecondary education will be.

While measuring the return on investment (ROI) of attending different colleges sounds like a good idea, in reality it is a complex and challenging task. To calculate an ROI, one has to have accurate data on both the value of the investment as well as the value of the return, or the earnings that the investor receives from her investment. While we have lots of data on the cost of attending different colleges, including some data on net prices (as I described in my testimony), we have very little accurate, reliable, and comprehensive data on what the graduates of different colleges earn.

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Better information about college

shutterstock_119536138Earlier this week I testified at a hearing held by the Subcommittee on Higher Education and Workforce Training of the U.S. House of Representatives Committee on Education and the Workforce. The hearing, titled “Keeping College Within Reach: Enhancing Transparency for Students, Families, and Taxpayers,” examined what type of information about colleges is available to students interested in enrolling in postsecondary education, and what can be done to improve the quality of the information.

This is one of a series of hearings being held in both the House and the Senate in preparation for the reauthorization of the Higher Education Act of 1965 (HEA), the primary legislation that outlines the federal government’s role with respect to postsecondary education. The HEA was last reauthorized in 2008, and is due to be reauthorized again this year.

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