It’s no secret that college is expensive.
Last year, student loan debt rose by $77 billion and now totals $1.16 trillion in the United States. That’s a lot of debt, and not everyone can make their payments on time. Delinquency rates also ticked upward to 11.3% at the end of 2014, according to the Federal Reserve Bank of New York’s latest borrowing snapshot.
But a new report released today aims to help prospective students and their families make smart decisions about which colleges provide the best return on investment (ROI). PayScale, which has created the largest salary database in the world, ranked colleges and universities that offer the best bang for your buck. After all, if you’re forking over thousands of dollars for a degree, don’t you want to know what it can do for you?
“The main reason PayScale compiles the college ROI data each year is to help prospective students make better financial decisions around funding their education,” says PayScale’s Lydia Frank. “Having some sense of earning potential and ability to pay back your student loans is crucial to a student’s future financial health.”
PayScale broke down the numbers by school type, location, major and more so you can consider the ROI on your potential college situation. The company collected salary data from hundreds of alumni who attended U.S. colleges and universities, surveying roughly 315 full-time workers per institution whose highest education level is a bachelor’s degree.
Which College Helps You Make the Most Money?
So which colleges offer the best ROI?
Harvey Mudd College gives students the biggest return on their investment, according to PayScale’s data. A private school in Claremont, California, with a student body of less than 1,000, Harvey Mudd College’s grads are known for their engineering prowess. Though it’ll cost you $48,594 per year for tuition and fees, Harvey Mudd College alumni earned an impressive $985,300 return on their investment in 20 years of working after graduation — meaning they earned back what they spent on their degrees, plus $985,300 more.
Plus, if you go to Harvey Mudd College, there’s a good chance you’ll actually finish your degree — you can’t keep getting that treasured student discount forever. Around 91% of students who enter the school finish in six years, and they report earning salaries between $75,000 and $150,000 per year after graduation.
You’ll pay $43,362 per year for tuition and fees to attend Caltech in Pasadena, California, but you’ll earn a $901,400 ROI in the 20 years after you graduate. Roughly 93% of students here finish their degrees in an average of four years.
Never heard of Stevens Institute of Technology? It’s a small, private school in Hoboken, New Jersey, that costs $44,490 per year in tuition and fees. Close to 80% of students finish their degrees in five years, and they net an average ROI of $841,000 in the 20 years after graduation.
Here’s the Rest of the Top 10 Colleges With the Best ROI
Check out the rest of the schools whose alumni report earning great salaries in the 20 years after they graduated.
4. Colorado School of Mines, Golden, Colorado (in-state students)
- State engineering university for Colorado
- Tuition and fees: $16,918
- Return on investment: $831,000
5. Babson College, Wellesley, Massachusetts
- Private business school
- Tuition and fees: $45,120
- Return on investment: $812,800
6. Stanford University, Palo Alto, California
- Private research institution
- Tuition and fees: $44,757
- Return on investment: $809,700
7. Massachusetts Institute of Technology, Cambridge, Massachusetts
- Private research institution
- Tuition and fees: $45,016
- Return on investment: $798,500
8. Georgia Institute of Technology, Atlanta, Georgia (In-state students)
- Public polytechnical school
- Tuition and fees: $11,394
- Return on investment: $796,300
9. Princeton University, Princeton, New Jersey
- Private research institution
- Tuition and fees: $41,820
- Return on investment: $795,700
10. Colorado School of Mines, Golden, Colorado (Out-of-state students)
- State engineering school for Colorado
- Tuition and fees: $33,958
- Return on investment: $771,000
Science, Technology, Engineering and Math Come Out on Top
Notice a trend among the top 10 schools? Many are focused heavily on engineering, technology and the sciences. That’s because it pays to studying engineering and technology.
The average 20-year net return on investment for engineering schools is $677,500, according to PayScale’s data. Compare that to liberal arts, religious, art, music and design schools, which have an average 20-year net return on investment less than $250,000.
Music and design schools came in at the bottom of the list with an average return on investment of $128,100 over 20 years. At some schools, you’re actually losing money over the long run by earning a degree in the arts — though obviously, earning potential isn’t the only reason to study a particular subject.
While PayScale doesn’t recommend one career or major over others, they do recommend thinking about your potential earning power when making a decision about how much to pay for college.
“If you’re planning to study a career that isn’t particularly lucrative, it probably doesn’t make sense to attend the most expensive school you can unless you’re receiving a full ride or have the ability to pay for it without taking on debt,” Frank said. “The majors and careers that tend to have the highest (return on investment), though, are typically in STEM fields — science, technology, engineering and math.”
PayScale also found that students who majored in engineering, computer science, math or business fields, or students who ended up working in business, finance, computer and math fields, had the best chance of seeing a return on investment over $1 million.
Those fields tend to pay more and they’re growing, which means your skills would be in high demand if you earned a degree in these areas. Lesson learned: Crack out your math and science books if you want to make a ton of cash after college.
Other Trends: State Schools, Party Schools and the Ivy League
The report also shows that it pays to choose public schools. State school alumni saw, on average, a slightly higher return on investment with $258,200 over 20 years. That’s compared to $250,900 for graduates of private schools. The difference likely comes from how much less you pay at a state school, according to PayScale.
Unsurprisingly, you’re also likely to see a greater payoff if you attend one of the eight schools in the Ivy League. Those universities were bested only by engineering schools, and alumni of Harvard, Yale, Princeton, Brown, Columbia, Cornell, Dartmouth and the University of Pennsylvania saw an average $649,900 return over 20 years.
Wondering whether to avoid those notorious “party schools,” known for Greek life and their students’ penchant for partying rather than studying? PayScale found the average return on investment was slightly higher for party schools than “sober schools.” Ironically, if you like to party, you’ll see an average return of $354,400 on your degree, versus $336,000 if you prefer to hole up in the library.
Is An Expensive College Degree Worth It?
There’s been a lot of discussion lately about whether earning a college degree is even worth it at all. One way to think about that question is by comparing your degree’s return on investment with what you can make investing your money elsewhere.
PayScale found that most schools, more than 88%, saw a better annual return on investment than conservative U.S. Treasury Bonds. But only a small handful saw a better return than the S&P 500. Apple and Microsoft stocks beat out all the schools included in the report, too.
All things considered, PayScale and others agree that the pros of getting a college degree outweigh the cons. The company says, however, that you should be making your college decision armed with the best, most current information possible about your financial outlook after graduation.
“We believe that college is absolutely worth it, and that you gain far more than a financial return on your investment of both money and time,” Frank said. “However, some schools simply do a better job than others in terms of setting their students up for success in the job market. And, it makes sense to factor real-world career outcomes into your educational decisions. “
Couple this information with these unique ways to save money in college, and you’re good to go. Plus, while you’re in school, there are tons of ways to make money on the side. You can sell used books, become a professional line sitter, make money selling plasma or even consider egg donation.
Your Turn: Did your college or university give you the best bang for your buck?
Tuition and fee data for the 2014-2015 academic year is from U.S. News & World Report.
Sarah Kuta is an education reporter in Boulder, Colo., with a penchant for weekend thrifting, furniture refurbishment and good deals. Find her on Twitter: @sarahkuta.