Measuring the return on investment of attending college (Part 2)

In my last post, I described the challenges in obtaining accurate and comprehensive data on the salaries earned by graduates of individual colleges around the nation. While there is much interest in using data on the earnings of college graduates as a means for ranking colleges, there is no single source of data on all colleges in the country (or even a majority of them) that allows us to compare institutions in this manner. Even if we did have accurate data, is the salary of recent graduates the primary criterion we should use in judging higher education institutions?

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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.

Continue reading “Measuring the return on investment of attending college (Part 1)”