We were doing a bit of research on college education and costs, and came across a pretty surprising piece of analysis. According to payscale.com, a number of colleges in the United States yield, on average, negative 20-year returns on investment (ROI). What that means: for these colleges, the difference in salary from attending (compared to not) is not high enough to make up for the cost of attending--sometimes by a long shot.
Sometimes politicians react to this by trying to lower student loan interest rates. But on a 5-year loan of $30,000 (which is typical) at 6% interest, total interest payments are less than $10,000. Some of the worst schools in the list have 20-year ROIs of negative $100,000 or more.
Something to consider: should people even go to these colleges? If the government covered the bill at these schools, it would still mean a large net loss on its investment over 20 years. Can society justify the cost of students attending many of these colleges, regardless of who pays?
But is there something else going on? Do college educations and experience have an intrinsic non-monetary value that makes the investment potentially worthwhile even if there’s no economic payback?
As always, let us know what you think in comments below.