Kiplinger Doesn't Get It

Generally, I like Kiplinger's website. I don't get their magazine any longer because most of their good stuff is online, and those pieces are pretty good. I link to/write about their articles quite frequently.

But in the case of naming the best values in public colleges, they're off the mark. They detail how they rank the schools and give this as a summary:

We narrow the list to about 120 schools based on measures of academic quality -- including SAT or ACT scores, admission and retention rates, student-faculty ratios, and four- and six-year graduation rates, which most schools reported for the class entering in 2002. We then rank each school based on cost and financial aid. In our scoring system, academic quality carries more weight than costs (almost two-thirds of the total).

To assess costs, we look at total expenses for in-state students (tuition, mandatory fees, room and board, and books); the average cost for a student with need after subtracting grants (but not loans); the average cost for a student without need after subtracting non-need-based grants; the average percentage of need met by aid; and the average debt per student before graduation. (In the table, aid is need-based assistance.)

In all, they list 24 different pieces of data but miss the one key that would really make this analysis great -- expected earnings at graduation.

Why is this so important? Because to see if getting a degree at any particular school is a good deal, you need to know two things -- what it costs and what you expect to make when you graduate. Only by knowing these two things can you make the most of a college degree.

But Kiplinger only ranks "quality" versus cost (giving 2/3 of the weight to the "quality" measures.) Who cares if the "quality" of the school is great or even if it's a good deal cost-wise to go there if you can't get a job paying much upon graduation?

For instance, Kiplinger ranks the University of North Carolina as #1 and Shippensburg University of Pennsylvania as #100. The average debt at graduation is $14,936 for Carolina and $20,148 for Shippensburg (they also list other cost numbers, but let's focus on these for simplicity's sake.) But what if you found out that the average grad from Carolina made $25,000 out of school and averaged $50,000 10 years later versus $35,000 and $70,000 for Shippensburg? (FYI, I'm making these numbers up -- they're not listed anywhere -- which is exactly my point). Would your conclusion be a bit different? Probably!

Of course you'd need to adjust for the differences in majors from one school to another (at least in part -- maybe one analysis could be overall and another could be by-major), but once this is done, wouldn't knowing what you'd make upon getting a degree be pretty important information? Without it, how can you really determine what the best "value" among colleges is?

Maybe I'm missing something. Feel free to add your thoughts and take on this issue.

Comments

[meb]

I agree completely, but then it gets even more complicated as one school could have a big engineering dept and another could have a big social service program. Of course the engineers will make more on average. I'm not sure how to take these differences into account.

[Mashford]

I agree with what you say, but you're ignoring a few issues ...
-personal responsibility in the making of money ... a go getter from state U in the mid-west may make more money than a east-coaster w/o the mid-west work ethic
-where do most of the students from the college go to work ... workers in LA or NYC, make more money than workers in Greeley Colorado ... go to school at Harvard and work in Greeley, low salary results
-I think students ought to focus chiefly on where they fit in ... they feel at home, they stay to finish the degree
-Focus on where they are mostly likely to complete the degree ... the major is another question ... 5 years down the road, very few care where you went, but they all care what you majored in ... check-out the job reqs on monster

[Matt]

You make a valid point. And perhaps Kiplinger should have included that in the financial analysis. However, you are glossing over the fact there is a lot more to college than making a salary after graduation. Many (most?) people would argue that your growth during college is where the true value lies. After graduation salary is secondary to those people. Thus, making the “quality” a much better indicator of a college’s value than the post graduation salary. Naturally, as a personal finance blogger, I would expect it to hold less weight (and as a personal finance reader it holds less weight in my eyes as well). However, not everyone thinks like we do. I see this as a pretty good list of the “highest quality education” for the dollar, which doesn’t necessarily have anything to do with post-graduation salary.

[bill]

To some College was an "experience" and I did have a blast in college and grew a lot.

But the true reason I spent thousands of dollars on tuition, hundreds more a semester on books, and 4 years of my early 20's was to get a salary after. If my path was carved out and a degree wasn't needed, I would have been gone so fast.

But I do agree there are a lot of factors that go into salary after based on degrees earned, career path for say a business major. I chose Engineering and had my path pretty much carved out and salary pretty standard.

[jamie smith]

Another key part that they forgot is the job placement rate--How many grads have jobs after graduating? This compliments the expected earnings at graduation because it gives perspective students an idea of how many students that get can get jobs after college and at what average expected earnings. I like BYU's MBA website as it lists the percentage of the students by major who got jobs and earnings.

