Here are ways to run the numbers to find the best fit
Choosing a college means balancing a lot of priorities and figuring out which matters most. Does a good location matter more than a top graduation rate? Are potential postcollege earnings a bigger deal than life-changing new experiences or a prestigious name?
The “best” choice depends on which priority a family chooses. And now there have never been so many tools to figure that out.
For anyone wanting to compare schools’ educational outcomes in terms of graduation rates, postcollege earnings or alumni debt loads, detailed statistics now are just a mouse click away. Information about schools’ true costs, factoring in financial aid, is equally abundant.
This data boom is being led by the U.S. Department of Education, which launched an early version of its College Scorecard in 2013, and has been refining the 7,700-institution dossier ever since. Other sources of school-by-school data on graduates’ earnings include PayScale Inc., a Seattle labor-data specialist, and Brookings Institution, a Washington, D.C., think tank. In addition, The Wall Street Journal and other publications include graduates’ economic outcomes as significant factors in annual college rankings.
For families building their own cost-benefit analysis for specific colleges, here are five factors to keep in mind:
Completing college can boost lifetime earnings as much as $800,000 beyond what’s possible with a high-school diploma, according to a 2014 study by the Federal Reserve Bank of San Francisco. Most of those benefits, however, vanish for students who don’t earn a diploma.
As a result, each school’s graduation rate is a useful data point, regardless of whether a family is doing a cost-benefit analysis of attending a particular college or simply trying to get a sense of where a student is most likely to thrive.
Because institutions vary widely in terms of how college-ready their typical admitted students might be, there’s no single graduation percentage that represents a sharp demarcation between reassuring and troubling. It’s more useful to focus on how a specific school’s graduation rate compares with a cohort of similar schools.
High rates may correlate with a welcoming community and strong academic support; lower rates could signal greater risks that students fall through the cracks. Ivy-caliber schools enjoy six-year graduation rates of 95% or higher. (Perhaps they offer great learning environments; perhaps they simply fill each class with students highly likely to succeed in any setting.) Flagship state universities generally are at 80% or better. Community colleges may post rates of 50% to 60%. Some for-profit colleges have graduation rates as low as 9%.
Bear in mind that schools like to highlight six-year graduation rates, which give full recognition to students who needed an extra semester (or several extra semesters) to finish their course work. If you’re not in the mood to pay for more than four years of college, dig deeper on school websites to look for four-year graduation rates, which must be reported as well.
Of course, adjust your calculations for an honest assessment of how steadfast your student is likely to be in a college setting; if the ability or desire to do the work is lacking, outcomes can be disappointing.
It’s easy to shudder at nationwide statistics for U.S. student debt. Overall borrowings top $1.4 trillion, with 11.5% of all loans being either at least 90 days delinquent or in default, according to the U.S. Department of Education. That said, borrowing to reap the benefits of a college education can be a winning strategy, if students earn enough after college to pay down their debts on a timely basis.
The College Scorecard reports three gauges of the student-debt picture at each school. Of these, the most valuable is the percentage of graduates whose debt repayments are brisk enough each year to shrink their total balance owed. The national average for paying down loans is 46%, but school-by-school percentages vary hugely.
Think of it as a rough proxy for students who land good jobs (or enjoy lavish family support). If graduates can rapidly erase debt from their lives, that’s a good signal that schools are helping prepare them for strong careers. If debt loads don’t budge, that suggests graduates are more likely to be scrambling to make ends meet.
Geographic factors matter, too. For students attending college in places where economies are strong such as Seattle, 75% or more are able to pay down their loans in any given year. In weaker economies such as Detroit, pay-down rates can be below 40%.
It’s hard to imagine choosing a college just because of its students’ impressive success in handling educational debt, college planners say, but the opposite situation, in which many students are struggling to manage their debts, could be a red flag.