Return on Students' Investments Varies Over Time

What kind of a return on investment can a student expect to get on his or her college education?

The answer depends on any number of factors. Cost of attendance, choice of college and type of degree attained are just a few of the major ones.

A new report released today by the Georgetown University Center on Education and the Workforce examines several of those factors and how they affect returns on students’ investment. The report uses data made available on the U.S. Department of Education’s College Scorecard -- net price and median earnings -- in order to calculate the net present value of degrees and credentials from different colleges over short and long time frames. It ranks more than 4,500 public, private nonprofit and private for-profit colleges awarding bachelor’s degrees, associate degrees and certificates. It ranks the institutions as a whole but not their individual programs, although its authors hope to be able to analyze program-level return on investment in the near future.

Generally, community colleges and a large number of certificate programs posted the highest return on investment in the short term, defined as a 10-year period. Colleges that award mostly bachelor’s degrees did much better over the long run, a 40-year time frame.

Public colleges tended to return more on investment over 10 years than private nonprofit colleges did, but private nonprofit institutions returned more over 40 years.

Those findings are driven to various degrees by the fact that community colleges and certificate programs take less time to complete and tend to cost less than a bachelor’s degree. Students can finish credentials quickly and start earning.

At the other end of the spectrum, four-year degrees from private nonprofit colleges cost much more and take longer to earn, keeping many students from participating fully in the labor force for longer periods of time. But they tend to pay off as the years add up, because median annual earnings 10 years after enrollment are almost $8,000 higher for private nonprofit college graduates than they are for those who graduated from public colleges.

An average private college graduate can expect to see an economic gain of $838,000 over 40 years, the report says. Public college graduates can expect less, $765,000. For-profit college graduates can expect $551,000.

For all colleges measured, the median gain 10 years after enrollment was $107,000. It was $723,000 for all colleges at the 40-year marker.

The findings reinforce the idea that college is worth the investment, according to the report’s authors and several experts who reviewed it. But they also leave room for a large amount of nuance and exceptions, and some experts raised methodological questions.

Exceptions to the top-level takeaways include that some public institutions rank among the many private nonprofit colleges with the best long-term return on investment. A couple of four-year private nonprofit colleges posted top rankings in both the 10- and 40-year time frames.

A key nuanced point is that the middle of the pack is more muddled than might be expected. Look at the 50th percentile, institutions not rated as having particularly low or high returns on investment after 40 years, and you’ll find four-year colleges. But you’ll also find community colleges and some for-profit colleges, said Anthony Carnevale, a research professor at Georgetown and director of the university's Center on Education and the Workforce, who is an author of the report.

“In the middle of the distribution of the American postsecondary institutions, it’s a fair fight between four-year schools, two-year schools, for-profit schools, not-for-profit schools,” Carnevale said.

That suggests students and the counselors who guide them through college choices should look at individual institutions over institution type, Carnevale said. While many students and families may assume that elite private colleges outperform other types of institutions, the results for most individual students are mixed.

Net Present Value and Other Assumptions

The report approaches return on investment by using net present value, describing the concept by using the idiom that “a bird in the hand is worth two in the bush.”

In other words, people generally value the things they currently possess more than the things they might gain in the future by taking a risk, the report says. To account for this fact, economists try to calculate the time value of money, increasingly discounting projected cash flows as they peer further into the future.

Authors applied that concept when examining data from the College Scorecard. They looked at institutions that reported net price and median earnings six, eight and 10 years after students’ initial college attendance. Earnings after 10 years were used as “a reasonable proxy for future earnings.” Some institutions were excluded for various reasons, including those that primarily awarded graduate degrees.

A total of 4,529 colleges ended up in the data set. Almost two-fifths, about 39 percent, were public institutions, 34 percent were private for-profit institutions, and 28 percent were private nonprofit institutions.

Median 10-year reported earnings among those working and not enrolled were $32,300. The report also looks at colleges’ median debt, excluding private loans and loans to parents, finding it to be $9,774 across the entire sample.

Experts who weren’t involved in the report questioned some of the assumptions baked into it. It does not take into account what a student could earn if he or she immediately entered the workforce straight out of high school, for example. Nor does it adjust for the fact that some institutions disproportionately enroll students with different characteristics that make them more or less likely to earn higher wages than their peers.

“The problem is that there is significant selection [bias] regarding who goes to each institution,” Phillip Levine, a professor of economics at Wellesley College, said in an email. “M.I.T. students are brilliant. If they didn't go to college at all, it is unlikely that they would make the minimum wage. What matters is how much is their wage relative to what it would have been had they not gone to college. If you ignore this point, you will get estimates suggesting the M.I.T. has a very high ROI. Maybe that's true, but it's hard to know.”

