We all know that the price of college is rising; but it college really worth the cost? Here, I’m going to focus on recent data that attempts to look at the economic value of a college degree, with reference to what we know about what Carleton alumni earn.

The study that has recently gotten the most attention is the U.S. Department of Education’s College Scorecard which was released in September 2015. (See: https://collegescorecard.ed.gov/) The Scorecard was initiated by the White House in an effort to better inform the public about the quality of colleges and universities, measured primarily by outcomes measures, such as graduation rate, salary after attending, and student debt. After some initial discussion about “ranking” colleges, the difficulty of putting over 7,000 institutions of higher education on a common basis ultimately led to a simple web site where students can search and compare colleges in their own way based upon some of these outcomes criteria. (However, accompanying the web site is the release of 170 megabytes of federal data, which anyone can access, and which will inevitably result in an explosion of third-party rankings in the future.)

What is unique about the Scorecard is that for the first time, some early post-college statistics are available at the national level, thanks to the power of the federal government to match earnings from IRS tax returns to individual colleges, but only for students who had applied for financial aid by submitting a FASFA form. (Without a link to the FAFSA, the IRS would otherwise have no way of knowing where a student had graduated from.) And we have data for a higher percentage of recent graduates than we’ve ever had before.

According to the Scorecard, the median salary of Carleton students ten years after entering college (as of 2013) was $46,100. This compares to the national median of $34,343 for those who attended college, or $25,000 for a typical high school graduate. Carleton ranks 16th in its 26-member peer group in earnings (range: $36,200 to $58,500).

There are a number of flaws with the Scorecard data. Earnings are calculated 10 years after entering college, regardless of whether the student graduated. (The national six-year graduation rate was 44%, compared to Carleton’s 93%.) There are no adjustments for regional salary differences. Since the data covers only those who applied for financial aid, loan debt may cause this group to postpone post- graduate study, and graduate study has a strong positive impact on earnings. Our surveys suggest that about 80% of Carls do some graduate study within ten years of graduation. Although the Scorecard attempted to control for lost earnings while in graduate school, these depend on continued receipt of federal loans, and many Carls might not be captured, because they have received graduate fellowships and/ or stipends.

There are a number of alternative measures of post-college earning power. The best-known is PayScale, which collects its data from job candidates who are seeking information about the value of their positions, in return for information about their earnings. (See: http://www.payscale.com/college- salary-report) According to PayScale (2015), the median early career earning for Carleton alumni is $44,000 (from 0 to 5 years after graduation). This is similar to the Scorecard, and to the State of Minnesota’s estimate of $44,992 for all bachelor’s degree holders in the state 3 years after graduation. (See: http://mn.gov/deed/data/ data-tools/graduate-employment-outcomes/) In Carleton’s own survey of the Class of 2014, one year after graduation, the middle 50% of respondents who were working full-time earned from $30,000 to $55,000, with a median of $38,500 and a mean of $43,265. (Earnings tend to quickly increase for each additional year of work experience.)

However, PayScale also looks at mid-career earnings (10+ years af- ter graduation), where the estimate for Carls is $107,000, where Carleton ranks 10th among national liberal arts colleges. That figure represents only alumni who only had bachelor’s degrees (i.e. less than half of Carleton alumni). This year, PayScale for the first time added a measure to include alumni with degrees beyond a bachelor’s, and “all Carls” are estimated to earn $45,500 in early career and $106,000 by mid-career. The major problem with the PayScale is that their estimates are based on a small number of data points, and for small colleges, the confidence interval around the data is +/- 10 percent. Year-to-year “swings” in PayScale earnings estimates can be significant.

Last year, the Brookings Institution took a more in-depth look at the “valued-added” to mid-career earnings by colleges and universities, supplementing PayScale data with variables from a variety of other sources, including LinkedIn, the weighted labor market value of a college’s mix of majors, the percent of graduates with STEM degrees, and a variety of college characteristics, admissions, and financial measures. After a series of complex multiple-regressionand other analyses, Carleton ranked 5th among national colleges and universities in their “value-added” measure, which was described as the difference between “predicted” and “actual” mid-career earnings. Only CalTech, Colgate University, MIT, and the Rose-Hulman Institute of Technology ranked higher. Of note, the authors identified Carleton as one of only 8 institutions where what they called an “x- factor” (the part that quantitative data couldn’t explain) contributed very heavily to the value-added measure. The authors could only attribute the “x-factor” vaguely to “things like administration or teaching quality, student ambition, or alumni networks”—in short, things that liberal arts colleges such as Carleton do exceptionally well..

One of the biggest problems with these studies is that they look at the median earnings by institution in the aggregate, and they don’t take into account significant variation by major at the institution level. Nationally, graduates with STEM majors earned the highest early career salaries. PayScale’s (2015) national early earnings estimates by major ranged from $101,000 for petroleum engineering to $30,300 for early childhood education. But looking ahead to mid-career earnings, the picture changes. While many alumni with technical undergraduate degrees remain in positions closely connected to their degree, Carls and other liberal arts grads have more flexibility to switch career pathways and are less tied to their majors. Many sacrifice immediate earnings for graduate study, or for work in education or other lower-paying, but socially-meaningful non-profit positions. As they gain experience or complete their professional or graduate degrees, they tend to move into higher-paying professional or management positions. If one believes the PayScale data, by mid-career, Carls have increased earnings by 143% to $107,000, which places them on par with the top 14 majors in mid- career earnings (all of which are in engineering or computer science).

All of these earning studies are highly technical and subject to significant error and should be taken with a grain of salt. While they are better than “no information at all”, they oversimplify the problem since they don’t deal with the great range in earnings, and the fact that just as there are no “typical Carls”, there are few typical “median” alumni. They cannot account for the success that is attributable to graduates’ own skills, initiative and ambition. Furthermore, and finally, they focus almost entirely on the monetary “value” of an education, and ignore the “values” instilled by the liberal arts, which can contribute in unmeasurable ways to a “life well-lived” and to lives that give back to society.