A recent analysis conducted by non-profit thinktank The Foundation for Research on Equal Opportunity (FREOPP) revealed that almost a third of American college students are enrolled in programs that do not generate a positive return on investment (ROI. In total, 31 percent of students were found to be enrolled in programs with negative ROIs.
The study discovered that approximately 25 percent of bachelor’s degrees, 43 percent of associate degrees, and nearly 50 percent of master’s degrees had negative ROIs. The median return on investment for a bachelor’s degree was $160,000; however, this figure varied greatly depending on the subject studied. For example, the ROI for economics, computer science, and nursing was as high as $500,000, whereas English, education, psychology, and fine arts had a lower return or even zero.
The highest median payoff for a bachelor’s degree was found in engineering, with a median ROI of $949,000. This was followed by computer science with $652,000, nursing generating $619,000, and economics making $549,000.
For undergraduate certificates, returns were higher for technical trades compared to the median bachelor’s degree. The median investment return for technical trades—such as precision metal-working, HVAC technology, and vehicle repair—was $313,000. However, many subbaccalaureate programs, like associate degrees in general education or liberal arts, were found to have no payoff.
The analysis also highlighted the importance of field of study when considering ROI. At both the baccalaureate and subbaccalaureate levels, the topic of study was a paramount consideration. The median return on investment for the average subbaccalaureate program was $170,000.
The ROI for graduate school programs is also mixed. While professional degrees in law, medicine, and dentistry tend to have strong payoffs, often exceeding $1 million, nearly half of all master’s degree programs have no ROI due to their high costs and modest earnings benefits. Even the MBA, one of America’s most popular master’s degrees, frequently has a low or negative payoff. The median return on investment for an MBA was found to be only $101,000, with 39 percent of programs generating negative returns.
Colleges with the highest net tuition costs, above $16,000 per year, were found to generate higher median ROI. Those with lower costs had lower investment returns. The analysis speculated that the higher tuition costs could be attributed to a better quality of education, which then pays off as higher returns. Alternatively, it is possible that schools raised their prices due to the assumption that people would pay back their student loans.
The issue of student loan debt has become a contentious political topic in recent years, with the Supreme Court striking down the Biden administration’s massive student loan forgiveness program and President Biden vowing to find a way around the ruling. In July 2022, the Biden administration announced $39 billion in student loan forgiveness as part of fixing “administrative failures” that held up relief for borrowers under income-driven repayment (IDR) plans.