Which colleges offer the best return on investment?

Jed Kim Jul 11, 2016
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A student at Princeton University's campus. William Thomas Cain/Getty Images

Which colleges offer the best return on investment?

Jed Kim Jul 11, 2016
A student at Princeton University's campus. William Thomas Cain/Getty Images
HTML EMBED:
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Money Magazine has released its annual “Best Colleges for Your Money” list. It ranks schools on dozens of criteria — chiefly, how attending them will hit your bank account and how quickly you’ll make it back afterwards.

Princeton topped the bang-for-your-buck list this year. It hands out lots of grants, and on average, its alums are among the highest paid. Stanford, No. 1 last year, came in 10th. Babson College fell from second to below the top 50.

Why? The magazine tweaked its methodology.

“It changes every year, a little bit,” said Kim Clark, who wrote the article for Money Magazine.

”This year, there’s some significant changes, because the federal government late last year released fascinating new data on the earnings of financial aid recipients for each college and student loan repayment rates,” she added. “So, of course, we had to include all of this new data in our rankings this year.”

That data improved upon the ability to examine how students are able to handle their school-related debts.

“Some schools are pretty good at gaming the default rates,” Clark said. “They get their students in programs that make sure that they don’t default within the first three years after graduation, but you can’t game the repayment rates.”

The new government data comes from the Department of Education’s College Scorecard, which also provides the median income of students 10 years after they began attending school.

That data appears to be mattering more to college-bound students these days. A recent study for the College Board examined the impact the College Scorecard has had on high schoolers’ interest in various schools. It showed more SAT scores were sent to schools whose grads were seen to have higher incomes.

“A 10 percent increase in earnings for a college relative to another college increased the member scores sent by 2.4 percent,” said Jonathan Smith, a policy research scientist who co-authored the study.

“In the research world, we kind of think about that as a pretty substantial effect,” he said.

Clark said while finances are only one factor that matter to college-bound students, other considerations are not readily available.

“It’s very important for us as a society to produce people who can think critically, and understand history, and enjoy art and participate in our democracy,” Clark said. “Unfortunately, colleges do not make it easy for us to see who’s doing that. They do not provide us any information on what students are actually learning at the schools.”

She said financial success after graduation can signal the value of a college.

“The ability to pay your debts, you know, pay off your student loans, is an indicator of your ability to operate in society,” Clark said.

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