Report: Most Colleges Lead to a Return on Investment for Students
Credit: MediaNews Group/Long Beach Press-Telegram via Getty Images / Contributor / Getty Images- Colleges largely met a “minimum economic threshold” for students, according to a new Institute for Higher Education Policy (IHEP) report, meaning students made as much as high school graduates, plus enough to recoup their investment within 10 years.
- More than 2,400 institutions enrolling 18.3 million students met the threshold.
- Another 500 institutions didn’t meet the threshold.
- More colleges would meet the threshold with doubled Pell Grants and first-dollar programs, according to the report.
Most colleges lead to a long-term return on investment for students, a new report from the Institute for Higher Education Policy (IHEP) found.
At least 2,414 institutions, accounting for 18.3 million undergraduate students nationwide, lead to incomes at least as much as a high school graduate — plus enough to pay back their investment within 10 years, according to the IHEP report.
That minimum economic threshold, defined as “Threshold 0” in the “Rising Above the Threshold: How Expansions in Financial Aid Can Increase the Equitable Delivery of Postsecondary Value for More Students” report, means a long-term return on investment for the majority of undergraduate students.
But a significant number of institutions don’t meet that key threshold. Around 500 institutions, accounting for almost 1.5 million undergraduate students, don’t reach that figure.
“A college education can and should be a steppingstone to a better living and improved quality of life for students,” IHEP Vice President of Research and Policy Diane Cheng said in a press release. “But today, postsecondary value is not delivered equitably. Improving college affordability can have a marked impact on the value students receive.”
The number of schools meeting that minimum economic return threshold varied by institution type, according to the report. The percentage of colleges meeting Threshold 0 were:
- 97% of public four-year institutions
- 82.6% of private, nonprofit four-year institutions
- 88.8% of public two-year or less institutions
- 43% of for-profit institutions
- 67% of private, nonprofit two-year institutions
Return on investment is a key factor for prospective students in deciding whether to pursue a higher education. And the report recommends doubling the federal Pell Grant to boost the number of institutions whose graduates reach Threshold 0.
Around 95 additional colleges could meet the threshold if the Pell Grant were doubled, according to the report, and first-dollar free college programs at public institutions would mean an additional 44 colleges could meet the threshold.
“Policymakers should enact affordability programs that provide greater return on investment — especially for students who stand to gain the most from the mobility postsecondary education can provide,” Cheng said in the release.
The report also recommends a focus on helping students from low-income backgrounds with expenses like transportation, healthcare, and childcare. Policymakers have increasingly focused on return on investment in recent years, often highlighting low-income and historically underserved students as part of those efforts.
In Oregon, for example, lawmakers recently included historically underserved student enrollment and outcomes at the state’s community colleges in its funding formula.