College ROI

I found this PayScale College Return On Investment (ROI) calculation in Businessweek interesting. (Bold areas added by me.)

The PayScale calculation differs in two other respects as well. Like many ROI models, to calculate the cost of a college degree it includes all college expenses—tuition and fees, room and board, books and supplies. But instead of assuming students all graduate in the standard four years, it multiplies those expenses for however long it took 2010 graduates of each school to obtain their degrees, whether in four years, six years, or something in between. Unlike many ROI calculations that reckon the value of a degree, the PayScale analysis tots up the return on a college investment, over and above what a high school graduate would earn during the same period. When someone attends college but fails to graduate, there’s an investment but little or no financial return, so the PayScale analysis incorporates graduation rates, in effect adjusting the return for the risk of not graduating. How big is that risk? On average, two of every five students who entered the colleges in the ranking never participated in commencement.

I am surprised student loans are not included. If a student who attends one school makes $5,000 more a year than a student who attended another school but has to pay $5,000 a year for the first fifteen years (of the 30 in the calculation) on student loans, then it seems like a major contributor to the Return on Investment.

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