Forbes College Rankings 2021

Forbes says that they are using Third Way’s ROI, which is summarized at Third Way . However, Caltech isn’t listed in the link above because Caltech doesn’t have sufficient earnings information for their limited number of federal FA recipients.

The Third Way ROI calculation as described above seems inaccurate. ROI is largely dependent on student qualities – choice of major/career field and quality of student, yet the ROI calculation does not control for either of these factors. More importantly, it assumes students pay the same cost.

Edit – Numbers seem to have changed in map. Different colleges are available and missing from map (Williams is gone, Amherst has been added). Perhaps database was updated. Now costs seem closer to what I’d expect for the full student body average. Some new results are below

  • Stanford – Stanford costs $14k/year. Stanford grads earn $57k more than HSG. Ratio = $56k/$69k = 0.8 years to of work to recoup investment

  • Reed – Reed costs $28k/year. Reed grads earn $18k more than HSG. Ratio = $109k/$18k = 5.9 years of work to recoup investment.

  • Caltech – No information

Perhaps when there was no earnings information available, Forbes assigned a default value that is typical for colleges of its type. That would explain why Caltech and several selective smaller colleges had large decreases this year.

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FL ahead of UVA, UNC, UT Austin. What are they smoking - maybe some of that stuff going around Gainesville. I can’t think of UF being better in any category, especially job placement in top paying industries. Not even close.

For many, the University of Florida is or was tuition free / beneficiary of state of Florida plans.

UF business placement is pretty stout and OOS tuition is at the low end.

@Data10 great stuff. Boo to Forbes for missing the mark on Caltech bshould at least plug in values relative to Harvey Mudd and MIT.

That’s a cost issue. That doesn’t make it a better school, just less expensive. That’s like saying UMASS is less expensive than MIT so it’s better.

UF has a decent B school. Perhaps stout but still nowhere near the placement of banking, consulting, asset mgmt, top tier Leadership Development Programs , etc. as the ones I mentioned. Different league.

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Cost is a critical part of return on investment (ROI) which is 15% of the new formula used by Forbes.

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ROI may sound like a very good measure for a college decision, the reality is that it’s completely unquantifiable and unreliable. With both its numerator and denominator so highly variable depending on the students, their families’ finances, and their post-graduation incomes that aren’t reliably and/or adequately reported, it’s impossible to come up some meaningful ‘average’ ROI.

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But, yet they do.

Yes, they all want to make it appear they’ve got some secret recipes and done their homeworks.

Just like the universities themselves. Don’t you think?

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A list of ROI I pulled from the Georgetown survey, by far I consider the most authoritative:

Caltech is doing just fine on this list (#18 for 20-year ROI and #19 for 40-year ROI) ahead of most schools on the list and out of a total of 4,500 schools. But this list also generates very interesting results and is more in line with the Forbes ranking than it is with the WSJ/USNWR. Top schools remain at the very top of the hierarchy. Most T10 are in the 800k+ range for 20-year ROI and $1.7 million range of 40-year ROI. However, some noticeable under-performers are Chicago (ranked #92 on 20-year ROI and #70 on 40-year ROI), Northwestern (#75 on 20-year ROI and #61 on 40-year ROI) and JHU (#68 on 20-year ROI and #50 on 40-year ROI) from the T10.

Also notice how most LACs are performing quite poorly compared to top private universities and outside the T20 (based on USNWR), the ROI is starting to be less different from top flagship state universities, which is similar to the Forbes ranking. What does this say about the state of liberal arts education, I wonder?

20-year ROI:

$1 million: Stanford, MIT
$950k-$1 million: Harvard
$900k-$950k: Georgetown
$850k-$900k: Penn, Harvey Mudd
$800k-$850k: Caltech, Yale, Georgia Tech, Columbia, Carnegie Mellon, Duke, Princeton
$750-$800k: Lehigh
$700-$750k: Notre Dame, Cornell, Washington and Lee, Dartmouth
$650-$600k: Claremont McKenna, Tufts, USC, JHU, Vanderbilt, Northwestern, Case Western, Boston College, WashU, Rice, Berkeley, UChicago, Michigan,
$600-$650k: Cooper Union, Lafayette, Baruch, GWU, Emory, Northeastern, UMD, Holy Cross, Bucknell, Brown , UCLA, UWashington, Bowdoin, Amherst, Virginia Tech, UIUC, Colgate, UCSD, BYU, UVA, Drexel
$550k-$600k: Rutgers, Trinity (CT), U of Richmond, UC Irvine, Union, George Mason, Pomona, UT-Austin, Stony Brook, Pepperdine, UC Davis, Wellesley, Florida, Texas A&M, William & Mary, UConn, Colby, Davidson, Wake Forest, Hamilton, BU, UNC, Williams, Barnard
$500-$550k: SMU, Wisconsin-Madison, UMiami, UC Santa Barbara, Rochester, Bates, Syracuse, Haverford, University of Utah, Franklin & Marshall, Haverford, Middlebury, Swarthmore, Clemson, Dickinson, AU, NYU, Minnesota, Fordham, University of New Hampshire, Georgia, CUNY, University of Rhode Island, Brandeis, Bryn Mawr

