Will Grads See Higher Returns on Degrees?


It’s no accident that college degrees are compared to investments. Choosing between Notre Dame or Duke is no different than deciding whether to bet your money on Pfizer or Apple. Your choice of school and major will determine your initial shares and purchase price. Ultimately, it is how you apply what you learn that governs your returns.

Based on recent survey results from Greenwood Hall, an online education management solutions provider, many wonder if  students should forego investing in higher education altogether. Over 55% of college graduates polled expected degrees to yield a lower return than they would have received 10 to 15 years earlier.

The survey, conducted by Nielsen in January, polled over 2,000 respondents (with 900 being college graduates according to Bloomberg Businessweek). Greenwood Hall also weighted the results “for age, sex, geographic region, education, and race . . . to align them with their actual proportions in the population.”


The oldest graduates were the most pessimistic. Among 45- to 54-year-old college graduates, 59% believed recent graduates would earn a lower return. And 57% of graduates who were 55 or older agreed. Those aged 18 to 34 weren’t far behind at 56%, with the 35- 44-year-old segment being the most optimistic at 47%.


Wealthier grads harbored similar sentiments. Among grads earning $100,000 or more, only 12% expected new grads to see a higher return from their degree than they did. Twice the percentage of people making $75,000 to $100,000 had that optimistic expectation. Even more, nearly two-thirds of the highest earners believed a college degree had lost its value.

However, there was an uptick in optimism among minority populations, with 33% of Hispanic and 29% of African-American graduates believing that new grads will get a higher return on their degree.

Not surprisingly, 80% of respondents cited debt as the top reason why recent grads would net a lower return than grads from 10 to 15 years ago. However, lower salaries (75%) finished a close second, followed by poor career placement resources (44%) and school disengagement from students (41%).


John Hall, CEO of Greenwood Hall, attributes some of these results to poor messaging. “What this survey suggests,” he writes in a press release, “is that schools need to maximize their perceived value. One powerful way of accomplishing this is by enhancing student engagement and the overall student experience throughout the student lifecycle.

“We feel that supporting students every step of the way, especially those at risk, during the enrollment process, student services/financial aid inquiries, on-going counseling as well as career placement, is a comprehensive approach that can significantly enhance a school’s real and perceived value.”

That’s one take. In the wake of the financial meltdown, where household net worth fell by nearly 40% from 2007 to 2010, it’s hardly a shock that older respondents, who bore the brunt of the recession, would view a college degree as a questionable investment. However, recent data doesn’t necessarily follow survey sentiment, particularly for business students.


Let’s start with a November 2014 study from the National Association of Colleges and Universities, which found that nearly 75% of companies surveyed globally intended to hire business-related majors. In fact, business schools produced six of the ten most in-demand majors. In other words, business grads have a great opportunity to get their feet in the door in 2015.

Once they do, they can make a bundle of money over their careers. Take the financial modeling performed by PayScale, which annually calculates return on investment for various undergraduate business programs. Here, for example, out-of-state business majors at the University of California at Berkeley project to a 20-year net ROI of $1,070,000, with a 10.6% annual return on their degree (with the top 25 undergrad business programs expected to yield a return of $660,000 or more).  Often, undergraduate business majors earned the highest starting salaries at several schools, including the University of Pennsylvania, Carnegie Mellon, and the University of Michigan (where grads made $62,000 to $67,000, on average, to start).

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