Studies choose college programs with the best returns on investment
Students pursuing a college degree usually have a sense of where their institution fits in relation to others, but not necessarily the height of their program of study. Now they can find out. Using data from the latest College Scorecard, two new studies take a much more precise look at how specific programs – for example, the University of Texas at Austin’s Bachelor of Accounting degree – help recent graduates recoup their investments.
The two studies – one by the center-left think tank Third Way and the other by the more conservative Texas Public Policy Foundation – agree that while most college programs help graduates find jobs that will allow them to repay their loans or recover their costs. in a few years, a significant number do not. And knowing which is which, the authors of both argue, can not only help students make more informed program choices, but also guide policy makers to hold institutions accountable for failed programs.
“It used to be that you had to go to the best college you could afford,” said Andrew Gillen, senior policy analyst at the Texas Public Policy Foundation and author of his study. “This program-level data helps to lift that banner. If I know I’m interested in journalism, I can research journalism programs at different schools and see what their graduates are earning.
Likewise, the data allows regulators to identify high-debt and low-income programs and implement stricter sanctions or oversight. “For excessive debt, the only participant that comes out unscathed is the institution,” said Gillen. “They were paid in advance. But the student has a debt they cannot afford, and the government cannot collect it.
Some 43 million students currently owe nearly $ 1.6 trillion in federal student debt, according to government data. Figures like these warrant concern, said Martin Van Der Werf, associate director of editorial and post-secondary policy at the Center on Education and the Workforce at Georgetown University. “I would like to see more regulatory crackdown, especially on programs that attract students who have been promised a quick degree and then an entry into a lucrative career,” he said. “And then they find out it was a waste of time – the career is really not that lucrative and the degree is not very valuable. And it is very expensive. It is the students who really need protection.
The TPPF report examines the debt load of recent graduate students relative to their early career earnings. He used College Scorecard data for more than 37,000 programs – associate, bachelor’s, master’s, professional, and doctorate – that graduated over 6.5 million students during the 2014-15 and 2015-16 academic years, measuring median debt against median annual earnings two years after graduation.
The study suggests two “accountability measures” to help consumers distinguish between student loan debt that is a “great educational investment” and that considered a “dangerous bad financial investment”.
The first measures median debt as a percentage of median incomes, recommending a four-tier ranking system ranging from “reward” (for programs with a debt-to-earnings ratio below 75%) to “sunset” (for those that exceed 125%. percent). According to those metrics, Gillen explained, 7.2% of all programs in the College Scorecard dataset would be sanctioned, and an additional 6% would achieve a “sunset” rating, subjecting them to increased regulatory oversight, advice and guidance. financial aid for currently enrolled students and a ban on enrolling new students using federal loans.
The second accountability option, Gillen said, is a revamped version of the paid employment rule, established by the Obama administration and then repealed by President Trump’s Department of Education, which aimed to keep vocational programs low. high achievers responsible for over-indebted students. Gillen proposes to apply the same formula as the old paid employment scheme, which divides annual student loan payments by annual income, but using it for all programs and perhaps creating a cutoff mechanism. alternative. This would place about 9 percent of programs in the “failing” category.
Even good institutions can have programs with poor results. The the Wall Street newspaper recently reported that Columbia University Film School graduates who took out federal student loans incurred a median debt of $ 181,000. Yet, two years after graduating, half of these borrowers were earning less than $ 30,000 per year. “When you put in place accountability at the institution level, Columbia will never fail,” says Gillen. “But when you work at the program level, you can hold specific programs to account. “
Examining program-level data makes it difficult to assess facilities all at once. “You can identify poorly performing programs in the right institutions and exempt the performing programs in poor institutions,” said Gillen. “One of the areas that economists like to tackle is sociology. But when you actually look at the data, there are a ton of sociology programs that work very well. If you ask me about any institution I can find you a program that works great for students. And if you ask me about a program, I can find you a school with an excellent.
It favors the deployment of “carrots” as well as “sticks” to make institutions accountable for their offers. “Until now, the whole approach to higher education accountability has been that if you are unacceptable at some level, we will punish you,” he says. “We need sticks – you need to sanction institutions – but we should also have carrots: if you are doing fantastically, maybe you can be exempt from regulatory oversight or earn financial bonuses. “
Using the same data, the Third Way report assesses which programs allow students to recoup the cost of their college education within five years of entering the workforce. Unlike the TPPF report, it only looks at bachelor’s, associate, and certificate programs and doesn’t look at the debt per se, but the total cost.
Almost two-thirds of all programs – 64% – allowed students to recoup their tuition fees within 10 years of graduation, said Michael Itzkowitz, senior higher education researcher at Third Way and author of the report. Likewise, there are nearly 6,000 college programs – around 16% of them – that leave students with no return on investment, meaning they earn even less than someone without any college experience, ”he said. he declared. “To put that into perspective, there were 353,000 students – out of about 2.2 million in our data set – who graduated from these programs. They leave too many underemployed or perhaps underemployed students. prepared for success in the 21st century workforce.
Among those who earn a bachelor’s degree, the Third Way report found that 100 percent of nursing and engineering students took five years or less to recoup their educational investments, compared with 44 percent in anthropology programs and 45 percent. hundred in religious studies.
Like Gillen, Itzkowitz hopes this program-level data will have larger policy implications. “When it comes to student outcomes and taxpayer funded programs, what we’re seeing is there’s more agreement on both sides of the aisle,” he said. “So it is essentially up to Congress to find a reasonable way to ensure that students receive adequate preparation to succeed in the workforce and that taxpayer dollars are used efficiently. “
Not everyone agrees that earnings should be the primary measure of a program’s value, even when tax dollars are at stake. These studies examine how students fare in the world. start of their career. And as Claude Pressnell Jr., president of the Tennessee Independent Colleges and Universities Association noted, sometimes the true value of a college education doesn’t become clear for years, if not decades. And there are plenty of ways to help society in addition to paying off debt.
Van Der Werf believes the new studies are a valuable asset but need to go further to truly serve consumers. “They’re important for higher education researchers, but they won’t make any difference to the public until you name the programs,” he said. “Where you go to school and what degree you take is not always a rational economic choice. But I think there must be more and more. And these kinds of tools, hopefully, will allow people to make a little smarter investments. “