How to Calculate the Economic Value of College Degrees


Put simply, calculating the economic value of any particular college degree is difficult. The factors that can affect such a calculation are almost innumerable. However, there are a few considerations that should take precedence in making this determination. Without any further adieu, here they are:

The Institution

The institution from which the degree is earned can play a large part in that degree’s ultimate economic value. However, this is true to a much lesser extent than is often assumed. The most elite firms—Apple, Google, Microsoft, top management consulting firms, etc.—typically recruit from the most elite universities, although the best students at other institutions can contend for these jobs as well. If you have no desire to work for an elite firm, much of the incentive to pay top dollar for a prestigious education is gone. However, you may find that the appeal of having a top-flight university’s name on your resume and diploma, as well as having the opportunity to meet and connect with bright people, is worth whatever extra it may cost you.

The Type of Degree

A professional undergraduate degree in, say, nursing, accounting or engineering is likely provide quick return on investment. This is so because each of these degrees qualifies graduates for a specific professional position—nurse, engineer or accountant—upon graduation. Although each field has its own licensing exam(s) that must also be passed, almost the entirety of each graduate’s professional foundation has been laid when he or she receives one of these degrees. Compare these with, for example, an undergraduate degree philosophy or history. These degrees have no predetermined career path attached to them, and are generally derided for providing an extremely low return on investment. By themselves, these degrees do tend to provide relatively low return on investment, at least at first. However, many students use them as a springboard for postgraduate professional study in fields such as law or medicine—provided that they have completed their pre-med classes, of course—in which professional degrees provide a higher return on investment than the previously discussed undergraduate degrees. Weighing immediate return at a lower rate against delayed return at a higher rate must be done on an individual level.

Financial Aid

Taking the money at a lesser school is often a wise financial decision. The name of the university on your degree will be different but the quality of education you receive is likely to be substantially similar. Outside of possibly a few top programs—think MIT physics or University of Chicago economics—the difference between a top-tier school and a lesser school will be negligible. However, top-tier schools are more likely than their lower-ranked counterparts to provide access to faculty members with high-level connections or to host top employers for on-campus recruiting sessions. These barriers can be overcome, although it will require more effort to make connections with these employers and faculty members at universities not considered to be elite. Choosing a scholarship at a less prestigious institution over full tuition or a smaller scholarship at a brand-name school will cost less, although you could be missing out on the indirect economic benefits discussed above. Weighing these factors must be done on a case-by-case basis, taking into account the amount of money you would save and weighing it against the amount you would expect to gain over your working life if you attend an elite institution.


There are numerous factors to take into account in determining the economic value of any particular college degree. Gather as much data about each option as you possibly can. This will allow you to be circumspect and make not only an objectively good decision but one that is right for you individually.



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