Ranking 4,600 Colleges by ROI (2025) - How ROI is Calculated, Net Price, and Debt Exclusion

Oct 15, 2026

Ranking 4,600 colleges by ROI (2025) explains how return on investment is computed using U.S. Department of Education College Scorecard inputs. It defines ROI as cumulative earnings over specified horizons minus out-of-pocket costs based on average net price and predominant credential duration assumptions. The document clarifies how average net price is derived from tuition, fees, books, and living costs minus grants and scholarships, and addresses why debt is excluded. It also discusses why certificate and associate’s degrees can show higher short-horizon ROI than bachelor’s degrees.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages16

Reading Time40 min

AccessFree to download

How is ROI calculated?

What is the average net price?

Why is debt not included in your calculations?

Why can short-horizon ROI be higher for certificates and associate’s degrees?

Should I use ROI to decide which institution to attend?

Ranking 4,600 Colleges by ROI (2025) Ban Cheah Martin Van Der Werf Catherine Morris Jeff Strohl Ranking 4,600 Colleges by ROI (2025) Ban Cheah Martin Van Der Werf Catherine Morris Jeff Strohl 1. How is ROI calculated? We use the following variables from the US Department of Education’s College Scorecard: • students’ median earnings 6 years, 8 years, and 10 years after they enroll at an institution • the average net price of the institution • the predominant credential awarded at the institution The predominant credential awarded at an institution is important because we use it to assume how long a student attended a particular institution. If the institution predominantly grants associate’s degrees, then we assume the student attended for three years, whereas if the institution predominantly awards bachelor’s degrees, then we assume the student attended for five years. (Three and five years are roughly the national average time to completion of associate’s degrees and bachelor’s degrees, respectively.) We calculate ROI at intervals of 10, 15, 20, 30, and 40 years following initial enrollment at an institution. The ROI is the cumulative sum of earnings minus the total out-of-pocket costs based on the average net price. For example, we calculate the 10-year ROI for a predominantly bachelor’s degree-granting institution as follows: 10-year ROI = year 6 earnings + year 7 earnings + year 8 earnings + year 9 earnings + year 10 earnings -average net price x 5 Because the College Scorecard doesn’t list earnings for years 7 and 9, we estimate them using the average change in earnings between years 6 and 8 and years 8 and 10, respectively. For horizons longer than 10 years, we assume that real earnings continue to bethe same as in year 10 (i.e. , we assume no growth in earnings after year 10) . This is a very conservative approach, and because earnings actually tend to grow with age, our estimates of ROI can be assumed to be at the lower end of possible outcomes. 2. What is the average net price? According to the College Scorecard, the average net price is the net amount paid to attend a particular institution by students who are receiving federal financial aid (grants, such as Pell Grants, loans, and work study) . The average net price is the average out-of-pocket cost paid by full-time, firsttime students who receive federal financial aid to attend one year of school. Institutions calculate the average net price by adding the advertised price for tuition, fees, books, supplies, and the average living costs at the school (oncampus, off-campus not with family, and off-campus with family) and subtracting the average grant and/or scholarship aid from federal and non-federal sources (e.g. , Pell Grants, school-based grants, or merit scholarships) . A negative average net price indicates that average grant/scholarship aid for students receiving federal aid exceeded the total cost of attendance at an institution. The share of students at a particular institution who receive federal aid is available in the College Scorecard. For public institutions, the average net price reflects the average out-of-pocket cost for in-state students only. Average costs for out-of-state students attending public institutions are typically higher. 3. Why is debt not included in your calculations? We do not include debt in ROI calculations because the relevant variables, such as current and future inflation rates and their effects on monthly debt payments, make it too difficult to accurately address with a single adjustment.This is avery conservative approach, and because earnings actually tend to grow with age, our estimates of ROI can be assumed to be at the lower end of possible outcomes. 4. Why is the ROI for certificates and associate’s degrees at the 20-year horizon or less often higher than it is for bachelor’s degrees? This reflects the lower cost of obtaining certificates and associate’s degrees, both in

FAQs

How is ROI calculated in this ranking?

ROI uses College Scorecard variables including students’ median earnings at multiple year intervals, average net price, and the predominant credential awarded to estimate time attended. ROI is computed as cumulative earnings minus total out-of-pocket costs based on the average net price.

What is the average net price used for ROI?

Average net price is the net amount paid to attend an institution by students receiving federal financial aid. It reflects average out-of-pocket costs for full-time, first-time federal-aid recipients after subtracting average grant and scholarship aid.

Why is debt not included in the ROI calculations?

Debt is excluded because adjusting for current and future inflation and how it affects monthly debt payments is too difficult to handle with a single adjustment. The approach is described as very conservative.

Oct 15, 2026

Uploaded by Sophia Brooks