Return on Investment matters as it relates to college tuition and the total cost of attendance

For example, does it make sense to spend $100,000 and take on tens of thousands in loans in order to get a degree in social work, a profession in which jobs often pay very poorly? Students in all professions need to consider the concept of “return on investment” or ROI. In my opinion, I think it’s just plain foolish to take out heavy loans to get an undergraduate education.

The average student loan balance in this country is about $40,000, and most undergraduates can expect to graduate with about $20,000 in loans. I think this seems like a decent investment for most students.

But I have one client with relatively meager resources who insists that he will do whatever it takes if he gets into a very selective college. It’s a long story but despite this young man’s lack of money to pay for college he will not be eligible for need-based aid. So in order to attend a $90k-per-year college, he’d have no alternative but to take out a large loan amount.

If this young man put himself in hock to the tune of, say, $200,000 to pay for Princeton, would he get his return on investment? Well, it depends on what field he decides to go into. But somehow I don’t see him as an investment banker or a management consultant. He’s more a “save the world” sort of person who loves the arts and literature. I see him becoming a professor, perhaps. But with all the debt, how would he ever pay it all off on an assistant professor’s salary? And we’re not even including potential graduate school debt in the calculation.

A 2025 Federal Reserve of New York study on college ROI

The Federal Reserve of New York released a study in 2025 ‘Is College Still Worth it?’   As shown in the chart below, the math still works for the median student to go to college with a ROI of around 12%. The high ROI comes from the wage premium that many college graduates earn explained in this section of the report:

College graduates earn a substantial wage premium in the labor market compared to those with only a high school diploma, and this premium tends to grow over one’s career…. In recent years, the median college graduate with just a bachelor’s degree earned about $80,000, compared to $47,000 for the median worker with only a high school diploma. This means a typical college graduate earned a premium of over $32,000 per year, or about 68 percent—near its all-time high.

Return on Investment of College Tuition

Sources: U.S. Census Bureau and Bureau of Labor Statistics, Current Population Survey March Supplement (IPUMS); the College Board; U.S. Department of Education, National Center for Education Statistics.

However the New York Fed also released a second report in 2025 called ‘When College Might Not Be Worth It’ which came to the conclusion that college may have not been worth it for about 25% of students. A large negative factor is when it takes 5 or 6 years to complete your undergraduate degree so your input costs increase and you lose a few years of wage earning ability. However, another big reason is that some college graduates just do not earn the average wage premium compared to high school graduates. If you are paying the full college tuition cost at a private university or out-of-state public university, then you need to be making a decent amount of money in the long-term for your college investment to be economically worth it.

And, as shown in the chart below from the NY Fed study, some majors like Education make it very difficult to justify the high cost of these institutions.

Median ROI based on Major

Sources: U.S. Census Bureau, 2023 American Community Survey (IPUMS); the College Board; U.S. Department of Education, National Center for Education Statistics.

Colleges are businesses and they are happy to take your money to fill seats. They may even encourage you to take out more loans But you need to think carefully about this concept of ROI:  Return on Investment. A few years ago, The Chicago Tribune had a similarly titled article as the NY Fed study that leads with a story of a young woman who took out $60,000 in loans to go to fashion school and learn about merchandising.  She can’t get a job.  She waits tables. Now waiting tables isn’t horrible but the woman is drowning in debt and has a good case of buyer’s remorse.

And keep in mind that there are myriad ways to keep college tuition costs low and avoid taking out too many loans.  Of course, you may not be able to have it all (i.e., your dream college with no debt burdens).  But you can still make great investments in your own education, increase your earning power and live a more fulfilling life–without mortgaging your future.

Need Help with the College Admissions Process?  

Figuring out the likely all-in cost of college, including college tuition, at specific universities can be very complex. As part of our comprehensive packages, we help families assemble a well thought out college list that takes into account any financial aid considerations. So, please contact us for a complimentary consultation. At Great College Advice, we provide personalized college consulting focused on helping make the process of preparing, selecting, and applying to college more successful, less stressful, and more fun.   

Since 2007, the expert team of college admissions consultants at Great College Advice has provided comprehensive guidance to thousands of students from across the United States and over 45 countries across the world. Great College Advice has offices in Colorado, New Jersey, Chicago, North Carolina and Massachusetts.  

