What Is the Value of a College Degree?

A seemingly simple question is surprisingly hard to answer.

A few years ago, the higher education staff at the Bill & Melinda Gates Foundation posed a simple-sounding question: What is the value of a postsecondary education, and how do you measure it? To figure that out, the foundation partnered with the Institute for Higher Education Policy, a D.C. think tank, and empaneled a diverse group of academics, think tank scholars, college presidents, students, government officials, and a couple of journalists (including yours truly). Thus was born the Post-secondary Value Commission.

Check out the complete 2021 Washington Monthly rankings here.

The group’s original intent was to focus on the economic value of a degree or credential from a specific school to individual students. But we quickly realized that there are vast differences between what students of different races, genders, and income groups pay (including via loans) to get a degree, and in what they earn after college. So equity became central to our work. 

We then recognized that the same degree from a given college can produce not only different incomes for different students, but also vastly different amounts of wealth, especially between Black and white students. So we added wealth as a key variable. 

It then became apparent that the focus on students’ economic well-being was too narrow. Governments invest hundreds of billions of dollars annually in our higher education system; what is the return on that investment, and how do you measure it? Overall GDP growth? Additional tax revenues? What about the benefit to the country of colleges preparing students to become active citizens who, through their individual efforts, help solve the equity issues that were our chief concern?

Measuring Economic Returns Chart — CG2021In short, that simple question did not have a simple answer. Still, after two years of meetings, Zoom calls, and hard work from a crack team of researchers—one of whom is the Monthly’s own data editor, Robert Kelchen of the University of Tennessee—the commission released a remarkable report this spring containing a package of conceptual tools that I suspect will define for years to come how higher education experts, policy makers, and average citizens approach that question.

My favorite tool is the “value threshold” chart reprinted on this page. It gives precise shape to an intuitive idea: that the long-term economic value of a college education for any individual student can range from “not worth the investment” to “lets me earn a middle-class income” to “allows me to save for a comfortable retirement.” 

Unfortunately, the federal government does not publish numbers fine-grained enough for outside organizations to use the tool to assess individual colleges. It could tomorrow, however, if Congress would pass the College Transparency Act, as this magazine has long advocated. The bill would lift a ban on data sharing that Congress itself imposed—on mostly bogus privacy grounds—under pressure from trade associations for colleges that might not look so good once the numbers are public. 

Until then, we think the Washington Monthly’s annual college rankings provide the best existing measures of the value individual colleges offer to individual students and to the country as a whole. (So does the Lumina Foundation, which for more than a decade has generously funded this issue of the magazine, and the Gates Foundation, which also kindly supports our higher education coverage.) We use available federal and other data to rank colleges based on their record of recruiting and graduating students of modest means, producing scholarly research, and encouraging students to be active citizens by voting and performing military or civilian service. And when there’s enough data for outside groups to use the Post-secondary Value Commission’s tools, we will be the first in line. 

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Paul Glastris

Paul Glastris is the editor in chief of the Washington Monthly. He is writing a book on America's involvement in the Greek War of Independence.