REVISED, Sept. 19, 2013 at 10:55 a.m. to add sample salaries from the Engineering School and clarify that the Investor’s Business Daily rankings take into account undergraduate students from all majors.
U.S. News & World Report released its annual rankings of universities and colleges last week with the University of Virginia maintaining its No. 2 position for top public universities.
But over a projected 30-year career, what are the earnings potentials for graduates of highly ranked schools?
For those answers, prospective students and their parents may turn to PayScale.com, which like U.S. News, released its own rankings of colleges and universities last week: the 2013-14 PayScale College Salary Report. With data from more than 1.4 million college alumni, PayScale.com’s report compares salary data from more than 1,000 U.S. colleges and 120 academic majors.
For example, according to PayScale.com, a recent graduate from the University’s highly regarded School of Engineering and Applied Science might have a starting salary of $67,515 as a mechanical engineer, $58,769 as a systems engineer, or $80,807 as a software engineer – all evidence of PayScale.com’s high academic ranking for a highly valued career.
Using information from PayScale.com’s current report, Investor’s Business Daily has good news for prospective and current U.Va. students. Based on the first 30 years of net median pay, minus key college costs, U.Va. – which includes all the academic majors for bachelor-degree graduates – ranks No. 3 among surveyed colleges and universities in annual return-on-investment at 13.1 percent. (The full list of schools included in PayScale.com’s survey can be found here.)
For future students measuring the costs of each potential school, it’s important to measure not just each school’s list price, but also the return on investment, or ROI – the typical earnings over a number of years divided by the cost of getting an undergraduate degree from each school.
There can be a big difference between a college’s return on investment in sheer dollars and its ROI.
For instance, consider net ROI over the first 30 years after students graduate. In PayScale.com’s ranking, the list of schools whose undergraduates rack up the most net pay in three decades, minus the cost of attending school, is led by technology and engineering schools such as Harvey Mudd College, California Institute of Technology, Polytechnic Institute of New York University and Massachusetts Institute of Technology.
But when that’s converted into an annual rate of return, all four fall from the top tier.
It’s also essential to factor in financial aid. PayScale.com counts grants, but leaves loans out. Return-on-investment with grants factored in reflects typical out-of-pocket costs such as room and board, not just list price.
With grants factored in, the return-on-investment for public colleges and universities are impressive. For return-on-investment with grants included, the top 11 schools are public, including U.Va. in third place, just ahead of the College of William & Mary (12.5 percent).
According to Katie Bardaro, lead economist for PayScale.com, students should definitely focus on schools that are especially strong in their academic area of focus. Nevertheless, attending a public school generally makes good economic sense because, with grants and loans factored in, public higher education is inherently cheaper.