The gospel of American higher education policy is pretty simple: more postsecondary education is better, for those who get a degree and for the country as a whole. The ethos is backed by social science research, which suggests that the wage premium enjoyed by individuals with a college degree has expanded since the 1980s (see panel 2 here), the college-educated are less likely to be unemployed, and that a bachelor’s degree is worth an extra $500,000 to $1 million in lifetime earnings.
While the aggregate returns to postsecondary education are real, we know far less about how these returns vary across institutions. But from the perspective of a qualified high school student, whether her degree will come with a wage premium is less important than figuring out which school will produce the highest return on her investment. Economists have shown that the wage premium is related to admissions selectivity, but for students choosing among similarly selective colleges, there is far less information to go on.
In a new, thought-provoking analysis of previously unreleased data, my colleague Mark Schneider calculates an estimated “return on investment” (ROI) for more than 500 colleges and universities. Using data from Payscale.com, Schneider finds that ROI increases with admissions selectivity and that public institutions offer higher returns than private ones. He concludes that policy makers should strive to make this kind of information available for all schools. See here to read Schneider’s piece in its entirety.