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If You Go To A Liberal Arts College, You’ll Make More Money

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Want to make money? Get a college degree.

Want to make even more money? Get one from a liberal arts college.

That’s the finding of a recent report from the Georgetown University Center on Education and the Workforce. Researchers calculated the profit someone could be expected to make after making college and education choices, after they’d paid their tuition or loans and other expenses. Unsurprisingly, they find that having a college degree is indeed profitable. That’s been well established.

The report calls the profit you make post expenses a return on investment (ROI). What may surprise some is that, according to the report, of all the possible types of colleges, liberal arts colleges pay of among the best. Specifically, that 40 years after college enrollment, “the ROI of liberal arts colleges rises to $918,000, which is nearly $200,000 higher than the median ROI of all colleges ($723,000).”

The takeaway is that even the average college enrollee will see three-quarters of a million dollars in profit over 40 years, according to GU. But if you pick a liberal arts school, that shoots to more than $900,000 over your career. And at the country’s 47 most selective liberal arts colleges, the study found, the 40 year ROI is more than $1.1 million.

Liberal arts college don’t just pay off more than the average college, they pay off better than nearly all other types of colleges, period. The report’s calculated ROI for liberal arts colleges is close to, but still more than, the estimated ROI of engineering schools and business schools.

And in truth, the report’s authors Martin Van Der Werf and Ban Cheah told me their liberal arts ROI calculation of $918,000 – “that’s a very conservative figure.”

Part of why is that the $918,000 is calculated per enrollee, not per graduate. And since non-graduates are unlikely to see steep rewards, the rewards for graduating from a liberal arts college are actually likely much higher than the $918,000 figure.

When you think about it, if you spend $100,000 for an education at a liberal arts school – and, with discounting, grants and scholarships, many cost far less – and that $100,000 pays you more than $900,000 profit, that’s quite an investment. Now imagine that taxpayers will front you that $100,000 as a loan that you can pay off over time. That’s not a great investment, that’s a winning lottery ticket investment.

Of course, there are some holes in the data Georgetown used. A big one is that the data set only calculates earnings over ten years and the authors “assumed no growth in median earnings after 10 years.” That’s a problem in calculating something over 40 years. And, since wages tend to grow over time as employees become managers and executives, it’s likely that the ROI for all college options may be much, much greater than estimated, including those at liberal arts institutions.

Further, the report’s definition of “liberal arts” college isn’t inflated by, as the authors put it, “prestigious universities that are known for their strong liberal arts curricula, such as Ivy League institutions or other highly selective universities like Stanford University or Vanderbilt University.”

In other words, we’re not talking the creme de le creme here, the big brand names of higher education. Even taking those out, the liberal arts ROI is still gigantic. Like the authors said, their estimate of more than $900,000 in profit was conservative.

Another caveat is that the GU report, only looked at “students who received federal financial aid at the time of enrollment.” Again, their data was limited to that. Most students do take some kind of aid, but not all. And because wealth correlates with access and advantage, it’s possible the students who did not take aid earn even more, yet again pushing up the average ROI. But it really means that for students with less means, a degree from a liberal arts institution pays off amazing well.  That’s a pretty big finding.

What the report also underscores is that, as we’ve seen elsewhere, studying science and technology and engineering (STEM), or investing in workplace degrees or credentials, pays off in the short run but not as much over time. Ten years after enrolling, for example, the return from a liberal arts schools lags other options, but the gap closes after that to where, 40 years in, the liberal arts options outperform their rivals.  

Since that’s being proven over and over again it looks like college leaders were right all along when they said college does not prepare you for a job, it prepares you for your fifth job. And those who said future employment would be all about real world job skills were, well, wrong.  Getting a job skill may pay off for a time but only for so long and only up to a certain level.

And it needs to be said over and over again that measuring college paths as investments, based on financial payouts, is perhaps the worst possible way to assess college. Diluting education to dollars and cents is cynical and devaluing. Students and families don’t choose colleges based on investment opportunity. And most colleges are not run that way – nor should they be. In fact, most education programs that sell earnings and career opportunities as enticements don’t deliver. That’s not a rule, just a rule of thumb.

Don’t go to college to get a job, go to college to get a life worth living. And, according to Georgetown, if you do that at a liberal arts college, you’ll paid more while you enjoy it.

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