University of Phoenix Conducts Return on Educational Investment Study
by Ruby A. Rouse
For people worn out from late nights writing papers, studying for exams, and then getting up for work the next morning, the University of Phoenix Research Institute has some encouraging news. Americans who postpone college until they earn some job experience, then continue to work while earning their degree, are estimated to make on average a 22 percent return on educational investment (ROEI).
Calculating and Comparing Return on Educational Investment
Researchers at the University of Phoenix Research Institute calculated and compared ROEI for traditional and nontraditional students. For the purposes of the study, traditional students were defined as those who enter college directly after high school. Nontraditional students, by comparison, were defined as those who delay college until after age 23 and hold a job while pursuing their degree, paying their own way through school.
Researchers calculated the ROEI of a bachelor’s degree for both traditional and nontraditional students by:
Accessing information about educational costs (tuition, fees, books, etc.) from the College Board, a nonprofit organization best known for administering standardized tests;
Accessing national salary data from the U.S. Census Bureau; and
Using a widely accepted financial calculation to compute the annual rate of return for a bachelor’s degree.
Results were published in a study titled, Traditional and Nontraditional Students: Is a Bachelor’s Degree Worth the Investment?
Strong Evidence of Financial Value
Researchers found that:
Regardless of when or where they went to school, undergraduate students in 2010 earned a strong return on a bachelor’s degree.
Traditional students earned a rate of return of approximately 12 percent.
Nontraditional students earned a rate of return of approximately 22 percent.(Rouse & Cline, 2011)
The findings underscore the consistency with which a college education provides financial value over an individual’s lifetime. Why do nontraditional students earn a higher return on educational investment? Working learners do not forgo four years of income and work experience to attend school right after high school. As a result, they have more work experience and income when they graduate from college, making them more valuable for employers; over time their ROEI exceeds that of individuals who went straight to college after high school.
Researchers caution that the findings should not be interpreted to mean that a nontraditional path is better than a traditional, direct-from-high-school route. Enrolling in college or delaying enrollment in favor of gaining work experience is an individual decision. For example, a recent high school graduate who wants to participate in campus activities or college sports may benefit from following a traditional path. Alternatively, someone who is uncertain about a career path or a field of study to pursue may benefit from gaining work experience before investing in a college degree.
Next Steps for Educators and Researchers
According to the National Center for Educational Statistics, nearly 3 out of 4 people enrolled in college demonstrate one or more nontraditional characteristics. What can be done to help these students succeed in earning a degree?
Greater attention and resources are necessary to meet the needs of the growing number of nontraditional students. ”Academic institutions should develop and improve programs to meet the needs of students who work while earning their college degree,” says Dr. Tracey Wilen-Daugenti, Vice President and Managing Director of the University of Phoenix Research Institute.
“Educational leaders should not assume that merely offering classes at different times and locations is sufficient to meet the needs of working learners,” says Wilen-Daugenti. While such changes may be a step in the right direction, research shows there are significant differences in the psychological and emotional needs of working learners and traditional college students.
Significantly more research focused on working learners is needed. The vast majority of educational research focuses on traditional students. As a result, there is an incomplete picture of nontraditional students who enroll in degree programs.
“It is critical that researchers study the needs, characteristics, and outcomes of the ‘new majority’ of nontraditional college students,” says Wilen-Daugenti.
The University of Phoenix Research Institute study provides evidence that investing in a college education is a sound decision for most people, including those who make this investment later in life. Using national data from hundreds of school and college graduates in 2010, researchers concluded that regardless of the path a person takes to earn a college degree, there is a strong likelihood the payoff will be significant.
Rouse, R. A., & Cline, H. (2011). Traditional and Nontraditional Students: Is a Bachelor’s Degree Worth the Investment? Phoenix, AZ: University of Phoenix Research Institute.
This post was provided by Ruby A. Rouse, executive director of research at the University of Phoenix Research Institute. Read the full report or learn more at www.phoenix.edu/institute.