Impact of College Costs on ROI

Hi y'all, I was browsing through a list of the 'top 50 colleges that pay off the most'. Just wondering how these rankings are derived? Is it purely based on graduates' salaries relative to the cost of their education? How are things like job placement rates and career advancement taken into account? Would love your thoughts on this.

The calculation of a college's return on investment (ROI) in such rankings isn't purely dependent on the salary of a graduate compared to the cost of their education, but this is a significant factor. Specifically, it takes into account the total net costs of the degree and the expected earnings after graduation. Another factor is the cost of not working for the years it takes to earn the degree (also known as opportunity cost).

Job placement rates and career advancement opportunities are typically reflected in this calculation indirectly. High job placement rates and strong career advancement opportunities typically lead to higher income for graduates, which would increase the return on investment.

Lastly, when such rankings are designed, factors such as graduation rates, loan default rates, and other indicators of student success may also play a part. This is because these factors give a more comprehensive picture of the return on the investment one makes in education.

For example, if a school has high tuition fees, but a large proportion of its students graduate on time, secure high-paying jobs, and are able to comfortably repay their student loans, this school may rank well despite its high cost. On the other hand, a less expensive school where students struggle with loan repayment or have more difficulty securing gainful employment may rank lower.

Remember, it's always good to do deep research because the aforementioned statistics can vary for every individual based on their major, specific career goals, and even geographic location among other factors.