Washington Monthly - September/October 2021 - 12

Editor's Note
Paul Glastris
What Is the Value of
a College Degree?
A
few years ago, the higher education staff at the Bill &
Melinda Gates Foundation posed a simple-sounding question:
What is the value of a postsecondary education, and how
do you measure it? To figure that out, the foundation partnered
with the Institute for Higher Education Policy, a D.C. think tank,
and empaneled a diverse group of academics, think tank scholars,
college presidents, students, government officials, and a couple
of journalists (including yours truly). Thus was born the Postsecondary
Value Commission.
The group's original intent was to focus on the economic value
of a degree or credential from a specific school to individual
students. But we quickly realized that there are vast differences
between what students of different races, genders, and income
groups pay (including via loans) to get a degree, and in what they
earn after college. So equity became central to our work.
We then recognized that the same degree from a given college
can produce not only different incomes for different students,
but also vastly different amounts of wealth, especially between
Black and white students. So we added wealth as a key variable.
It then became apparent that the focus on students' economic
well-being was too narrow. Governments invest hundreds of billions
of dollars annually in our higher education system; what is
the return on that investment, and how do you measure it? Overall
GDP growth? Additional tax revenues? What about the benefit
to the country of colleges preparing students to become active
citizens who, through their individual efforts, help solve the equity
issues that were our chief concern?
In short, that simple question did not have a simple answer.
Still, after two years of meetings, Zoom calls, and hard
work from a crack team of researchers-one of whom is the
Monthly's own data editor, Robert Kelchen of the University of
Tennessee-the commission released a remarkable report this
spring containing a package of conceptual tools that I suspect
will define for years to come how higher education experts, policy
makers, and average citizens approach that question.
My favorite tool is the " value threshold " chart reprinted on
this page. It gives precise shape to an intuitive idea: that the
long-term economic value of a college education for any individual
student can range from " not worth the investment " to " lets
me earn a middle-class income " to " allows me to save for a comfortable
retirement. "
Unfortunately, the federal government does not publish numbers
fine-grained enough for outside organizations to use the
12 September/October 2021
Measuring Economic Returns Via Thresholds
Minimum Economic Return: A student meets this threshold if they
earn at least as much as a high school graduate plus enough to
recoup their total net price plus interest within ten years.
1
2
3
4
5
Earnings Premium: A student meets this threshold if they reach at
least median earnings in their field of study (or, if field of study data
is unavailable, the median earnings for the institution's predominant
degree type).
Earnings Parity: This threshold measures whether students of color,
students from low-income backgrounds,and women reach the
median earnings of their systemically more advantaged peers
(White students, highincome students, or men).
Economic Mobility: This threshold measures whether students
reach the level of earnings needed to enter the fourth (60th to 80th
percentile) income quintile, regardless of field of study.
Economic Security: While sufficient earnings can create a stable life,
wealth is key to building the type of security needed to withstand
life's financial shocks. This threshold therefore measures whether
students reach median levels of wealth.
Wealth Parity: Mirroring the earnings parity threshold, this threshold
measures whether students of color, students from low-income
backgrounds, and women reach the level of wealth attained by their
more privileged white, high-income, or male peers.
tool to assess individual colleges. It could tomorrow, however,
if Congress would pass the College Transparency Act, as this
magazine has long advocated. The bill would lift a ban on data
sharing that Congress itself imposed-on mostly bogus privacy
grounds-under pressure from trade associations for colleges
that might not look so good once the numbers are public.
Until then, we think the Washington Monthly's annual college
rankings, which begin on page 54, provide the best existing measures
of the value individual colleges offer to individual students
and to the country as a whole. (So does the Lumina Foundation,
which for more than a decade has generously funded this issue
of the magazine, and the Gates Foundation, which also kindly
supports our higher education coverage.) We use available federal
and other data to rank colleges based on their record of recruiting
and graduating students of modest means, producing
scholarly research, and encouraging students to be active
citizens by voting and performing military or civilian service.
And when there's enough data for outside groups to use the Postsecondary
Value Commission's tools, we will be the first in line.
Courtesy of Postsecondary Value Commission
Washington Monthly - September/October 2021

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