Think about it another way: if a college mostly trains preachers, it’s not likely to score highly in return on investment, because preachers don’t tend to make large amounts of money.

A college that only trains preachers raises another point: its graduates might not care as much about money as other college graduates. Measuring return on investment doesn’t recognize the possibility that colleges and students alike seek more than economic benefits from postsecondary education.

The report assumed a 2 percent interest rate when calculating net present value. That prompted some discussion among experts, because the lower the interest rate, the more money earned in the future would be worth today. A higher interest rate would be more in line with historical norms -- and would lower the expected return on investment for college.

Financial aid for low-income students could significantly change the return on investment they could expect to receive for earning a degree, Levine said. But the report’s net price data don’t capture the different prices students might pay.

“This report considerably understates the ROI for lower-income families,” Levine said. “A student whose parents make, say, $50,000 per year or less (with typical assets for that income level) may have an ROI of two or more times as great as the level stated because of the greater generosity of financial aid. Students from those families certainly need to understand the value of a college degree and, as a society, we need to find ways to enable them to receive one.”

Many other factors could be added into return-on-investment calculations.

“Given all the things that go into determining these numbers, and given the sort of lack of precision, publishing this list of individual institutions to me is questionable,” said Sandy Baum, a nonresident senior fellow at the Urban Institute. “There are so many factors that go into earnings, one being the characteristics of the incoming students.”

The report acknowledges many different caveats. They include not accounting for the way economic shocks can affect specific occupations, the way people living in different geographic regions have different earning potential and the way industry-specific shocks might affect certain groups. It also didn’t consider how earnings for the particular cohorts studied might differ from other groups of students -- an important point, considering that the students in the study entered college just before the Great Recession hit.

Also, different students at the very same institution have vastly different earning potentials based on what they study. Income differences by field are much more important to convey to students than which institution he or she attends, said Arthur M. Hauptman, a public policy consultant specializing in higher education finance.

“The best approach would be to use the overall data to see what fields are more remunerative, if that’s your primary goal,” Hauptman said. “Then look for schools that have good programs. If you know what field you want to go into, then choose the school based on the field. The Scorecard makes things worse to me, because it’s merging this issue of school and program.”

Carnevale has emphasized the need to look at program-level data many times in the past. He hopes to address return on investment at the program level in the future.

“There is a certain effect of going to a certain kind of school,” he said. “But there is a second effect, which in many cases is much more powerful: the program you’re in.”

The Georgetown CEW expects the federal government to soon release program-level data that would allow similar ROI calculations to be performed for different majors or programs.

“There’s a second tier of information that in many cases is more important,” Carnevale said. “That’s program. That is field of study, and so forth. There is a whole substructure underneath this data, which will change this number a lot.”

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UK: Students complain they are being asked to 'snitch' after university asks for names of striking lecturers as eight day industrial action begins

Students have complained that they are being asked to "snitch" on teaching staff after their university asked for names of their striking lecturers at the beginning of an 8-day walkout.

Sheffield Hallam university has posted a form on its website on which students can enter details of the lectures missed due to strike action.

This has angered some students, who have implored their Twitter followers to spam the form with nonsense.

Twitter account Hallam Student Support The Strike posted:  FUN FACT - "The 'grass on striking lecturers form' is public - anyone can access it If you've got a spare minute, why not submit a report or ten telling Sheffield Hallam exactly what you think of this scheme?"

Pranksters tweeted evidence that they had done just this, with one pretending to have missed a lecture by "Dr Seuss" and another posting quotes from Animal Farm.

Other submissions include "you must really hate your staff" and "we are not your surveillance tools".

A Sheffield Hallam University spokesperson explained: “To help us ensure that students do not miss anything essential, we are monitoring what activities are impacted. Staff aren’t obliged to tell the University of their decision to take industrial action until after the end of the strike period. The form available helps us capture sessions that have not taken place as soon as possible so we can proactively plan alternative learning opportunities and minimise disruption for students.”

Up to 43,000 members of the University and College Union (UCU) at 60 UK institutions are taking part in walk-outs in an action the union has said will affect about a million students in the run-up to the Christmas break.

Those going on strike include lecturers, student support services staff, admissions tutors, librarians, technicians and administrators.

Prominent academics supporting the strike include Mary Beard, a leading Professor of Classics at the University of Cambridge, who said she "works 100 hours a week" and would therefore "not be crossing a picket line".

UCU has said staff have reached "breaking point" over issues including workloads, real-terms cuts in pay, a 15% gender pay gap and changes to the Universities Superannuation Scheme (USS), which the union says will leave members paying in more and receiving less in retirement.

Picket lines are being mounted at campuses across the country, protests held and other forms of industrial action launched, including not covering for absent colleagues and refusing to reschedule lectures lost to strike action.

