With tuitions increasing and wages stagnant, the Return on Investment for a private college degree is losing ground to the ROI on a public college degree.
It is still true that a college graduate is going to make more money than someone whose formal education stops at high school, on average, over time.
However, a new study reiterates a growing trend that the difference in return on investment for public colleges versus private colleges is growing in favor of the public institutions.
According to PayScale, a company that collects information on millions of salaries worldwide, the return on investment for public colleges is higher than that of private schools, and the difference is growing.
The 20-year net return on investment between a high school graduate and a person with a bachelor’s degree from a public college is $489,000. The difference between the 20-year net return on investment of a high school graduate and a private school graduate is $431,000, which means the ROI on a public college education is $58,000 higher than that of a private college education.
According to PayScale’s research, by 2025 the gap will expand to approximately $122,000, as the public college education ROI will grow by $81,000 in the next 10 years and the ROI on a private college education will grow by just $17,000.
The difference comes from statistics related to the rise in private college tuition costs versus the rise in public college tuition costs. While the quality of education as it pertains to economic success in future life may not change dramatically, the return on investment is affected.
“What this forecast brings into focus is that the name of your alma mater matters far less than you commitment to your education,’’ said PayScale senior editorial director Lydia Frank. “The biggest driver around return on your educational investment is cost, assuming you graduate, so go to a college you can afford.”
According to PayScale’s research, tuition at public colleges has grown more significantly than tuition at private colleges (225 percent over the last 30 years to 146 percent). However, the average one-year tuition at a public college is still only around $9,000 while the average tuition for a private college is at $31,000.
These statistics have turned in the last 10 years. In 2006, the ROI for a private college degree was $2,000 higher than that of a public college degree. But over the last 10 years, wages have seen little increase across the board, affecting ROI in both cases.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.