by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Chris West writes for the Martin Center about N.C. higher education’s bang for the buck.
Shelling out the time and cash necessary to earn a degree is a sacrifice. For many, the question of “is college worth it?” has a simple answer: “yes.” But for others, the answer may not be so clear. A private liberal arts school may look more glamorous than the neighborhood community college, but it also comes with a hefty price tag. How can students determine whether or not their investment of time and money will pay off in the long run?
There may be a way to answer that question. Third Way, a nonprofit that self-identifies as center-left, recently just released a mapping tool that helps evaluate what return on investment—if any—students should expect if they were to earn a degree or a credential from a given institution. Specifically, the Price-to-Earnings Premium (PEP) tool compares the “net price the average student pays out-of-pocket to obtain an academic credential relative to the additional amount they earn by attending that institution in the first place.”
The authors of the research, Tosin Akintola, Michael Itzkowitz, and Nicole Siegel based their calculations on publicly available data from the U.S. Department of Education. Itzkowitz notes:
“To determine how much students pay out of pocket, we look at how much it typically costs them to attend an institution after all scholarships and grants are taken into account, or their total annual net cost. Rather than only assessing whether students are earning enough to pay down their educational debt—as the Gainful Employment regulations did—a net price assesses how much students actually paid to finance their postsecondary endeavors, whether that’s through federal loans, self-financing, or both.”
The tool is equipped with an interactive map, clear explanations of the authors’ methodology, and a number of helpful comparative data dashboards. Their simple formula calculates a “price-to-earnings premium,” i.e., how many years it takes the average student from a given institution to recoup their educational costs.