The best short-term ROI

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Community colleges and many certificate programs have the highest returns on investment in the short term, though returns from bachelor’s degrees eventually overtake those of most two-year credentials.

That’s according to a new report from Georgetown University’s Center on Education and the Workforce (CEW), which used data from the expanded federal College Scorecard to rank 4,500 colleges and universities by return on investment. It includes traditional two-year and four-year public and private colleges, as well as for-profit colleges and training academies.

CEW also developed an online tool that allows users to sort data on tuition, median student debt and median earnings for each institution.

Colleges that primarily award associate degrees have the highest short-term return, a median of $141,000 for students 10 years after enrollment. The median net present value for all colleges is $107,000 for 10 years after enrollment. Over a 40-year span, that number rises to $723,000.

Twenty-six of the 30 institutions with the best short-term net economic gains primarily grant certificates or associate degrees. Because these programs require fewer credits to complete, they leave students with less debt and allow them to enter the workforce sooner, the report notes. In the long run, however, the returns of these programs fall behind those of bachelor’s degree-granting institutions because students’ earnings are lower.

The report also shows that public institutions have a better value in the short term, though private institutions — especially among four-year institutions — surpass ROI in the longer term, even as students at those colleges accumulate more student loan debt.

“Tuition is simply lower at public colleges, and they therefore require less upfront investment and lower levels of debt,” the report says. “Short-term credential programs also take less time to complete (often no more than two years), so the financial rewards start accumulating more quickly.”

Institutions with the lowest long-term economic value range from theological institutions to beauty schools to colleges specializing in the arts, the report says.

About the Author

Matthew Dembicki
is editor of Community College Daily and serves as publications director for the American Association of Community Colleges.