Third Way, a nonprofit think tank in Washington D.C., recently analyzed program-level data from the U.S. Department of Education to calculate the Return on Investment (ROI) students earn after graduating from specific college programs. This calculation, the Price to Earnings Premium (PEP), estimates the time it takes for undergraduate and graduate students to recover their postsecondary education costs based on their earnings premium after graduation. Some of the findings from the analysis can be found below.
The PEP for 2.2 million college graduates indicated that most college programs provide students with enough of an earnings premium to quickly recover their postsecondary costs.
- 46% of college programs show their graduates earned enough to recover their educational costs within five years.
- 64% of graduates earned enough to recover their educational costs within 10 years.
- 25% of all college programs (10,000) indicated that their graduates fail to earn enough to recover their postsecondary costs within 20 years.
The PEP for bachelors degree granting programs revealed that:
- 41% of bachelor’s degree graduates recovered their educational costs within five years.
- Bachelor’s degree programs were most likely to yield at least some ROI for those who completed their degree.
- 10% of bachelor degree programs graduates earned less than high school graduates within two years of degree completion.
- 100% of graduates from science, engineering, and health majors recovered their educational costs within five years.
The PEP for associate degree granting revealed that:
- 58% of associate degree graduates recovered their educational costs within five years.
- Students who earned an associate’s degree have a higher possibility of recovering their educational costs within five years, more than bachelor and certificate program graduates.
- Over 99% of associate degree graduates from nursing programs recovered their education costs within five years.
- 83% of associate degree programs in Human Development, Family Studies, and Related Services yielded no economic ROI.
The PEP for certificate programs revealed that:
- 48% of certificate program graduates recovered their educational costs within five years.
- A disproportionate number of graduates(197,277) from certificate programs yielded no ROI from their program of study compared to graduates of associate’s degree programs (76,627) and graduates of bachelor’s degree programs (79, 422).
Calculations also demonstrated that PEPs varied by type of institution.
- 73% of graduates from public institutions recovered their educational costs within 10 years.
- 56% of graduates from private non-profit programs recovered their educational costs within 10 years.
- 40% of graduates from for-profit programs recovered their educational costs within 10 years.
The analysis also found that 13% of graduates from public institutions earned less than a high school graduate two years after graduation; two-fifths of graduates from for-profit institutions are likely economically worse off than they were before attending; and 46% of programs at for-profit institutions yielded no economic ROI.
