A California study shows which college programs are worthwhile and which are not

A new report from the College Futures Foundation and HEA Group determines the return on investment that undergraduate students can expect from thousands of college programs in California.

The good news is that nearly 9 out of 10 academic programs in California allow graduates to recoup their educational costs within five years. The bad news is that more than 100 programs failed to provide an economic return on investment, leaving the majority of their graduates earning less than a high school graduate five years after completing the program.

The results are included in California College Programs That Pay: Measuring Return on Investment for All Majors and Qualifications, from Michael Itzkowitz, President of the HEA Group. They are based on an analysis of the results of 260,000 graduates of 2,695 bachelor's, associate's and bachelor's degree programs offered at 324 institutions in California.

Using data from the U.S. Department of Education's College Scorecard, researchers calculated a price-performance ratio (PEP) to estimate how long it takes program graduates to recoup their educational costs after earning their degree.

Each college program's PEP is based on two factors: 1) the out-of-pocket cost—or net cost—that students pay to complete a degree, and 2) the merit premium they earn by completing a particular field of study.

To determine how much each degree costs, researchers assumed students paid one year of net costs to earn a certificate, two years to earn an associate's degree, and four years to earn a bachelor's degree. Of course, this is a conservative estimate as many students take longer and pay more out-of-pocket costs to complete their academic program.

They then used annual out-of-pocket expenses after deducting all grants and scholarships to calculate the total cost of earning a degree. Because cost data was not available for individual programs, they applied an institution's net cost to each of its programs, regardless of the specific field of study.

The earning premium that each college program generates for its graduates is defined as the additional income a college graduate earns five years after completing the program compared to a typical California high school graduate with no college experience (set to $26,073 per year). Programs that allow graduates to earn more than this amount earn a premium that can then be used to pay the out-of-pocket expenses necessary to earn the degree.

The new report is a follow-up to the foundation's first report, released last spring, which focused on the ROI of institutions serving low- and middle-income learners. This report examines the economic ROIs for specific majors and credentials offered statewide and includes all students who received a loan or grant from the federal government.

Among the highlights of the report:

• Most bachelor's degree programs in California (88%) allow graduates to recoup their tuition costs in five years or less.
• More than a third (34%) of graduates are able to cover their costs in less than a year. You deserve a high enough premium – and have paid an affordable enough price – to quickly cover the cost of acquiring a qualification.
• Overall, 12% of all college programs in California take graduates five years or longer to recoup their costs, while 112 programs provided no economic return on investment for students and the majority of their graduates earned less than a high five years after completing the program -School graduate.
• Of the 112 programs with no economic ROI, 83 were offered at for-profit institutions.
• Associate's degree programs tend to have the shortest ROI, with many graduates able to recoup the cost within a year.
• 34% of certificate programs take five years or longer for graduates to recoup their educational costs. And 23% of these programs show that the majority of graduates earn less than someone with no college experience. These low-value certificate programs tend to focus on the for-profit sector.
• ROI varied significantly by major, with some programs such as business and nursing producing very high returns, while others such as music and cosmetology provided little to no ROI.
• Nearly all programs offered at public institutions in California (97%) demonstrated that their graduates recouped the cost of earning a degree within five years. Almost half (48%) allowed this within a year.
• Private nonprofits generally took longer; only 7% of their programs allow graduates to recoup their costs within 12 months.
• For-profit institutions in California took longer to complete their graduates, and nearly a fifth of their programs (17%) produced no economic benefit at all.

The report also noted that a student's major is sometimes more important to economic ROI than the college itself. “We found results for 'time to recovery' that vary by program at four-year, two-year, and certificate-granting institutions differ,” said Itzkowitz. “Some offer ROI in a short period of time, others offer little to no ROI.”

Bachelor's degree programs

Of the five most popular bachelor's degree programs – business administration, psychology, sociology, communications and media studies, and nursing – most allowed graduates to recoup their educational costs one to five years after completing their degree.

In fact, none of these bachelor's degree programs—at any institution across California—showed that graduates took longer than 10 years to recoup the cost of earning a degree. However, only the majority of their graduates (69%) were able to recoup their training costs in less than a year

Associate programs

The most popular associate-level degree programs were: 1) humanities and sciences, 2) nursing, 3) allied health diagnostic, intervention and treatment professions, 4) business administration, and 5) allied health and medical assisting services.

Many of these associate degree programs allow their graduates to recoup their educational costs in less than a year. For example, 98% of nursing program graduates meet this threshold; This also applies to 84% of graduates of business administration courses. The most popular associate's degree program – Liberal Arts and Sciences – shows that 95% of graduates recoup the cost of their degree within five years, and 62% do so within one year.

Implications

“Postsecondary degrees must continue to be linked to economic mobility as they are critical to creating a higher education system that drives a robust, inclusive economy in California,” Eloy Ortiz Oakley, president and CEO of the College Futures Foundation, said in a statement Press release. “The focus of this research is to show which institutions and programs make this connection.”

According to Itzkowitz and Oakley, the report should not be viewed as “a denunciation of any particular program or desired area of ​​study,” but rather as an opportunity for further research to understand why and how these institutions achieve these results and where there may be policy and practice implications .”

“Learners deserve access to information so they can enter a program with their eyes open to what awaits them, and institutions must be transparent with their data and honest about how their programs deliver on the promise of economic mobility,” Oakley said.