In addition to our one-on-one counseling, Great College Advice extends its support through one of the most active and resource-rich Facebook Groups for college-bound students and their families: College Admissions Experts. With over 100,000 members—students, parents, and experienced counselors—this vibrant forum offers peer support and expert advice like no other.

The post College Tuition–Is It Worth It? first appeared on Great College Advice.

Clients ask the team at Great College Advice repeatedly to explain the relationship between the financial aid and admissions offices to help them understand how financial need is factored into admissions decisions. Usually, these questions revolve around whether a college is “need-blind” or “need-aware.” So in this post, we’ll try to shed some light on how the admissions and financial aid offices work together. More importantly, we’ll provide some insight on the difference between a need-blind and need-aware college and how a college’s financial aid policy may impact whether you ultimately decide to apply there based on affordability.

Need-Blind Admission Policies and Enrollment  Management

Generally, the Admissions and Financial Aid offices are operated separately. But usually, the two are overseen by a Dean or Vice-President of Enrollment Management, or some such title. This should give you a clue that the two offices, while administratively independent, are two sides of the same coin.

Both are tasked with recruiting and then retaining students, providing just enough resources to keep the income flowing into the university. Tuition dollars, after all, are the lifeblood of any institution of higher education. Both offices have the responsibility to keep the dollars flowing in.

As prospective students apply to the university, they send their applications to the office of admissions, naturally. They apply for financial aid around the same time. Their applications for aid are processed by the Office of Financial Aid. So, it seems, in some ways that the two are separate, and most colleges like to help create the image that admissions decisions are completely separate from financial aid decisions.

Believe me, they are not.

Colleges That Offer Need-Blind vs Need-Aware Admission

Only one group of colleges can make any claim that the two decisions are separate: those practicing “need-blind” admissions. These colleges are generally very wealthy with large endowments, and their number is quite small. I’ll come back to this exception in a moment. But suffice it to say that the financial aid and admissions offices must work together if they are to ensure the continuity and adequacy of the institution’s income stream.

Both the admissions and financial aid offices start the process with an annual budget–an amount of money that can be used for financial aid.

Some of this budget is “hard” money (interest income from endowed scholarships). But the overwhelming majority of financial aid is given in the form of discounts on the price of tuition. Colleges may call these “grants” or “scholarships,” but internally colleges discuss their “discount rate”: the average discount off the tuition sticker price they will offer in a given year.

A large percentage of the financial aid budget goes to fund currently enrolled students. Most (but not all) colleges distribute their aid budgets to ensure that current students can continue their progress toward their degrees. Keep in mind that any individual’s financial need can change from year to year, or even from semester to semester. In order to retain students, perhaps 75% or more of the total financial aid budget goes to continuing students.

Does Need-Blind Admission Really Exist?

Admissions officers try to read your application without prejudice. But admissions officers have clues regarding a family’s ability to pay.  Most applications ask whether you plan to apply for financial aid. If you check “no,” then you are considered a full-pay student. In addition, colleges review family background. If the father is a surgeon and the mother an attorney (or a plumber and a waitress, respectively) admissions officers make some plausible assumptions about the ability to pay. All colleges subscribe to demographic analytic software packages which provide detailed income information on zip codes and even neighborhoods!

Once the admissions office has made a decision on which students to admit, the director will submit the entire list to the financial aid office for review. The financial aid office compares the aggregate financial need of the entire class with the amount of aid available for incoming freshmen. If the need far exceeds the dollars available, financial aid will kick the list back to admissions with the comment, “if we admit this class, we’ll go broke–go back to the drawing board.”

If this occurs, then the admissions office begins another review of applications, focusing on those kids who are “on the bubble,” or who are borderline admissions cases. Needy students on the borderline will be rejected, and replaced with students who didn’t quite make the cut–but who can pay full price. This process will continue until the admissions office can resubmit the list, and the financial aid office is satisfied that the institution will not over-commit itself.

Now let’s look at the small number of colleges who claim that their admissions process is “need-blind.” These colleges are wealthy. They not only have a high discount rate, but they also have endowment funds to draw upon if, for some reason, the admissions office ends up admitting way too many students with financial need. But “need-blind” does not mean “need-ignorant.”

