Higher education remains a powerful driver of economic opportunity across the country, a stronger investment than stocks, bonds, or gold. To assess that payoff, policymakers, advocates, and funders have increasingly turned their attention to individuals’ return on investment (ROI) as a core measure of higher education’s success. Fortunately, the recent availability of earnings and net price data for nearly all US institutions have made it easier to do so. Using ROI to inform policy and practice stands to improve student outcomes, strengthen the economy, and advance shared prosperity.
Many researchers already quantify ROI, but there is no standard measure. As we expand our own research on this concept, we saw an opportunity to make it easier to understand and act on. We compiled the definitions of ROI we’ve seen, analyzed their similarities and differences, and created this tool to display what we found. Reference it when you need to know what ROI means in a given context and to compare different ways of measuring it. It’s a resource for making sense of the data and using them to advance stronger, more equitable college payoffs nationwide.
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Also to note, California’s Cradle-to-Career Data System will soon collect more comprehensive and accurate individual-level data, which will hone the state’s ability to evaluate ROI. These anticipated improvements include:
- actual tuition and fees paid (not an institutional average);
- actual grants and other financial aid received (not an institutional average);
- potentially more precise estimates of books and living expenses (still an estimate, but possibly tailored to the student’s living arrangements);
- the inclusion of students who do not receive Title IV student aid;
- actual loan origination fees and interest rates;
- actual earnings over a specific time period after completion (rather than a fixed number of years after starting college like College Scorecard values or estimated based on a single year like Strada’s use of the American Community Survey);
- disaggregated demographic factors such as race or ethnicity, parenting status, and age, as well as background factors such as high school coursework and completion type; and
- the ability to limit results to students who completed at the institution at which they started, at a different institution, or not at all.
We’d like to thank Zack Mabel at the Georgetown University Center on Education and the Workforce, Nichole Torpey-Saboe at Strada Education Foundation, Michael Itzkowitz at HEA Group, Kim Dancy at the Institute for Higher Education Policy, and Kyle Whitman at the American Council on Education for their critical feedback on this resource.
