Is College Worth the Cost? For Public California Students, the Answer Is Probably ‘Yes’

• According to a new report, most of California's higher education institutions offer low- and moderate-income students a high return on investment.
• Seventy-nine percent of institutions allow students to recoup educational costs within five years, with a third able to recover their costs in under a year.
• Almost all public schools allow students to recoup costs in five years or less.

With the cost of college tuition rising, many students wonder if a college degree is worth the financial burden. For students from low- or moderate-income households, the stakes may be even higher.

A new report found that most California higher education institutions offer a high return on investment (ROI), allowing low- and moderate-income students to recoup their educational expenses within a few years post-graduation. At public colleges and universities, the time it takes to start seeing a return on investment is even less.

The report, commissioned by the California Futures Foundation, studies returns on investment for students at California higher education institutions. It includes a particular focus on students whose families earn less than $75,000 per year.

Using data from the U.S. Department of Education, the report calculates how much time it takes to recoup educational expenses by examining three factors:

• Net cost of a degree after financial aid
• Graduates' median earnings a decade after enrollment
• Difference between college graduates' and high school graduates' average income

The researchers then used the numbers to determine how much time it would take graduates to recoup the costs of their education.

For example, the total net cost over four years for a low- to moderate-income student at California State University, Fullerton is $9,500. Within a few years of graduation, these students are expected to make just under $58,000, nearly $32,000 more than the typical high school graduate would make. Thus, it would take between three and four months, or 0.3 of a year, to recoup educational costs.

The report found that the majority of California institutions, or 79%, allowed their low- and moderate-income students to recoup their education expenses within five years. Additionally, a third of students can recoup their costs in under one year.

The report also found that associate degree-granting institutions allow students to recoup educational costs at a quicker pace than four-year and certificate-granting institutions.

A CalMatters analysis of the data found that, on average, students take approximately two years to recoup their net costs at public institutions, while it takes a little over three years at nonprofit private colleges in the state.

Overall, only 24 schools, or 8% of California institutions, saw no return on investment. All were for-profit institutions, excluding two private, nonprofit colleges.

Private vs. Public Institutions

While private colleges, on average, take longer to recoup costs, some institutions are ahead of the game.

Stanford University had the highest return on investment, as it has a below-zero net price for low- and moderate-income students and offers graduates a median earning of $99,974, more than three times what a typical high school graduate would earn.

Other private, nonprofit schools that cost less than a year's salary include:

• Pitzer College
• Pomona College
• The California Institute of Technology
• The University of Southern California

In total, nearly a third of institutions across the state, 90 in total, allow students to recoup their costs in less than a year.

University of California (UC) students can recoup their costs in under two years. UC Irvine reported the least amount of time out of all the UC schools, with just over seven months, while UC Santa Cruz requires just over a year and seven months.

However, the report highlights that certain schools that provide a quick return on investment can lack a significant percentage of low- and moderate-income students.

Schools that both enable students to recoup their costs within a year and have over 50% Pell Grant recipients include UC Merced and the following California State University (CSU) campuses:

• San Bernardino
• Los Angeles
• Dominguez Hills
• Sacramento
• Stanislaus
• Fresno
• Bakersfield
• Northridge

CSU San Bernardino and Los Angeles require low- and moderate-income students to pay approximately $6,000 out of pocket for a four-year degree, but yield an additional $27,000 in earnings compared to a high school graduate. In contrast, UC Merced requires students to pay roughly $37,000 out of pocket but offers an earnings premium of $36,000.

A 2023 BestColleges survey of 1,000 students found that return on investment, or the salary after graduation, was second to last in the most important factors in their college decision-making process — after affordability, college reputation, and school size.

Students majoring in business or science, technology, engineering, or math (STEM) fields prioritize ROI more than those in humanities. The survey showed that 22% of business majors and 21% of STEM majors viewed ROI as a significant factor in their college choice, compared to 14% of humanities students.

Moreover, men were nearly twice as likely as women to consider salary after graduation as a top factor.