Finding Colleges with Good Career Prospects and Salaries

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  • 0:04 Cost of College
  • 1:04 ROI
  • 2:59 College & Major ROI
  • 5:17 Lesson Summary
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Lesson Transcript
Instructor: Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

Attending college can be expensive, so how do you know if it's worth it? Watch this lesson to learn about one measure of whether a college is worth the expense - return on investment - and how major choice affects it.

Cost of College

Elliott is getting ready to apply to college. He's excited but also a little worried. College costs a lot of money, and it's a major commitment to decide which college to go to. Some colleges cost more than others, but some also provide better opportunities. How can Elliott decide which college to attend?

There are many ways to decide on a college: where it's located, what majors it offers, whether it's private or public and a whole host of other elements. One major factor in many students' decision is finances.

Return on investment, or ROI for short, is one type of financial consideration that looks at how profitable attending a specific college is. In general, attending a college has a higher ROI (that is, it is more profitable) than not attending any college at all. Let's look closer at ROI and how to choose a college and major with a high ROI.


So, Elliott is applying to college, and he wants to make sure that the money he spends is a good investment in his future. That is, he wants to make sure that he ends up with a high ROI; that he will recoup his cost of college and make a profit with whatever job he gets after college.

How can he figure out ROI? The simplest formula for ROI is to divide the average annual income that he will make by the cost of college and multiply that number by 100 to get a percentage. Of course, Elliott's salary will vary from year to year. He might get a raise or change jobs or do any number of things that makes it impossible for him to exactly predict what he will be making in an average year.

As a result, many students consider ROI based on the average starting salary in their field. For example, if Elliott wants to be a fashion designer, he should look up what people in the fashion industry make on average for their first year out of college. He can then divide that number by the total cost of college and multiply by 100.

Let's say that it will cost Elliott $100,000 to attend his dream college for four years. And let's say that the average starting salary in the fashion industry is $25,000. He can then estimate that his ROI for that college will be $25,000 divided by $100,000, or 25%.

How could Elliott make his ROI better? Well, there's not a lot he can do about the average starting salary in his field. Sure, he could work really hard to try to get a higher paying job after college, but that's not guaranteed to work. His better bet is to lower the cost of college. For example, if it only cost him $50,000 to attend school, his ROI goes from 25% to 50%. That's much better!

College and Major ROI

As we saw with Elliott, the cost of going to school is a big factor in the ROI of college. And because not all colleges cost the same amount, the ROI of each college also varies. The truth is that some colleges have a higher ROI than others.

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