Labour's shadow education secretary Angela Rayner is due to speak at a rally in Manchester in support of the strikes.

The strikes will take place on five days this week, and again for three days from December 2.

Ms Rayner said: "Fair pay, secure contracts, reasonable workloads and decent, affordable pensions should come as standard for all those working in education, including in our universities.

"Thousands are on strike today because that simply isn't the case in the increasingly marketised system that the Tories have created. Labour will end the failed free market experiment in education and instead put staff and students first."

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Australian Christian schools join to train teachers

This is a very positive development, as secular teacher traiing has very low standards in every respect.

It is however regrettable that they have followed the secular example and mandated four years for teacher training.  That was always a highpoint of out-of-control credentialism.  Teachers in times past did perfectly well with a one-year diploma and "Teach for America" sends graduates into difficult schools with only months of preparation.

A saving grace may be that the new arrangement will see trainees spending much more time in the schools than they do in the secular system

The Pentecostals have provided the lead for the new setup but the participating schools are mostly Anglican, so the  new setup is non-denominational, in the best Protestant tradition.


Five Sydney schools have joined together to pilot a training program to ensure the future supply of high-quality teachers for their schools.

Trainee teachers will enter into a four-year undergraduate or two-year postgraduate degree program with a big difference: the trainee teachers will be working in the schools with students for their entire tertiary education.

The Teaching Schools Alliance Sydney has been established by Blue Mountains Grammar School, St Andrew’s Cathedral School, The Scots College, Inaburra School and William Clarke College. The Alliance will partner with Australia’s largest Protestant-affiliated tertiary provider, Alphacrucis College, to deliver the degree program.

The Alliance hopes to address wider social concerns about student teacher quality, high attrition rates in the profession and classroom readiness of graduates. The pilot program will lead the way in directly addressing these issues and becoming a model that can be replicated across Australia, particularly in regional areas.

The initiative reconnects schools with the training of the next generation of teachers and utilises the tertiary partnership to form a ‘Teaching School Hub’. The model is already operating successfully in the Hunter Valley NSW with a cluster of schools from St Philip’s Christian College group of schools.

Each Hub will assess applicants on the basis of proven volunteerism, ethos alignment, EQ, IQ and appropriate academic standards before commencing training.

Alphacrucis liaison for the Alliance, Dr David Hastie, said that the ‘Hub model’ of teacher training provides significant benefits to the schools as well as the trainee teachers. “The clinical training approach embedded in the model has proven to be effective across the globe, but this Hub model adapts it for our unique Australia education context. The model provides professional and contextual preparation with a wealth of experience in curriculum development, assessment, small group teaching, parent interaction, problem-solving and conflict resolution.”

“The trainees are also well supported, their tuition fees are subsidised, they are paid part-time as a teaching assistant and they graduate with significant work experience.”

A typical Alliance trainee will spend 1-2 days per week paid to work in the classroom with a Mentor Teacher, which means that by the completion of their degree the trainee will already have hundreds of days of school-based experience.

The academic program includes a mixture of local face-to-face intensives, mentor training, and online coursework. A significant point of difference from existing models is that the training follows the rhythms of the school calendar rather than the traditional university calendar. This means that trainee teachers are receiving 40 weeks of training each year rather than the common university calendar of two 13-week semesters.

The degrees awarded are the same degrees awarded at traditional universities with the same standards, rigour and accountability to the governing bodies that set and monitor academic standards in Australia. In addition, the pilot is to be evaluated by an independent research team.

Full and partial scholarships are available to prospective trainees.

Background:

Blue Mountains Grammar School is a co-educational Pre-Kindergarten to Year 12 Christian school in the Anglican tradition. The school has two campuses located at Wentworth Falls and Valley Heights.

St Andrew’s Cathedral School is a co-educational Kindergarten to Year 12 Anglican school located in Sydney’s CBD.

The Scots College is a Pre-Kindergarten to Year 12 non-selective Presbyterian boys' school for day and boarding students. The College has campuses in Bellevue Hill, Rose Bay, Dolls Point and Kangaroo Valley.

Inaburra School is a co-educational Kindergarten to Year 12 Baptist school located in Sydney’s South.

William Clarke College is a Pre-school to Year 12 co-educational Anglican College located in Kellyville in Sydney’s north west.

Alphacrucis College is Australia’s largest Protestant-affiliated tertiary provider, and is aligned to the Pentecostal denomination. Founded in 1948, the College’s main campus is located in Parramatta with additional campuses in Brisbane, Melbourne, Hobart, Adelaide, Perth and Auckland.

Media release. Contact: Dr David Hastie – 0405 153 048. Alphacrucis College, Associate Dean, Education Development. david.hastie@ac.edu.au