Which Colleges Make The Best Investments?

July 16, 2015

With the rising cost of college, more students and their parents are rightfully looking at their of college in financial terms. In that spirit, I saw this report on the best “value colleges” by “return on investment.” This can be a much more useful measurement than simply looking at a school’s general “ranking” but there are a few thing to keep in mind:

1) Will the student be living on or off campus? There were no 4-year colleges that I could commute to when I went to college but for many students who do live near a good school, this can be a great way to save a few bucks on food and housing. Fortunately, the report allows you to select whether the student would be living on campus so be sure to see which schools might be a good value if that’s a possibility.

2) What’s the expected net cost? This was a huge factor in my decision to attend both NYU for undergrad and USD for law school. The report factors in financial aid with a blanket estimate but how much a particular student receives can vary greatly. You’re better off filling out the net price calculator on the school’s web site for a better idea of how much it would really cost out of pocket.

3) What does the student want to do after school? In my case, I went to NYU to study journalism (one of the few schools with an undergraduate journalism major and located in the media capital of the world) and to USD for their tax law program (ranked in the top ten). The fact that I ended up doing neither shows the danger of putting too much weight on this factor but for those who do know what they want to do, it can be crucial. After all, a school can be great for one major and horrible for another. Fortunately, the report does break down incomes by career.

As long as you keep in mind the caveats above, looking at a school’s ROI can make a lot of sense in choosing which one to attend. After all, it’s probably the biggest financial decision the student has had to make, both in terms of future job prospects and the amount of debt they’ll be carrying into their careers. In fact, learning to think about the decision in this way can be a valuable lesson in itself.