40-year ROI:

$2 million: Stanford, MIT
$1.9 million: Harvard, Babson, Georgetown
$1.8 million: Harvey Mudd, Penn, Caltech
$1.7 million: Yale, Columbia, Duke, CMU, Georgia Tech
$1.6 million: Lehigh, Princeton, Notre Dame, Cornell
$1.5 million: Washington & Lee, Villanova, Dartmouth, Tufts, USC, Case Western, Claremont McKenna, JHU
$1.4 million: BC, Vanderbilt, Northwestern, WashU, Holy Cross, UChicago, GWU, Bucknell, Cal Poly, Lafayette
$1.3 million: Rice, Northeastern, Berkeley, Brown, Drexel, Emory, Michigan, Bowdoin, Amherst, Trinity, UMD, Colgate, Union, U of Richmond, Virginia Tech, Pepperdine, UCLA
$1.2 million: UIUC, BU, UVA, Wake Forest, Baruch, UCSD, BYU, UWashington, Wellesley, George Mason, UC Irvine, Hamilton, Syracuse, UT-Austin, Pomona, UC Davis, SMU, Rochester, Davidson, William & Mary, Stony Brook, UConn, Texas A&M, UMiami, Colby, Haverford, Williams, Delaware, Rutgers, U of Baltimore, NYU, Florida, Bates, Barnard
$1.1 million: AU, Franklin and Marshall, Middlebury, UNC, Purdue, James Madison, Wisconsin-Madison, Fordham, Swarthmore, UC Santa Barbara, Dickinson, UIC, Brandeis, Yeshiva, Gettysburg, Utah, Michigan State, Bryn Mawr, Clemson, Vassar
$1 million: U of Rhode Island, Minnesota, Connecticut College, Wesleyan, U of New Hampshire, Carleton, Georgia, UPitt, UMass-Amherst, Colorado-Boulder, Temple, CCNY, Wofford, Furman, Hampden-Sydney, Indiana-Bloomington, U of Kansas, Elon, Occidental, Baylor
900k: Howard, Arizona, Auburn, Skidmore, Grinnell, Denison, Oklahoma State, Kalamazoo, U of Vermont, U of Nevada-Las Vegas

I don’t know what makes a ROI list “most authoritative.” Whether Caltech has a top ROI largely depends on whether you control for Caltech having top students, who generally choose high paying majors, work in an expensive section of the country, come from wealthy families, and and are not Black. If you control for these factors, then Caltech and most of the colleges ranked well in the list above have a far more mediocre ROI. That is particular students with the characteristics above tend to have high earnings wherever they attend college, not just ones who choose to attend Caltech or similar.

For example, The Economist college rankings are based purely on expected earnings vs actual earnings. They use the same CollegeScorecard earnings source data as the Georgetown ROI rankings above, yet their ranking order is very different, as listed below.

The Economist College Rankings (Actual Earnings - Predicted Earnings)
1 . Washington and Lee (+$22k)
2. Babson (+$20k)
3. Villanova (+$13k)
4. Harvard (+$13k)
5. Bentley (+$13k)
6. Otis Art & Design ($+12k)
7. Lehigh (+12k)
8. Alderson (+$12k)
9. Texas A&M (+11k)
10. Cal State Bakersfield (+$11k)

1260/1275. Caltech (-$8k)

The Economist rated Caltech as 1260th out of 1275 colleges, putting Caltech in the bottom 1% on earnings and similarly abysmally low on ROI. Caltech had the highest average SAT scores among all 1275 colleges, a high percentage tech majors, etc.; so Caltech is expected to have extremely high average earnings. The Economist expected Caltech to have the 2nd highest average earnings among all 1275 colleges… only 2nd to MIT. However, Caltech’s reported earnings were 19th out of 1275 – below tech colleges like MIT, Mudd, Stevens, RPI, Rose Hulman, WPI, and CO Mines. Caltech’s average earnings were certainly high, but they were $8k below expectations, and earnings below expectations results in a low ranking.

