College Rankings, Income, and Liberal Arts

College rankings are in the news this week as The Economist just announced its first set of college rankings. The rankings are based on The Education Department’s salary numbers from its College Scorecard, an online tool that compares colleges on cost, student debt and graduation rates.

This data was just released in September, and so now there are several organizations analyzing this data so as to make some sense of what it all means. Besides The Economist, the Wall Street Journal and The Brookings Institution have also published the results of their analysis of the data.

The Economist looked at what it referred to as value-added. This was measured for all 1,275 schools in the study by looking at the gap between how much money each college’s students subsequently earn 10 years after graduation, and how much they might have made had they studied elsewhere.

Based on this analysis, the top five schools in terms of value-added were

1. Washington and Lee
2. Babson
3. VILLANOVA
4. Harvard
5. Bentley

As you might imagine, people at Villanova are quite excited by this particular ranking, especially since it puts us ahead of Harvard.

Here were the bottom five schools (from the bottom up):

1. Cooper Union for the Advancement of Science and Art
2. St. John’s College (Maryland)
3. Gallaudet
4. Earlham
5. Rice

I’d also like to point out that Yale would have been the next school on the list – the second list that is. That’s right, Yale was the sixth worst school in terms of the value it adds to the earnings of its students. The median earnings of its students was $66,000, while its expected earnings, based on The Economist’s model, was $75,596, for a negative difference of $9,596.

Compare this to Villanova’s stats: The median earnings of its students were $73,700 while the model predicted the earnings to be $60,461 for a positive difference of $13,239.

The list of full of surprises, such as the low rankings of Yale and Swarthmore, and the high rankings of schools such as Babson and Villanova.

The report has triggered quite a bit of online debate at The Economist, often times unfortunately denigrating to a political discussion.

The Wall Street Journal story about the data used the unfortunate headline “Parents’ Fears Confirmed: Liberal Arts Students Earn Less“. Based on the Journal’s analysis, students who choose elite liberal arts colleges don’t earn as much money early in their careers )10 years after graduation) as those who attend highly selective research universities.

At nearly half of the top liberal arts colleges, the reported median salary 10 years out was below $50,000. Students at almost all of the top research universities beat the $50,000 mark, while at about a third of top research universities they had median salaries above $70,000.

The Brookings Institution study, similar to The Economist’s approach, attempts to look at the value-added by a college. The model used by Brookings first comes up with a set of variabes that it believes are critical to teh future earnings owere of individuals. These criteria include: student academic preparation, age, racial or ethnic background, family income, the type of college (a community college or research university, for example), the location of the college (as in a big city with many jobs compared to a small town), and the qualities of the college.

The study then enters the data for a specific college into this model to come up with predicted earnings of the graduates 10 years down the road. It then compares the predicted earnings to the actual earnings, and uses that information to rank the schools in terms of value-added.

I am not going to compare the three studies noted above; I’d rather talk about the interpretation and implications of the findings of the three reports.

First, future income is not the only viable measure that could have been used to measure the value of a college degree. Why not happiness, or health, or money raised for charity? These are also important metrics, and it could be helpful to see what impact  a college has on these outcomes. Yes, earnings are strongly related to happiness and health, but only up to a certain extent, and beyond that, income does not seem to matter as much in terms of achieving greater happiness or health.

Second, the study is not assessing the impact that a graduate may have. An individual from MIT may be making $150,000 ten years after graduation working for a large engineering firm, while someone from Swarthmore may be working for a non-profit that provides food on a daily basis to students who live in households below the poverty line. I am sure that such a job does not pay much, but what are the intrinsic rewards offered by such a job? Again, it may be hard to measure, but that does not mean it’s unimportant.

Third, the available data is just providing overall data from the colleges, and such data is not broken down by major. To me that makes it hard to make any statements about the value of one major versus another. It is apparent (and obvious) that students from engineering related schools earn more than students from colleges without technical degrees.

I don’t think  that one can conclude from the study that liberal arts colleges are worthless. I think such colleges attract the type of student who is not overly concerned about learning a skill set that can be applied immediately upon graduation. Rather, such students are interested in developing their critical thinking skills, developing a well-rounded knowledge base, and focused on thinking about how to make a difference in the world, doing work that matters.

I would hate to see every 18 year old that is in college choosing a major based on earnings prospects. I think the result would be a lot of people with degrees in accounting, the law, or medicine potentially doing work they don’t like as well as potentially leading to an oversupply of such graduates which could harm their earnings prospects.

As I’ve mentioned in several of my posts, I am a big fan of a liberal arts education. I’m also a pragmatist (I teach in the business school at Villanova). That’s why I think looking for programs that allow students to combine a liberal arts degree with a more career focused major or minor, such as accounting, is a great way to get the best of both worlds, liberal arts and business. (Shout out to Villanova’s Summer Business Institute program, which offers non-business students the opportunity to earn a business minor in one summer.)

To me, the ultimate way to measure the value of a college education is did it make a difference in the lives of its students.

To paraphrase the song “For Good” from Wicked, I think one of the best things a graduate could say about his or her alma mater might be:

“Because I went here, I do believe I have been changed for the better. I have been changed for good.”