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Measuring College ROI

Measuring College ROI
Photograph by Corbis

Calculating the return on investment (ROI) for a college education is a complex endeavor, with the outcome deeply dependent on methodology, assumptions, and other factors. One of the key factors that sets the PayScale methodology apart is that it results in an ROI figure that reflects not only costs and earnings, but also the likelihood that students will graduate and how long it will take.

The PayScale salary data are self-reported by individuals who use its online pay tools. For each school in the ranking, PayScale collected, on average, about 1,000 pay reports from alumni who graduated with a bachelor’s degree over the past 30 years, from 1982 to 2011. Since the data were reported in the last year, these earnings figures are in 2012 dollars. They include base salary or hourly wage, bonuses, profit-sharing, tips, commissions, and other cash earnings; they do not include stock, the cash value of retirement benefits, or other non-cash benefits. Only full-time employees who work in the U.S. were used for this analysis; self-employed, project-based, and contract employees were not. Graduates with advanced degrees were excluded.