Introduction
In 2020, we released an analysis that introduced a new way for students and policymakers to evaluate their return on investment (ROI) in higher education. This Price-to-Earnings Premium (PEP) calculated the time it takes students to recoup their college costs based on the earnings that the typical student obtains by attending. New data from the Department of Education now allows us to dig deeper at many institutions. We can now explore the ROI students received from specific college programs.
By comparing the earnings premium that students obtain relative to the price they paid to earn their credential, we can calculate the PEP produced by individual majors within an institution. This provides more data—for potential students, policymakers, researchers, and taxpayers—about where students should invest their time and money.
Overview
The good news for roughly 2.2 million students we studied: Most college programs provided enough of a premium for students to quickly recoup their educational costs. Almost half of the programs show graduates earning enough to recoup their costs in five years or less. Nearly two-thirds show the same result 10 years after graduation.
However, many college programs produced dismal results for their students. Nearly one-quarter of college programs (10,000) show graduates failing to earn enough to recoup their college costs even 20 years after graduation. Approximately 6,000 of these programs showed no economic premium whatsoever. Thus, over 350,000 students enrolled, paid tuition, and graduated but saw negligible financial gain.
While institutional data offers a birds-eye view of how well students are succeeding, program-level data can pinpoint which programs lead to good outcomes. Still, there’s limited accountability for how federally funded schools or programs serve their students. With students’ livelihoods and taxpayer dollars at risk, policymakers must fix problems in higher education and work to ensure better outcomes for all students.