The 10 colleges that pay off the most after 40 years
There are several ways to measure the value of a college degree. Earning a college diploma has been linked to longer life expectancy, higher earnings, and lower unemployment. Another measurement is "net present value," or NPV.
NPV is a term used by economists to measure how much an investment is worth, adjusted for differences in the value of money over time due to inflation.
In a recent report from the Georgetown Center on Education and the Workforce (CEW) titled "A First Try at ROI: Ranking 4,500 Colleges," economists used NPV to measure the value of a degree from thousands of colleges. This metric includes the cost of earning a degree from each school and how much graduates earn throughout their careers as well as how long it would take to invest and earn that money instead.
As CEW researchers put it, "net present value can be summed up with the idiom 'a bird in hand is worth two in the bush.' We tend to place more value on what we possess now than on what we might attain in the future if we take a risk."
"Everyone is asking, 'Is college worth it?' and we set out to try to find an answer," said Dr. Anthony P. Carnevale, lead author and CEW director, in a statement. "Not only will it help students, but this kind of information on the costs and benefits of higher education holds institutions more accountable."
The researchers found that while cheaper college options, such as community college, paid off in the short term, more expensive degrees from private nonprofit colleges and universities paid off the most in the long run.
"Public colleges, where tuition is lower and students accumulate less debt, lead to better returns than private colleges at the 10-year horizon," the report reads. "But degrees from private nonprofit colleges typically have a higher return on investment when measured in the long-term. Even though students, on average, take out more than twice as much in loans to attend private colleges."
Since workers are projected to work longer into their lifetimes, it's increasingly important to measure the earnings return of a college education much further into a career, such as at the 40-year mark.
Researchers found the median NPV for all colleges 10 years after enrollment is $107,000. By 40 years after enrollment, as wages rise throughout graduates' careers, that NPV reaches $723,000.
Here are the 10 colleges where earning a bachelor's degree pays off most after 40 years, according to the Georgetown report.
10. United States Merchant Marine Academy
Type of school: Four-year public
10-year NPV: $298,000
40-year NPV: $1,949,000
9. Georgetown University
Type of school: Four-year private nonprofit
10-year NPV: $198,000
40-year NPV: $1,950,000
8. Harvard University
Type of school: Four-year private nonprofit
10-year NPV: $286,000
40-year NPV: $1,967,000
7. Babson College
Type of school: Four-year private nonprofit
10-year NPV: $184,000
40-year NPV: $1,985,000
6. Maine Maritime Academy
Type of school: Four-year public
10-year NPV: $251,000
40-year NPV: $2,043,000
5. Stanford University
Type of school: Four-year private nonprofit
10-year NPV: $307,000
40-year NPV: $2,068,000
4. Massachusetts Institute of Technology
Type of school: Four-year private
10-year NPV: $311,000
40-year NPV: $2,273,000
3. Massachusetts College of Pharmacy and Health Sciences
Type of school: Four-year private nonprofit
10-year NPV: $247,000
40-year NPV: $2,421,000
2. St. Louis College of Pharmacy
Type of school: Four-year private nonprofit
10-year NPV: $389,000
40-year NPV: $2,087,000
1. Albany College of Pharmacy and Health Sciences
Type of school: Four-year private nonprofit
10-year NPV: $385,000
40-year NPV: $2,722,000
Based on Carnevale and his team's calculations, the Albany College of Pharmacy and Health Sciences pays off the most over the course of a career thanks to relatively low attendance costs and high earnings for alumni 40 years after enrollment. According to the report, the 40-year NPV of the school is $2,722,000.
St. Louis College of Pharmacy, another school that emphasizes training future pharmacists, also scored highly by this measure, earning the second spot on the CEW's list with a 40-year NPV of $2,087,000.
Prestigious schools like MIT and Harvard also cracked the top 10.
Overall, eight of the top 10 schools are four-year private nonprofit bachelor's colleges and universities. The only two public institutions to make this top tier are the Maine Maritime Academy and the United States Merchant Marine Academy.
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