Experienced admissions staffers know that they cannot admit a freshman class comprised solely of students who need a full tuition scholarship. They have to balance the full-pay students against the full-pay students. Even wealthy colleges have budgets that are not infinitely expandable. Admissions staff at “need-blind” colleges simply have a bit more wiggle room.

As I have said, admissions officers do have clues about a student’s ability to pay right on the application. In this sense, all college admissions processes are “need-aware.”

More evidence that need-blind admission is a myth

There is one other piece of evidence that helps us to understand that need-blind admission doesn’t really exist in ideal form. Colleges publish statistics about how many of their students receive different types of aid. We can track, for example, the percentage of the entering freshman class received need-based at Brown.

If Brown were truly and completely “need-blind” and not “need-aware,” we would expect that from year to year, there would be relatively big fluctuations in the amount of aid awarded. Some years, the class might be comprised of lots of kids who had high financial need but were otherwise remarkable applicants. In other years, maybe fewer remarkable, poor kids apply.

What the statistics tell us, however, is that Brown’s financial aid budget is fairly steady from year to year (discounting inflation). And–more important–the percentage of entering students receiving need-based financial aid is also fairly steady in the mid-40% range (for the Class of 2028 cohort 829 of 1719 enrolled students received need-based aid with the average award package totaling almost $69,000).

We do not see those expected fluctuations from year to year based on the quality of the applicants. Strangely, no matter who applies, the percentage of aid recipients stays roughly the same from year to year and even decade to decade.

Need-Blind vs Need-Aware in Admission–A Summary

So what conclusions can we draw from this relationship between admissions and financial aid?

• First, full-pay students have an admissions advantage over scholarship students at most universities. This fact is not one that we like to admit, but reality bites, sometimes.
• Second, students who need aid to afford college should consider applying to schools where they are at the top of the selectivity curve. You do not want to be “on the bubble,” because you either are less likely to be admitted or your aid package is likely to be less generous than at a college where you are one of the top recruits.

To be even more specific, if the middle 50% (25th – 75th percentile) score on the SAT for Lafayette College is between 1390 and 1490, the high-need student with a 1390 will be less desirable than the high-need student with a 1490. If you have a 1390 and need a generous aid package, look for colleges that have a middle 50% SAT range of 1250-1350, and your chances go up for both admission and financial aid.

Need help with the college admissions process? 

The team at Great College Advice has years of experience working with thousands of students as they navigate the college admissions process.  We can help you prepare, select, and apply to colleges to give you the best chance of being accepted to your top choices.  Not only can we help identify the right fit schools that also fit your college budget, but we will also help you with every other aspect of this process. Want to learn more?  Just contact us on this form and we’ll set up a no-cost, no-obligation meeting so we can learn more about you and discuss how we can help make the college admissions process more successful and less stressful. 

The post Financial Aid, Admissions, and “Need-Blind” Policies first appeared on Great College Advice.

*****************
Here at Sewanee, the admissions office was great.  They set up a meeting for me to meet with a professor of history, Professor Register and he was great.  He was an American historian.  Really forthcoming about how the tensions between academia and scholarship and teaching all interplay.
Here at Sewanee there’s a 3/3 load for the faculty.  So, they have three courses they teach in the first semester and three courses in the second semester.  It’s a really good question to ask to get an understanding of how the faculty weighs the importance of scholarship versus the importance of teaching.  So, if they’re teaching a 3/2 load, that means that they have three courses in the first semester, two in the second.  Some places will have a 2/2.  Apparently here at Sewanee, in the not so distant past, it was 4/4.  So, that’s really a measure of a teaching college versus a university where it might be 2/2 or 2/1.  So that there’s much more time and priority given to scholarship versus teaching.
So, when you’re looking for a college and thinking about that you want to weigh what your own importance is.  Do you want to go to a place where the faculty are primary teaching, like a place like a Sewanee where it’s 3/3?  Or are you looking for that big research university where your professor may be only teaching one or two courses per semester.

The post The Importance of Teaching in Choosing a University first appeared on Great College Advice.

