Borrowed from the business world, the term “return on investment” has been plastered on college advertisements across the U.S. A battery of new rankings grade campuses on the financial benefits they deliver. States such as Colorado have started publishing yearly reports on the monetary payoff of college, and Texas now factors it into calculations for how much taxpayer money goes to community colleges.
“Students are becoming more aware of the times when college doesn’t pay off,” said Preston Cooper, who has studied college ROI at the American Enterprise Institute, a conservative think tank. “It’s front of mind for universities today in a way that it was not necessarily 15, 20 years ago.”
Instead, more are heading to technical schools or the trades and passing on four-year universities, she said.
“A lot of families are just saying they can’t afford it, or they don’t want to go into debt for years and years and years,” she said.
“I’m not saying kids shouldn’t go to college,” she said. “I’m just saying all kids don’t have to go in order to be successful.”
The other part of the equation — making sure graduates land good jobs — is more complicated.
A group of college presidents recently met at Gallup’s Washington headquarters to study public polling on higher education. One of the chief reasons for flagging confidence is a perception that colleges aren’t giving graduates the skills employers need, said Kevin Guskiewicz, president of Michigan State University, one of the leaders at the meeting.
“We’re trying to get out in front of that,” he said.
The issue has been a priority for Guskiewicz since he arrived on campus last year. He gathered a council of Michigan business leaders to identify skills that graduates will need for jobs, from agriculture to banking. The goal is to mold degree programs to the job market’s needs and to get students internships and work experience that can lead to a job.
Bridging the gap to the job market has been a persistent struggle for U.S. colleges, said Matt Sigelman, president of the Burning Glass Institute, a think tank that studies the workforce. Last year the institute, partnering with Strada researchers, found 52% of recent college graduates were in jobs that didn’t require a degree. Even higher-demand fields, such as education and nursing, had large numbers of graduates in that situation.
“No programs are immune, and no schools are immune,” Sigelman said.
The federal government has been trying to fix the problem for decades, going back to President Barack Obama’s administration. A federal rule first established in 2011 aimed to cut federal money to college programs that leave graduates with low earnings, though it primarily targeted for-profit colleges.
A Republican reconciliation bill passed this year takes a wider view, requiring most colleges to hit earnings standards to be eligible for federal funding. The goal is to make sure college graduates end up earning more than those without a degree.
Others see transparency as a key solution.
Lawmakers in North Carolina ordered a 2023 study on the financial return for degrees across the state’s public universities. It found that 93% produced a positive return, meaning graduates were expected to earn more over their lives than someone without a similar degree.
The data is available to the public, showing, for example, that undergraduate degrees in applied math and business tend to have high returns at the University of North Carolina at Chapel Hill, while graduate degrees in psychology and foreign languages often don’t.
Colleges are belatedly realizing how important that kind of data is to students and their families, said Lee Roberts, chancellor of UNC-Chapel Hill, in an interview.
“In uncertain times, students are even more focused — I would say rightly so — on what their job prospects are going to be,” he added. “So I think colleges and universities really owe students and their families this data.”
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