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Understanding the Return on Investment (ROI) on a College Education 

Attending college is a big investment. When making such a big financial decision, it’s important to understand the return on your investment (ROI).

Attending college is a big investment. The cost per year of a college education in 2022-23 is nearly ten times what it was in 1979-80. When making such a big financial decision, it’s important to understand the return on your investment. Return on investment (ROI) is a formula that compares the net profits (or loss) to an investment’s cost.   

In general, ROI on college investment compares the earnings of college graduates to the costs of their tuition. However, determining the ROI of a college degree is not quite that simple. There are several important additional considerations to make when understanding the ROI of your investment in your college education. 

Here, we will focus on three ways we can look at ROI for a college education: level of education, type of academic institutions, and college major.  

ROI of an Undergraduate Degree 

Generally, getting a college-level degree is considered a good investment. Associate or bachelor’s degree graduates can expect to earn much more over their lifetimes than those with a high school degree, with bachelor’s degree holder earnings being an average of 84% higher than those without any college. Unemployment rates among college graduates are half of their peers with only a high school degree.  

Associate or bachelor’s degree graduates earn on average 84% more over their lifetimes than those without a college degree.

ROI for Different Types of Institutions 

While a college degree overall is often a worthwhile investment, ROI can fluctuate between public and private institutions, as well as between non-profit and for-profit colleges and universities. Generally, degrees from non-profit institutions (including both private and public schools) are a better investment than those from for-profit institutions. A study of more than 3,000 institutions found that, on average, public institutions have the best ROI, followed by private non-profit institutions, while private for-profit institutions sometimes have a low or even negative ROI. When choosing which type of college you may want to attend, it is worth keeping in mind the type of institution and the impact this choice can have on your postgraduate earnings. 

ROI for Different Majors  

Trying to determine the ROI on a specific major is very challenging. Many factors aside from the selected major influence post-college earnings, including a student’s socioeconomic background, potential alumni network, geographical location, postgraduate location and lifestyle, and financial aid assistance. In addition, aptitude is an important variable when considering how successful someone will be in a course of study or future career. Because of this, it is very difficult to determine the ROI for a specific student based on their major, but there are still useful takeaways to consider. 

Generally, most data that looks at ROI on majors shows that STEM (science, technology, engineering and mathematics) degrees have the highest returns on investment. However, even within the STEM field, there are large variances in income and the lowest STEM income could be well below the highest income for a degree program with a lower earning potential.  

There are several studies that have sought to answer this complex question of the ROI of an individual major or program, outlined below, which do offer some interesting insights to prospective students.  

Interested in learning more? Check out these resources: 

ROI on different college degree levels: 

 ROI on different types of institutions:  

ROI on different majors: