higher education economist preston cooper took charge College Investor Audio Show Join us at the ASU+GSV Summit to talk about when a bachelor’s degree is beneficial, where graduate school goes wrong, and how families should think about ROI in a rapidly changing labor market.
Recorded live at the ASU+GSV Summit in San Diego, Robert Farrington sits down with Preston Cooper, the researcher behind some. The most widely cited work on the return on investment of college and graduate schoolTo learn what the numbers really say – and what students and families should do with that information during admissions season.
Cooper’s highlights: College is beneficial most of the time, but about 20% to 30% of students who earn a bachelor’s degree do not graduate. There are three reasons for this: paying more for the degree, not completing it, or choosing a field with weak labor-market demand.
The interview works through each of them, then takes the outline to graduate school and the AI question that’s driving a lot of family conversations now.
episode summary
- Three reasons graduate degrees fail and how to avoid each.
- Why is completion rate the biggest factor in college ROI?
- How to Evaluate a School Using college scorecard.
- Where graduate school still pays and where MBA, Master of Education, Fine Arts and Psychology programs become riskier.
- The state-licensing trap that forces some careers to purchase a low-ROI master’s degree.
- What the latest computer science unemployment data really says about AI and college majors.
Three Reasons for Failing to Pay for College
Cooper said that about 20% to 30% of people who graduate do not get ahead economically, and almost always for one of three reasons:
- They paid too much (“A degree that costs $50,000 may not be worth $150,000”)
- he did not graduate
- They chose an area with limited job opportunities
That framing sets up the rest of the conversation – every other ROI question goes back to one of those three risks.
Completion rate is the number one factor
Only between 60% and 70% of four-year college students complete a degree within six years, meaning that 30% to 40% do not. This has the worst financial outcome of all: You incur tuition costs, possibly student loans, without the credentials needed to get jobs that justify the expense.
Cooper’s general rule for families: Ask if the school has a track record of getting students to the finish line, and ask honestly if the student is academically prepared to complete the program.
Robert added the financial side – if first year is already long, senior year almost always becomes harder as prices go up and front-loaded aid stops, which itself causes non-completion.
Field of study: how to test a program
Behind completion, field of study is the next biggest ROI driver. Engineering, Nursing, Economics and Computer Science are still giving good results. The fine arts, psychology and even education are often net-negative on a dollars-and-cents basis.
Cooper was careful not to say that those degrees never pay off—only that students seeking them need to be more selective about the specific program and its job placement record.
For families researching schools, he said Education Department’s College Scorecard As a solid starting point. It lists six-year graduation rates, typical starting salaries and net costs by program. Not perfect, but enough to compare 20 to 200 schools, the range where data matters most because the brand doesn’t make the decisions.
Grad School: Where It Pays and Where It Doesn’t
Cooper’s rule of thumb on graduate education: It is usually beneficial if the program provides specific training for a specific high-paying profession (medicine, law, dentistry). Completion rates are high, and graduates often get jobs paying $200,000 or more.
The stakes for a master’s degree are more volatile. Even some MBA programs don’t pay off because of the price point. Master’s programs in fine arts, humanities, education, and psychology are a particularly mixed mix – some are strong, but most are not.
Robert noted his own findings from Cooper’s MBA data set: A large share of programs go even or negative, while a small slice produce extreme returns, which is exactly the kind of distribution that students should be wary of.
Robert’s practical tip: If you’re unsure about an MBA, don’t pay for it out of pocket. Many Fortune 500 employers will cover the cost as part of a tuition reimbursement program, and that one step can flip the ROI math.
state licensing net
Some fields (teaching is the most obvious example) pay more for master’s degrees, although there is little evidence that the degree makes practitioners more effective. Cooper said the long-term solution is to reform state licensing rules so workers aren’t forced to purchase low-ROI credentials just to get the job done. Until that happens, his advice is to manage risk: stay stateside, stay public and stay away from debt.
He gave his example. He earned his undergraduate degree at George Mason University and paid in-state tuition instead of going to GW or Georgetown for what he called “essentially the same product.”
Principle: If the goal is to check the licensing box, the cheapest recognized route is the right route.
AI, computer science, and the five-year question
Robert pressed Cooper on whether the data also applies to today’s 18-year-olds, who won’t enter the job market until 2030. Cooper said this is the most common question he gets in college conversations: Should students still get a bachelor’s in computer science if AI is going to take over the jobs?
Their study builds on current data: Early-career unemployment for computer science majors has risen to nearly 7%, above the all-college-graduate average. But CS majors who do ground-breaking work still earn about $90,000 in their mid-20s — more than mechanical engineering, nursing, economics or business.
“the bottom has not fallen completely,” he said, calling it a corrective to some media coverage.
His big point: No one has perfect information about the future labor market, which is why risk aversion is the right posture. Pick a strong paying field, take a diverse course load, look for programs that are forward-looking about future skills, and keep student loan debt low enough to make a pivot possible.
ground level
Cooper concludes with a frame worth repeating: The notion that a college degree is a golden ticket to prosperity is no longer accurate. College still pays for most students, but there is real risk involved, and managing that risk (on price, completion, and field of study) differentiates a degree from one that doesn’t work.
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