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Think tank determines nation’s best, worst states on ROI for college degrees

A think tank that ranked the nation’s state public universities based on return on investment found that the best states include South Dakota, Minnesota, Iowa, Kansas and Pennsylvania.

Some of the worst states, according to the Foundation for Research on Equal Opportunity, are Hawaii, Montana, Louisiana, Connecticut and New Mexico.

The foundation determined the return on investment, or ROI, based on “the amount a student can expect to gain financially from each individual degree.”

“ROI compares the main financial benefit of college — the increase in lifetime income attributable to the degree — to the costs, including tuition and foregone earnings.”

Preston Cooper, a research fellow for the foundation who wrote a summary of the findings, stated that rankings by state “allows us to learn lessons about best practices in higher education. States which consistently produce high ROI must be doing something right.”

Among the best states are South Dakota and Minnesota. Campus officials at both the University of South Dakota and the University of Minnesota declined to comment to The College Fix about the report.

“South Dakota’s public colleges and universities have the highest median ROI at $217,000,” Cooper stated.

Minnesota was also ranked as one of the highest states, with a ROI of $214,923. Cooper stated that University of Minnesota-Twin Cities “offers several degrees with an ROI exceeding $900,000, including marketing, mechanical engineering, and finance.”

Coming in at a close third is Iowa at $214,015.

“Iowa State University is far and away the most valuable player in the Hawkeye State. The school’s mechanical engineering program graduates nearly 500 students per year and supplies a median ROI of nearly $925,000,” Cooper stated.

In his summary, Cooper explained that “High-ROI states commonly have a well-developed technical college system. A preponderance of career-oriented majors at four-year schools also plays a role.”

Hawaii, in contrast, ranked as one of the lowest states, with an ROI of negative $5,720.

University of Hawaii did not respond to a request for comment from The College Fix.

“Fifty-four percent of undergraduate programs at the Aloha State’s public colleges and universities have negative ROI, meaning the typical student is financially worse off for having enrolled,” Cooper stated. “Even the state’s flagship school, the University of Hawaii at Manoa, has negative-ROI programs: the popular psychology major graduates hundreds of students per year but leaves enrollees worse off by around $78,000.”

The foundation also reported on the nation’s “Most Valuable Programs.”

“These degrees at public colleges and universities supply excellent ROI and graduate enough students to meaningfully impact economic mobility in their states,” Cooper stated.

The nation’s top-rated program is the University of Texas at Arlington’s nursing program. according to the foundation. Coming in second is Ohio State University’s nursing program. And in third place is Indiana University Bloomington’s business program.

“Twenty-three programs on the MVP list are in registered nursing, followed by 18 in business fields and 18 in computer science,” Cooper stated. “Mechanical engineering and finance have reputations as lucrative majors, but they account for a smaller share of programs on the MVP list, perhaps due to these fields’ difficulty.”

Cooper offered three suggestions for universities to improve their ROI stats.

One is to implement a performance-based funding set up, which he states has pros and cons, however, “Such a funding framework would provide institutions with a direct financial incentive to increase ROI.”

Another strategy Cooper recommended is to expand high-volume majors, arguing it could increase opportunities for a wide variety of students.

Finally, he recommends solving “the nursing shortage.”

“Given that nursing is the ‘most valuable program’ in over half of state public university systems, expanding nursing schools at public colleges is one of the most effective ways to increase aggregate ROI,” Cooper stated.

MORE: Student debt is not the problem. The higher education cartel is: op-ed

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About the Author
Chris Karenbauer -- Cedarville University