Princeton University takes first place in a new analysis of the economic returns students receive from attending college, but public universities also do well in the new ranking, claiming more than half of the top 25 spots.
The rankings just released are the work of DegreeChoices, a relatively new company that provides students, families and consumers with information about their college and career opportunities. (Full disclosure: I serve as a website content consultant for DegreeChoices.)
Using public data sources — notably the US 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 scores.
The first is repayment – a measure of how long it takes for students to recoup their investment in education after attending a particular school. The second is meritsPlus, a calculation of how much more or less students at a particular college earn compared to the weighted average of students at all colleges in that state.
Payback is essentially the same measure used by Third Way in rating colleges, which is understandable given that Michael Itzkowitz, a Senior Education Fellow at Third Way who developed its Payback methodology, is serving as an advisor by DegreeChoices for its ranking system.
Payback is calculated by dividing the amount a student pays out of pocket to study at a given institution by the average raise they receive. The salary increase is determined by comparing the average salaries of college attendees to the average salaries of college graduate peers in the state where the college is located.
Dividing the net cost by the premium that college goers earn compared to high school seniors shows the number of years it takes for students to recoup the net cost of their education.
meritsplus calculates the difference in median earnings for students at a given college by subtracting the weighted state average earnings from the school’s median earnings.
To get to what is called an institution economic score, the factor by which DegreeChoices ranked the schools, the schoolthe repayment is divided by its percentage advantage/disadvantage meritsplus Factor.
Here is an illustration. The payback for a student at California State University – Fullerton is 1.37 years. For a student at the University of California, Los Angeles, it’s 1.49 years. Cal State looks a little better because the payback period is shorter.
But wait. Compared to the average income of all students ten years after attending 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 that those earnings provide looks more favorable for UCLA. Dividing Cal State’s payback by 1.075 gives an economic score of 1.27; Dividing UCLA’s payback of 1.49 by 1.453 gives an economic score of 1.02.
Whether amortization or earningsplus more importantly depends on individual circumstances. Payback shows how quickly, on average, education costs can be recouped while generating revenueplus later conveys relative economic advantages.
Remember that schools earning more than 100% of the state average receive 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, ranked by their economic score. Additionally, each listing displays Admission Rate, Graduation Rate, Net Cost, Payback, Average Earnings, and EarningsPlus.
- Princeton University .31
- Stanford University .36
- CUNY City College .39
- University of Florida .45
- Georgia Institute of Technology .49
- Massachusetts Institute of Technology .50
- California Institute of Technology .52
- University of Michigan .70
- Duke University .70
- University of Pennsylvania .71
- University of California, Berkeley 0.74
- Missouri University Science and Technology .74
- Vanderbilt University .75
- Rice University .77
- Georgetown University .82
- University of California, Los Angeles .83
- University of California, San Diego .85
- University of North Carolina, Chapel Hill .86
- University of Washington .88
- Harvard University .89
- University of Virginia .89
- University of Illinois, Urbana-Champaign .90
- Florida International University .91
- Columbia University .91
- Yale University .91
What is notable about this top 25 list is that it includes 13 public universities, far more than the number produced by other popular rankings US News (four public universities in top 25), Wall Street Journal/Times Higher Education(only one public school in top 25) or forbes (six public bodies in the top 25).
DegreeChoices uses the same ranking method:
liberal arts colleges (The first 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 universitiess (Top 3: Elizabeth City State University, Fayetteville State University, Xavier University of Louisiana)
women’s colleges (Top three: Texas Woman’s College, Barnard College, Mount Saint Mary’s University)
Profit-Oriented Institutions (Top 3: Columbia Southern University, West Coast University-Dallas, Neumont College of Computer Science)
Consumer interest in how much economic return a college degree provides continues to be strong, and there are now multiple methods of calculating those returns. This is due in no small part to concerns about the high cost of college education, the resulting debt many college students and their families incur, and the fact that most students say getting a good job is their primary motivation , to go to college.
David Levy, who developed the DegreeChoices methodology, said his goal is to bring the data on the economic outcomes of attending different colleges “into a user-friendly format so that students can quickly compare performance metrics between their target schools. This is a gap in current university rankings. Closing this gap is becoming increasingly important as the cost of education skyrockets.”
Economic benefit is not the only reason to pursue college education, and it is not the only measure of what makes a good college. But at a time when financial considerations have become so important to student decision-making, the DegreeChoices Economic Score provides an especially comprehensive comparison of the economic returns of the nation’s universities and colleges.