I live in Massachusetts, went to graduate school here, and teach entrepreneurship part-time at Harvard Business School. So, with my backyard in mind, I take a close look in this blog at the college scene in the Commonwealth.
What I lay out here might surprise you.
This blog is a redaction of a research report that I published a few weeks ago with Yazmin Guzman (a colleague at Postsecondary Commission) and Michael Itzkowitz (a Senior Fellow at Third Way, a DC think-tank). You can find the full report here.
The Basics
The table below characterizes the 85 main colleges in Massachusetts. These colleges enroll 325K undergraduates and account for 98% of the Commonwealth’s college population. Their student bodies range in size from 350 to 24,000 students.
Spend a minute on the table below. I’ll return to it throughout this blog.
Put Aside the Top-100 Types
Our state is home to an unusual concentration of nationally ranked private colleges that are named regularly by US News & World Report and other rankings-crazed publications as top-100 universities. We have 16 of these nationally noted colleges in Massachusetts. Think MIT, Williams, Boston College, Tufts, Harvard, and so on.
In this analysis, I treat separately and generally ignore these colleges. While they comprise about a quarter of college students in the Commonwealth, they enroll few in-state students and matter little to typical college-going students and families in the Commonwealth.
As I move on from these colleges, some parting facts about them:
Graduation Rate Elephants in the Room
College conversations in Massachusetts tend towards the self-congratulatory, I believe. They often linger, as far as I can tell, in a glowy assumption that we do better than other states.
But on the all-important measure of whether our colleges are designed for degree completion, our colleges are average or worse.
The graduation rate situation in our 4-year colleges is also no cause for celebration. Below is a chart that plots the graduation and admission rates of our 4-year colleges.
To me, three points are worth making from the chart above.
Price-to-Earnings Noise
Most college students view college as a ticket to a well-paying job. They choose among colleges and pick majors based, more than anything else, on their need for a good salary and strong career prospects after graduation.
On this crucial topic, the US Department of Education recently released a trove of new data on the short-term earnings of graduates from specific degree programs in Massachusetts colleges.
The new data set covers 52,448 graduates who finished college in 2014-15 or 2015-16. These students graduated from 1,071 degree programs, all administered in one of the 85 colleges profiled above.
The chart below plots these 1,071 degree programs by their average net price and by the earnings of a typical graduate two years after completing college.
A college’s net price, recall, is the average out-of-pocket cost to a student to attend college. It is calculated as the full, advertised cost of college (i.e. tuition, fees, room, and board) minus the average amount of support (in the form of government-issued tuition grants, mainly Pell grants, and college-issued financial aid) given to students.
Two immediate observations stand out from the diagram above.
26% of Degrees are Short-term Money Losers
A thoughtful way to evaluate a degree program is to quantify the wage premium it generates for its graduates (i.e. to estimate how much added salary a typical graduate earns because of having the degree) and to compare that wage premium to the average net price of the degree.
My colleagues and I did this analysis for degree programs in Massachusetts, and the results are below. The chart groups 1,071 degree programs in Massachusetts by how long a typical graduate needs to work in order to pay back the average net cost of a degree via the wage premium generated by the degree. The table below it summarizes these findings.
At least two points surface in the analysis above.
The main observation here – again – is that degrees vary enormously in the short-term “bang for the buck” they produce for their typical graduate. A majority are good deals, but a substantial minority are money losers.
Majors Matter Massively
If students cannot predict how much they will make after college by the price they pay to go to college and if degrees are all over the map in how likely they are to generate short-term wage increases, then what is an ROI-driven student to do?
The answer, in part, is to focus on choosing an economically viable major. Picking a field of study is key to locking in a good salary after graduation.
In the chart below, I organize 884 bachelor degree programs in Massachusetts into broad fields of study and, for each field, plot the percent of degrees that allow typical graduates to pay back the cost of college, via its wage premium, in less than 10 years.
Degree programs in some fields of study are very likely to generate high short-term financial returns. For other fields of study, the opposite is true.
The bad news from all of this earnings data is, of course, that prices are unreliable signals of salary outcomes and that degrees offer a bewildering range of economic returns.
The good news, perhaps, is that economically minded students and families – if they shop carefully and dig deep on available data on prices and outcomes – can find colleges and degree programs that are reasonably priced and likely to generate an appealing financial return.
Conclusion
The material in this blog should raise wide-ranging questions about the college sector in Massachusetts. I hope it stirs debate.
To me, one immediate conclusion from the analysis is that our colleges — and the public agencies and accreditors that oversee them — should ramp up efforts to collect, organize and share data on college earnings outcomes with students and families.
Students have an obvious and urgent interest in fuller information about the financial outcomes of colleges and degrees within them. All stakeholders – regulators, politicians, accreditors, and colleges themselves – should rally to this cause. On that suggestion, I would think, nobody can disagree.
The broader and deeper policy take-away from this analysis, in my view, is the urgent need for new colleges and true innovation in the higher education sector in Massachusetts.
I have argued elsewhere that most colleges (including the ones in Massachusetts) cannot change and improve in meaningful, lasting ways. Most of them are mired in fixed costs, wedded to short-term revenue models, and hamstrung by bureaucratic governance. They are structurally prohibited from real change. Even if held accountable and funded in new and more thoughtful ways, most colleges will keep doing what they are doing.
The way to a better college sector – one that costs less and does more to improve the life and work prospects of its graduates – is to create a strictly regulated path into the college sector for nonprofit startup colleges. These startup colleges would pursue innovative designs (as only startups can) and would bring to the Commonwealth’s college sector fresh ideas, new designs, and competition.
Creating a tightly monitored access point into higher education for nonprofit college startups is the primary goal of the Postsecondary Commission, and I write about it often. This goal makes as much sense in Massachusetts as it does across the country.
I’ll leave it there for now. Thanks for reading along. Happy New Year, one and all.
-Stig
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