The Economist college ranking methodology also has flaws, as is evident in the extreme differences between certain similar colleges such as Harvard in 99th percentile ROI vs Yale in 0th percentile ROI. I think the Economist earnings prediction is better than most due to the increased controls, but this increased accuracy of earnings prediction can make relatively small differences from the earnings prediction have a huge impact on rankings. For example, if Caltech’s very small sample of earnings for federal FA recipients happened to be off by $10k from actual, and this error was corrected, then Caltech’s ranking would skyrocket from 1st percentile to ~77th percentile in the year the error was corrected. So colleges for which earnings happen to be inaccurate on the positive side have huge jumps in rankings, and colleges for which earnings happen to be inaccurate on the negative side have huge declines in ratings. You need more precise earnings to evaluate this degree of small differences from earnings predictions, or the results will be dominated by random noise.

If you could somehow have perfectly accurate earnings information and ideal controls, then I suspect the conclusion would be that earnings primarily depends on student characteristics – not the name of the college attended. If a kid is accepted to highly selective college X and chooses to attend not as selective college Y, that particular student’s earnings potential is likely largely unchanged; even though graduates from college X and college Y may have very different average earnings. This is essentially what the classic Dale and Krueger studies found, as did other similar ones. However, college ROI rankings usually assume earnings are entirely a function of college attended, with no dependence on whether the individual student excels academically or struggles academically, is interested in high paying major vs low paying major, comes from a wealthy family vs comes from a family that struggle financially, etc So long as this assumption exists, the ROI calculation will be severely flawed.

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If it doesn’t control for engineering (at one end) and professions where people typically give away a lot of their work (art and theater) at the other, your ROI data is trash.

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Northwestern University has a strong & vibrant theater program in the School of Communications yet did well in the Forbes rankings at #10. But, I agree, that ROI at Northwestern University is diminished overall due to theater related earnings (so we are in agreement).

Northwestern University’s ROI is lower due to the substantial number of theater related earnings / incomes included in the measurement. Subtract out the theater grads and the ROI at Northwestern should increase dramatically.

Also, @Uchiparent25 asks: “What does this say about the state of liberal arts education, I wonder?”

An interesting school, St. Lawrence University located in extreme upstate New York, addresses this concern in an attractive manner by offering 3 new majors in finance, data science, & business that require students to double major with at a liberal arts major. St. Lawrence awards a lot of partial scholarships based on merit. A lot. Strongly encourages students to study a foreign language & offers several study abroad options.

Nevertheless, I do not recommend this school unless one craves the outdoors & is willing to tolerate cold weather. Very athletically oriented school. Has an active social scene that involves alcohol. D-1 ice hockey & D-3 for all other sports.

ROI seems a very limited measure of the overall value of education. That’s not what I am sending my kid to college for.

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Which raises the questions of: What is important to you & to your kid, and how does one measure those areas ?

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ROI comparisons are in my opinion worthless without controlling for fields of study/profession. Schools with more engineers will have higher ROIs. Kids are not going to decide career based on ROI.

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All of the discussed ROI calcs discussed above (Forbes, Georgetown, The Economist) use a similar source CollegeScorecard source for earnings. The newer CollegeScorecard earnings address this issue of variable earnings by major by listing different median earnings for different majors. Some example numbers are below, comparing Northwestern to University of Illinois. Note that earnings are all over the map, depending on major, but show a similar pattern at the 2 colleges. CS has highest earnings, and Drama has lowest earnings at both colleges. So colleges with a lot of CS/Eng majors (tech colleges) are expected to have higher overall median earnings than colleges with few CS/Eng and a lot of English, drama or similar majors associated with lower early career salaries.

Median Earnings of By Major
CS – Northwestern = $98k, UIUC = $102k
Mech Eng – Northwestern = $73k, UIUC = $71k
English – Northwestern = $35k, UIUC = $33k
Drama – Northwestern = $21k, UIUC = $18k

From an individual student’s perspective, I don’t think the primarily conclusion is they’ll get the better ROI at Northwestern than UIUC or vice versa. I think the bigger conclusion, is they’ll likely have higher earnings, if they choose a major or career associated with a higher salary, such as CS/eng, assuming they are not pursuing grad/professional degrees. If they want to compute ROI, in addition to major/career path, they also need to consider cost ,which varies from one student to the next, depending on FA and scholarships. UIUC may be lower cost than Northwestern for some students, and Northwestern may be lower cost than UIUC for others.

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