Is this college worth the price?

There is no doubt that a bachelor’s degree can significantly increase a person’s income, but students in the United States who attend different colleges earn vastly different amounts. The US Department of Education’s College Scorecard shows that students attending MIT earn a median annual income of $111,222 10 years after enrollment, while those attending Alabama State only earn than $32,084.

According to research by Chicago Booth’s Jack Mountjoy and Washington University in St. Louis’s Brent Hickman, these publicly available earnings statistics overwhelmingly reflect pre-existing differences in incoming students’ earning potential, rather than a substantial variation in the value added by a school itself. By analyzing 10 years of data from 30 diverse state-supported universities in Texas, they demonstrate that the best predictors of a college’s real benefits for students are its tuition spending, emphasis on STEM majors, and graduation rates.

“These results suggest that the order and magnitude of raw outcome comparisons often highlighted in academic guides, popular press, and state funding formulas are largely driven by selection bias,” or the ability of top schools to enroll students who would. Well, it doesn’t matter where they frequent, the researchers write. This leaves “a smaller and more nuanced role” for contributions from educational institutions themselves.

Calculating the added value of colleges and universities is a hot topic among students, parents, and policymakers. “With state legislators increasingly exploring funding models that directly tie public college appropriations to student outcomes, it [value-added] is also an important consideration for policy makers deciding where and how much to invest,” observe Mountjoy and Hickman.

Conducting such an analysis is no small feat, say the researchers. Obstacles include finding a sample large enough to estimate the educational benefits conferred by each institution, by tracking a series of individual-level data linkages from student characteristics to enrollment to attainment of a degree and income, and creating a research model that takes into account the decentralized, idiosyncratic nature of college admissions and enrollment in the United States.

They tackled these challenges by drawing on multiple administrative records from Texas, the second-largest U.S. state behind California. This allowed them to track 422,949 students in 10 high school graduating classes from 1999 to 2008 who enrolled in the state’s 30 public universities. Mountjoy and Hickman then used a “matched candidate” research model that compared the outcomes of students who enrolled at different colleges, but applied and were admitted by the same set of institutions. This approach, they explain, was successful in balancing pre-college predictors of future outcomes, such as high school test scores and family income, across the different colleges that students ended up attending, yielding fairer institutional comparisons than raw and uncontrolled statistics.

Richard L. Militello