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Stanford tops CNBC’s list of colleges in terms of return on investment. Here’s why

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In a recent study by CNBC, Stanford was ranked the nation’s top college in terms of return on tuition investment, with its graduates earning the most of all schools’ relative to the net cost of attending. 

CNBC’s Make It, a group aimed at educating people about earning, saving and spending money, conducted the study by analyzing how much students pay in tuition and comparing it to their average salaries over the years following their graduation.

Using data from a non-profit news organization, CNBC was able to find net college costs for students from households that earn between $48,001 and $75,000 a year, calculating the cost by subtracting money from scholarships and grants. They then divided the net cost by the expected salary of a graduate from each college and ranked schools by the resulting numbers. 

The list spans 50 schools, including 25 private institutions and 25 public institutions. CNBC’s report states that Stanford graduates make an average of $143,100 following a decade in the workforce, and the net cost was calculated as being just over $4,000 a year, giving Stanford a higher return than any other school, public or private. 

“Looking at it pragmatically, I tell a lot of the parents of my clients that the most important thing is that they attend an institution they believe will offer them the highest returns, whether that’s financially or educationally,” said Marilyn Canka, a private college counselor in Palo Alto. “The best part is that those two often go hand in hand, with Stanford being one of the schools I believe does a very good job of providing value on all fronts.”

CNBC’s list also provides insight into the amount of professional success that can be reasonably expected for someone whose highest educational credential is a high school diploma. As students sort through college pamphlets and information during their high school years, they face questions about whether they want to attend college and, if so, how they will finance further education.

Though experts caution against taking out massive amounts of student loans, according to the U.S. Bureau of Labor Statistics (BLS), those with a bachelor’s degree earn $461 more per week compared to those with only a high school diploma. Degree costs can be hard to predict however, with only 41% of students earning their bachelor’s degree in four years, hiking up the costs of higher education significantly. And a student’s major in college can also be a predictor of how much that student is likely to earn later in life, with ranges varying widely between different fields of study.

“It’s hard to quantify the full value of an education. But U.S. Bureau of Labor Statistics data consistently show that, in terms of dollars, education makes sense. The more you learn, the more you earn,” said Elka Torpey, an economist in the Office of Occupational Statistics and Employment Projects at the BLS. 

Utilizing data from the Hechinger Report, CNBC was able to analyze families at the median U.S. household income, calculating benefits for graduates both zero, five and 10 years after college. 

In determining what helps Stanford stand out, the researchers found that approximately 53% of Stanford students major in a STEM field, yielding some of the highest average salaries among graduates. Furthermore, Stanford offers generous financial aid of up to 112% of a household’s yearly income for lower income brackets. 

“If I do end up going to college, I’ll probably major in something STEM-related,” said Harris Chen, a senior from Palo Alto. “It comes with its stereotypes, but all the data indicates the same thing: a STEM degree is more profitable over the long-term.” 

But money isn’t everything, Canka noted.

“I encourage all my students to pursue what they love, as long as they stay on track in college and make sure to complete their four-year-degree,” she said. “I believe that’s one of the best things a student can do for their future: work hard, get a degree, and do what you love.”

Contact Arushi Saxena at 21arushis ‘at’ students.harker.org.

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Arushi was a high school intern for The Daily in summer 2019.