In July, Business Insider released a list of 50 colleges costing over $60,000 per year for tuition, fees, room and board. While some on the list are institutions that one might expect to be the most expensive, many of the most expensive schools are not well known to the general public. Considering that last year there were only nine institutions costing over $60,000 and the fact that during the 2013-2014 academic year the average cost of tuition, room and board at a private college was $40,917 while the average cost at a public university was a meager $18,391, one wonders what enables these colleges to raise their costs to these levels. Especially when considering that most families have to borrow to pay for higher education.
With an increasing number of college and university leaders expressing concern about maintaining student enrollment in an era when many families are debating whether college is still “worth it”, what enables these schools to raise costs, much less to these levels? Is it that their football programs reign supreme? Do their student facilities, history and ivory-covered walls work to draw students as a candle draws moths? Or, is it that the degrees and programs they offer are more likely to result in higher income than other institutions?
Not surprisingly, Adam Smith’s invisible hand seems to be at work in higher education. A comparison of the most costly colleges with the rankings of colleges’ 2014-2015 salary potential from PayScale’s 2014-2015 College Salary Report indicates that while they are not exactly the top 50 in terms of projected earnings, by and large they are near the top.
For example, the most expensive college with a cost of $64,527 per year, Harvey Mudd College, a school that most parents probably never heard of (and has never had NCAA sanctions), also ranks number one in the country in terms of having the highest paying graduates with its alumnus having early career (first 5 years from graduation) salaries of $75,600 and mid-career salaries of $133,800.
Of the 50 colleges costing more than $60,000 per year, 15 are also in the top 50 in terms of the highest paying graduates – among them are Haverford College, Renssealaer Polytechnic Institute, Washington University in St. Louis, Stevens Institute of Technology, and Carleton College, hardly household names. Of the 50 most expensive schools, only seven were not among the top 200 in terms of salary potential of the 1,002 colleges ranked by PayScale.
Clearly, to some extent, prospective students and their parents look at the return on investment, at least in the upper stratosphere of expensive colleges, when deciding what college is worth and where to attend. While there is a looming crisis in higher education that will require, among other things, cost reductions and increased efficiencies, these colleges’ ability to demand and get large tuition points to another key part of the solution: programs and degrees must enable graduates to get jobs that justify the investment, whether large or modest. It is only when it is no longer a question of whether college is “worth it” that maintaining enrollment will not be the issue that keeps university leaders up at night.