Turning the College ROI Myth on its Head
For small liberal arts colleges, which haven't had a lot of good news lately, last week's release of a study from Georgetown University’s Center on Education and the Workforce provided a good way to start the new year. The study's key finding: the median return on investment (ROI) of liberal arts colleges is nearly $200,000 higher than the median for all colleges. Further, the 40-year median ROI of liberal arts institutions ($918,000) is close to those of four-year engineering and technology-related schools ($917,000), and four-year business and management schools ($913,000).
The new study basically turns the conventional wisdom on its head. Worried parents who fear that any child who does not graduate with an engineering degree is likely to end up living in the basement forever can at least reduce their skepticism and agita.
Anthony Carnevale, director of the education and workforce center at Georgetown is one of the most respected scholars in the field. He points out that an education that allows both flexibility and a broad range of knowledge is most likely to fare well over a 30- or 40-year lifespan. I can attest that business leaders in Virginia express a strong need for workers who can think, reason, and write well.
To be sure, small liberal arts colleges still face many challenges. A decline in the traditional college-going population (some predictions are that it will drop by 15 percent between 2025 and 2029) and the continued rise in tuition mean that small colleges can't just keep doing the same thing. In fact, Moodys Investor Services predicts that an increasing number of small colleges will close, reaching perhaps 15 per year in the near future.
But there are colleges that have accepted these challenges. They are doing it by rethinking both what they teach and how they teach it. For example, here in Virginia, Washington and Lee offers some accredited programs that many liberal arts colleges don't: a law school and undergraduate programs in journalism and business. The Georgetown study ranks W&L second in the country in total ROI, with a 40-year return of $1.58 million. Sweet Briar College is changing its curriculum to focus women's leadership. Innovative programs will prepare women for nontraditional careers like agriculture and engineering.*
Private colleges will need to focus on nontraditional students. With the numbers of 18- to 22-year-olds declining, colleges need to reach out to older students. Many Virginia private universities are already doing this - in fact, 37 percent of Virginia's private college students are over the age of 25. And 45 percent are eligible for Pell grants - an indication that private colleges are working to enroll low-income students.
Policymakers need to read this study as they consider how to support higher education. Virginia, which currently ranks 41st in state support for higher education, needs to up its game. Polling by the Virginia Business Higher Education Council suggests this should not be a big lift, since nearly 90 percent of voters say that attending and graduating from a Virginia college or university is a good investment because of the higher incomes that graduates typically earn.
There's no question that some colleges will close in the coming decades. But anyone who sees an Apocalypse on the horizon is, I think, underestimating the creativity of the people who work in these small institutions.
Of course, there are times when the factors that cause admissions officers to worry about a college's appeal to students turn out to be a selling point. That's what happened recently at my alma mater Macalester College. Now, as someone who grew up in the Midwest, I can assure you that snow is a fact of life. (There's a reason we say that the four seasons are almost winter, winter, still winter, and road construction.) So it perhaps should not have surprised anyone when a blizzard struck during the April visit for admitted students. College officials were, understandably, pretty worried that none of these students would want to come back. The opposite turned out to be true. Students had extra time to get to know each other, and to play in the snow. Many agreed they wanted to enroll - and that year's freshman class broke records. As the students told their parents, "They even get snow in April!"
(*Disclosure: I am a consultant for Sweet Briar College.)