How to Determine the Return on Your College Investment

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In the financial world ROI, or Return on Investment, is an important term. It estimates the expected future value of a current investment so comparisons can be made between opportunities. In the financial aid world, it is also helpful to determine the expected future benefit of investing in a college education. Clearly projecting how much income a certain education will afford can figure into decisions about which college to attend or what major to pursue. It can also help determine whether the future graduate will earn enough to be able to repay any college student loans which are taken out now.

I previously reported on an analysis of Labor Department statistics by the Economic Policy Institute in Washington, which demonstrated that a four-year degree has probably never been more valuable. But that information is general; where can you find specific information about the college degree your child is pursuing? Fortunately Discover® Student Loans has just introduced a helpful Return on Investment Tool.

This ROI Tool helps to compare the value, or future payoff, of various college degrees. The first page takes the site visitor to a kind of billboard which lists a variety of degrees, along with anticipated yearly earnings. From there you can easily select and compare various college degrees. Clicking on a specific major will provide further insights into the average salary, industry and more.

For example, a business major can anticipate earning an average of $60,000 per year upon graduation with a BS degree. But, clicking on the major brings up another screen which gets more specific within that particular major. This reveals that, while “General Business” might generate an income of $60,000 per year, pursuing Business Economics could yield $75,000 per year. The same BS degree from the same college or university might yield different salaries, depending on the major field of study.

Click again on “General Business” and you will find more information about the percent of graduates who end up with a full-time job with this degree. There is also a listing of potential industries and job types where this degree can be valuable, along with a percentage breakdown by male and female.

If you want to compare a number of industries, look for the icon at the upper left corner of these boxes. Click there and the tool automatically adds that major to a comparison area. Once you are ready to compare possibilities, they are automatically gathered together so you can easily compare outcomes.

Don’t wait until graduation to think about how much you will be able to earn, and whether you will be able to repay your federal and private student loans. Utilize the tools at your disposal now to estimate your return on college investment and you will already be making smarter decisions! If you need more information about the college financial aid process, or would like to discuss more about federal and private student loans, contact College Financial Aid Advisors (CFAA).