[mike]

how much you make after graduation is up to the student. if you're picking english or sociology as your major, it doesn't matter what school you go to, you decided you're making less than a major in accounting or biology or engineering. it'd be difficult to weigh this into the evaluation.

[Noadi]

Your major not which college you attend effects earnings more (assuming we are only talking accredited schools, non-acrredited degrees are virtually worthless). Since I believe happiness is more valuable than money I don't think you should be picking a major based on expected salary but on what your passions and strengths are.

[MasterPo]

College - or any advanced education or training - is only as good as the student who receives it puts it to use.

You can get an Ivy League MBA and work in Starbucks. Unless your goal is be Starbucks CEO someday (AND are actively working towards that goal, not just making lattes) it was a waste of money and time.

OTOH, there are a lot of very successful people who went to local or city colleges that MasterPo is sure didn't even make honorable mention on the list.

No degree - even an Ivy League one - will guarantee career success and financial freedom. It's what you do with it.

[tony]

I feel sorry for the graduate who has accumulated $60-80K in school loans only to get a degree in a field that pays $30K. The major you pick is key. Incoming freshmen should do their research and have some mentoring help with career choice. The best statistics would be job placement rate and salary comparison based on degree. That gives best education for your dollar.

[Ryan @ SpillingBuckets]

I don't necessarily agree with the debt and income stat value. While debt level and school cost is extremely important and should be probably the top few factors in school choice, income is completely up to you, no matter which school and no matter what major you choose. What you do with your education, the people you meet, the ideas you have makes the difference. I choose poorly in my life and followed the stats for school majors and income estimates and thus a super expensive school and a major I didn't and don't enjoy anymore or use in my current job. Only advise is to look at all angles.

[Nate K]

I went to a small, liberal arts college and because of our mission and types of degrees, many of our students went into seminary, public service, non-profits, NGOs, social work, education, and other types of service degrees.

I'd also say that these are some of the smartest people I've met and people who serve as leaders with a good sense of asking the right questions. They won't make a ton of money and that's OK with them. If they do make a lot of money it will be because they became a leader by the qualities that were built up by the community around them.

I'd rather be happy with my calling, my life, and my family than make money to retire early (if I even get a chance in life to make it that far).

In other words, what isn't in those studies is a good sense of the community that a young adult will spend 4+ years in. What qualities will be developed there? What do students think of their peers? What do they think of faculty? Who has inspired them? Those are the real questions to ask.

[MonkeyMonk]

As other have said I don't think it would have been very useful for Kiplingers to include post-graduation salary information because there are just too many variable to make that number meaningful. It really does boil down to your choice of major, career path, and the industriousness of the individual student.

I went to a fairly expensive, predominantly engineering/computer science-based university but was a writing/design major. The salary numbers from that university would have been totally useless to me and, even worse, might have given me an unfair expectation on future salary.

[Jim]

I think the problem is that there is little data and no straight forward measure of the income you get from the college itself. The income levels are too tied to degree and location. So if I say that a Harvard grad has a median income of $110,000 then what does that really mean? Not much if you're an English major living in Boston versus an Engineering major living in Tampa.

[MC]

Like MonkeyMonk, it seems useless to learn the average salary of a graduate from that college.

Because it all depends on the major you pick. I went to a lib arts college that had a huge nursing and teaching school--but I majored in Chem. I'm sure my salary is higher than the "average" which would be dominated by the teachers and nurses.

It would make sense to pay attention to the avg salary of students graduating from *the department/program you are interested in*. For example, engineering. And similarly if you want to go to medical school, you should check out the % of premed grads from the university that actually get into good med schools.

[Doug @ CheapScholar.org]

I think it is valid that you pointed out the lack of income information for students graduating from a particular college. However, that data is very difficult to collect and as many have said above, it really depends on the program/major of each student. If you could survey and compile the data by University and then my major, you may be able to compare apples to apples.

However, my experience is that a person's major doesn't necessarily define their career or vocation path. I know many people following a career path totally unrelated to their major.

Still though.. I think you bring up a valid point and that kind of information would be very helpful to those in the college search process

[Tinman]

Equivalent freshmen at state schools and Ivies earned the same 10 years later. Education is like a sewer: what you get out of it depends on what you put into it.