Educational Consultant
*****************
I had a great visit here at Samford University, really beautiful, beautiful campus.  One of the things I learned about today was, it was a great lesson actually in the idea of discount rates, Samford University is actually cheaper, the sticker price of tuition is cheaper than a lot of other private universities and they use that as a huge selling point about why you ought to consider coming to Samford.  The interesting thing is that they really don’t discount tuition too much.  They do provide financial aid for some students, but fully one-third of the students who come here pay the full price of tuition.
Now at other universities, even the other ones I’ve been visiting in the south, the other private universities, they actually have a much higher tuition rate but they discount the tuition for a much larger percentage of the students.
So, when I talk to my clients, and I always talk about the fact that most students will not pay the sticker price when they are accepted to a private university, but parents will also be looking at that sticker price and doing comparison shopping, say between Samford and let’s say, Vanderbilt or even Birmingham Southern, and they say, “Whoa, the sticker price at those other places is so much more than it is at a place like Samford”.  Well, if you’re paying full price for tuition or if you’re planning to pay full price, then yes, Samford is a deal.  But if you are looking for financial aid, you may get less financial aid at a place like Samford than you would at a place that has a higher sticker price.
So that’s a really confusing reality of the way universities, which are businesses, price their product or their service.  So it was a fascinating discovery here.  I enjoyed my time very much and I think that they provide a really great educational product here but I thought it was really interesting to learn about their pricing structure.

The post Understanding the Pricing Model of Universities first appeared on Great College Advice.

Great College Advice

The post Cheap Colleges, Steep Colleges first appeared on Great College Advice.

1. School of Business
2. Park School of Communications
3. Health Sciences and Human Performance
4. Humanities and Sciences
5. Music

Other great aspects of Ithaca include:

• The undergrad business school uses the same software that’s used by the NY stock exchange.  Thanks to a generous alumni donation, students even use real money in their trading.
• The Parks Communication School ranks at the top of all communication schools.
• At Parks, there’s a new major:  Emerging Media.
• Eleven of the buildings are connected by hallways and tunnels so you can avoid the cold.
• Doing your laundry is FREE.

Juliet Giglio
Educational Consultant in Syracuse, New York

The post Ithaca College: Large School, Small College Perks first appeared on Great College Advice.

The post Private School at a Public Price? Financial Aid Tips first appeared on Great College Advice.

• The educational experience at a flagship university outside your home state is not significantly different from the experience in your own state.  While there are some differences, generally speaking you’ll find the same majors, the same activities, and the same parties, whether you attend university close to home or far away.
• Tuition prices for an out-of-state public university can be 2 to 4 times as expensive as those in your home state.
• If you live on the plains but pine for the beach or the mountains, you can use the savings to pay for fantastic holidays at the resort of your choosing.  Or buy a car (or a whole fleet of cars!).
• The assumption that you can move to a new state and establish residency after one year is generally wrong:  most states have closed this loophole, making a public education out of state relatively expensive.

However, as Steve Cohen suggests in his article in the Daily Beast, there is perhaps no better time to get accepted by out-of-state universities.  The issue is money:  state universities are cash poor in today’s economy, and they are plugging holes in their budgets by accepting more out-of-state kids than ever before.
So for those for whom money is no object, it’s a great time to apply to flagship universities outside your home state.  Having the resources to pay full out-of-state tuition has become a credential in the admissions process.
From a financial point of view, however, it may not be as smart.  It all depends on how much money you have to burn, and your priorities in how you spend it.  If you want to reduce the cost of a college education, think twice before you commit to an out-of-state university.
Mark Montgomery
Educational Consultant
 

The post Applying to Out-of-State Colleges: Hits and Misses first appeared on Great College Advice.

(Deep Springs) and some of the schools might require some post-graduation commitment (military schools).
The “tuition free” colleges include:
Berea College (Kentucky)
Cooper Union (New York)
Curtis Institute of Music (Pennsylvania)
Deep Springs College (California)
Olin College (Massachusetts)
Webb Institute (New York)
and of course the military colleges including:
 
U.S. Air Force Academy (Colorado)
U.S. Coast Guard Academy (Connecticut)
U.S. Merchant Marine Academy (New York)
U.S. Military Academy (New York)
U.S. Naval Academy (Maryland)
Now tuition might be free, but that doesn’t mean that room and board will be free. More discussion about the cost of room and board in the next blog.
Juliet Giglio
Educational Consultant in Syracuse, New York

The post Go To College For Free! first appeared on Great College Advice.

The post Why Does College Cost So Much? An Explanation first appeared on Great College Advice.