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ROI of Liberal Arts Colleges

ROI of Liberal Arts Colleges


The researchers at Georgetown University’s Center on Education and the Workforce recently released a report, the ROI of Liberal Arts Colleges. Anthony Carnevale, Ban Cheah, and Martin Van Der Werf used the findings from their broader study, A First Try at ROI: Ranking 4,500 Colleges, to create a report focused specifically on liberal arts colleges. Since I previously wrote about the methodology behind the latter report, I will only reiterate those thoughts I deem  relevant to the new one.

Among the more interesting findings about liberal arts colleges are:

  • The ROI is well below the median for all colleges at the 10-year horizon but well above the median for all colleges 40 years after enrollment
  • The median ROI is higher than at most other types of four-year institutions
  • The most selective institutions have ROIs similar to those at doctoral institutions with the highest level of research activity
  • Institutions with higher graduation rates generally have higher returns
  • Institutions with a lower percentage of students on Pell Grants have higher ROIs
  • Colleges with high shares of STEM majors have higher median ROIs than colleges with high shares of students majoring in the arts
  • Regions with higher incomes, such as New England, have colleges with higher ROIs
  • Institutions are clustered in the eastern half of the United States
  • Eight of the 10 institutions with the highest ROI are in eastern states
  • Six of the 10 colleges with the lowest ROI are in the Southeast

As with many quantitative analyses, the devil is sometimes in the details. Determining which institutions should be considered liberal arts colleges was done via the Carnegie Classifications of Baccalaureate Colleges: Arts & Sciences Focus, which excludes elite universities with strong liberal arts curricula such as Ivy League institutions and others like Stanford and Duke. While the 210 or so liberal arts colleges in the U.S. have a median ROI 40 years after enrollment of $918,000, there is significant variance between institutions. For example, at the 75th percentile, the median ROI for liberal arts colleges is $1.05 million; at the 25th percentile, it is $766,000. The median ROI for liberal arts institutions starts out rather low. At the 10-year mark post-graduation, the median ROI is $62,000, or 40% below the $107,000 median ROI of all colleges. However, it then rises quickly to $918,000 after 40 years, above the $723,000 median for all institutions.

While the researchers write that it takes longer for students to earn a bachelor’s than a two-year degree — which is why the ROI is lower at 10 years — I would recommend researching the percentage of liberal arts graduates who advance to graduate school after earning their bachelor’s. A deferral of full-time entry into the workforce to earn an MBA, JD or MD could explain some of the variance in the 10-year period.

An unsurprising finding was that colleges with a higher percentage of STEM (science, technology, engineering, and math) students had higher ROIs than colleges with a lower such percentage. The researchers note that not all STEM graduates earn the same (i.e., engineers earn more than biology grads), thus STEM schools with engineering programs rank higher than other STEM schools.

The report’s conclusion reinforces some findings of other similar reports: namely, the most selective schools do well and the less-selective do not. The report also notes that ROI is higher at institutions with higher graduation rates (the same highly-selective institutions) and those that enroll fewer low-income (Pell) students (might be the same institutions). Geography plays a role as well with institutions in New England having the highest ROIs and those in the Southeast and Southwest the lowest. The average incomes for these areas are higher in New England and lower in the Southeast and Southwest.

I applaud the Georgetown Center on Education and the Workforce for issuing this follow-up report about liberal arts colleges. There has been extensive criticism of liberal arts institutions and programs as the perceived ROI on a college degree is lower for those programs than STEM programs. However, as the data in this report suggests, the 40-year ROI is higher for liberal arts colleges than all but two other groups in the 4,500 college ROI analysis. Selective admission and STEM-oriented liberal arts colleges fare better than the rest and some of their higher ROIs may skew the median higher based on the different percentiles. This report could therefore be another useful tool for prospective students and their parents to use when evaluating colleges.



Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston continues to serve as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, and as a member of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.


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