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Study Names Colleges With the Best Return on Investment

Payscale, a company that tracks salaries in the U.S., is out with its annual report on collegiate return on investment. (Payscale was kind enough to send us an early copy of the data, available here.)

The schools that did the best weren’t a huge surprise. Topping the list is Harvey Mudd College, a leading engineering school. The remaining institutions in the top 10 are elite colleges with expansive alumni networks (Harvard, Princeton) and top-notch technical schools (MIT, Caltech).

Payscale estimated how much a member of the Class of 2013 paid to attend each school, which is a tougher task than you’d expect. The company factored in graduation rates (lots of students taking longer than four years to graduate with a bachelor’s degree skew a school’s estimated cost upward), as well as financial aid  (an openhanded school skews its cost downward) to arrive at an estimated net cost to attend. This is a number that’s somewhat more sophisticated than each school’s sticker price but tends to be a better picture of the financial burden taken on by students.

Next, Payscale used its survey data on salary to determine the expected 20-year earnings of someone who graduated from each college.

Finally, it determined the expected earnings of someone who, instead of going to college for four to six years and then working for 20 years, worked for 24 to 26 years right out of high school.

The final number is the 20-year net return on investment, which is the total earnings, minus the cost of the degree, minus the average earnings over the person with only a high school education.

Here are the top 10 colleges, according to Payscale’s data (this is for students who lived on campus):

College Return on Investment — Class of 2013

School Degree Cost 20-Year ROI
1. Harvey Mudd College $116,800 $1.1M
2. MIT $80,710 $973,800
3. Caltech $89,460 $968,500
4. Stanford University $74,870 $950,800
5. Stevens Institute of Technology $134,800 $838,500
6. Babson College $104,700 $838,100
7. Princeton University $78,590 $829,600
8. NYU-Polytechnic Institute $124,300 $824,000
9. Dartmouth College $77,050 $822,600
10. Harvard University $53,910 $821,900

Here are the top 10 public schools, based on in-state tuition:

Public College Return on Investment — Class of 2013

School Degree Cost 20-Year ROI
1. Colorado School of Mines $77,350 $820,200
2. Georgia Institute of Technology $37,350 $810,500
3. Massachusetts Maritime Academy $65,150 $733,500
4. University of California, Berkeley $64,210 $724,100
5. Missouri University of Science and Technology $61,950 $697,200
6. South Dakota School of Mines and Technology $71,750 $683,000
7. New Jersey Institute of Technology $77,310 $648,900
8. California Polytechnic State University $73,170 $642,100
9. University of California, San Diego $52,350 $619,500
10. University of Virginia $25,880 $619,100

One thing that would be worth looking into is the impact that student debt has on this sort of calculation. Clearly, going to an elite school carries a signifcant financial burden, a cost that isn’t incurred all at once. Interest accumulated on loans can stack up to be a sizable and enduring debt that doesn’t show up here, especially for more expensive schools. If anything, that could mean that schools with high cost and high performance are ranked a little higher when it comes to return on investment than is to be expected.



Walt Hickey was FiveThirtyEight’s chief culture writer.