Which Colleges Are Worth the Cost?

While the federal government distributes nearly $150 billion in higher education student aid annually, regulations that hypothetically prevent low-quality institutions from benefiting from this aid rarely function as intended. Researchers have made progress in measuring the return on investment (ROI) of enrollment in higher education, but residual obstacles are preventing policymakers from using these measures to hold institutions accountable. This report outlines an improved methodology for estimating the ROI from college enrollment that may point the way toward better regulation of higher education institutions.

BPC’s models estimate the benefits to a student’s earnings from postsecondary education—a college earnings premium—for students at thousands of institutions in the United States. Each estimate is compared with the costs of attending that school. Adjustments are made to the models to more accurately assess the costs and benefits of enrollment; the public subsidy provided via local, state, and federal supports for institutions; and the negative effect of labor market discrimination.