Is private or public college a better investment?

Historic trend reverses

In 10 years, the median return on public college tuition will exceed that of private institutions by 24%, according to a new PayScale analysis.

By 2025, the 20-year net ROI for a bachelor's degree at a private college will climb 4%, but public schools' will rise 17%, according to the company's calculations. Because of those rapid gains, the median ROI of attending a public college will exceed that of private colleges by 24% in 2025, Payscale estimates.

To conduct the analysis, PayScale examined its salary survey of approximately 2.8 million people. Researchers looked at earnings differences between high school, public college, and private college graduates minus the total estimated cost of earning a four-year degree—as determined by the Department of Education's Integrated Postsecondary Education Data System (IPEDS). 

For an in-state 2014 public school graduate, that price came out to $29,609, while for a private school graduate it was $83,192.

Although enrollment at elite institutions such as the Ivy League schools will remain strong, smaller private schools will struggle, says Mark Schneider, president of education research firm College Measures.

Small colleges refuse to grasp 'their true financial situations,' expert warns

"Going to a no-name private school that is $40,000 a year is just not worth it," says Schneider.

What programs students choose to pursue also plays into their future earnings, says Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University.

"It's not where you go, but what you learn that determines what you make after graduation," he says.

Carnevale also points out that completing college at all—regardless of whether the school is public or private—increases an individual's lifetime earnings (Anderson, CNBC, 7/4).

Thoughts on the story? Tweet us at @eab_daily and let us know.


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