Search Results for: ROI

I don’t know anyone who doesn’t think ROI (Return on Investment) is important when making decisions. Nobody buys a house for $300,000 and when they sell it hope they get $200,000 for it. No owner of baseball team pays a player $100,000 over 5 years and only hopes they hit for a .200 batting average. Nobody puts money into a 401(K) or a mutual fund and expects to lose money on it. Let me also say that this is a tough topic to nail down because there are many factors involved, but it is a good one to understand and think about before applying to colleges.

What is ROI?

Below is a quote by valuecolleges.com that I thought was a great description of ROI.

“There are a lot of factors to take into consideration. You invest a lot more than just money into a college education – you invest time, work, and stress. That makes college fundamentally different from many other investments.

ROI could be as simple as what income people make vs. what they paid for college and what they owe in student debt, but that is still too simple. Income isn’t necessarily a measure of success, and student loan debt could just mean you took out more loans than you needed to, not that the school was too expensive. While some short sighted people just want to know how much money they can make straight out of school, others want a certain level of long-term career satisfaction. Neither is wrong.

Plus, as Chris Maples, president of the Oregon Institute of Technology explains, there are a lot of different investors in an education, too – not just you, but your family, the foundations that provide grants and scholarships (who don’t want to see their money wasted), the government (which needs the taxes you’ll pay from the work you do with your degree), and the institutions themselves, who put a lot of thought into who they accept and who expect their graduates to prove their worth. You may be fulfilled tending bar with your Ivy League education, but they’re not putting you in the alumni newsletter.”

What are the biggest factors that impact ROI?

6. Earning College Credit While in High School

Through dual credit opportunities your high school provides (DC students and parents, click here to understand our partnership with CCU), you may be able to earn 12-15 or more dual credits that will transfer to the colleges you eventually attend. This will save you thousands of dollars and the ROI is tremendous! There are other opportunities to earn college credit while in high school like AP exams, taking college classes online or in-person while in high school, CLEP exams and more. Click here to read my post titled “Earning College Credit While in High School” for more information.

5. Major

Based on the major you end up pursuing in college, you can start looking at job prospects and career earnings. I do say what you “end up pursuing” because you typically have a year and a half to change majors and decide which major is best to earn your degree in. When you decide on a major, you can then begin to understand the earning potential in that career field. When you are applying to college, it’s important to not just apply to schools you think or see on lists that are “better” for that major because there are plenty of colleges in the United States that will prepare you for a career field in that major. A lot of times what we hear is not the entire picture and it is up to us to put in the time to research and find similar (and less expensive) opportunities that we were not aware of before.

4. Location/Living Expenses

Please see my last post titled, “Sometimes it Pays to Go Away to College” for more information on why going a bit further away to college from home can earn you more merit based scholarship opportunities. It is important to understand what your living expenses in college will be and not have them be so exorbitant that it impacts the debt that you find yourself in after you graduate. Another impact on ROI when it comes to where you attend college is that it is less expensive to live in certain states. This could impact your cost of living while in college as well as after you graduate. Things like gas, food and housing are definitely less expensive in certain states. Where you attend college may have no bearing on where you will work after college but many college graduates tend to get their first job in the area in which they attended college. Companies are also a bit more familiar with graduates from colleges in the area they are located in. If you major in education, you most likely are doing your substitute teaching and earning a teacher’s certificate in the state you attend college in. If you had any internships during your college years, they are typically with companies near the college you attend and then some students continue working with these companies after graduation. When applying to college, consider the area you may go to school in and understand what the living expenses are in that area.

3. Internship/Networking Opportunities

This is a big category for return on investment and one that is talked about in more wealthy and “competitive” areas. Some will say that if you spend more money to go to one of the most competitive admission colleges or universities, it is worth that “extra” amount of money you are spending compared to a less competitive school because the byproduct of attending that school, you now are in a better position to be more successful after you graduate. This is because of the networking opportunities and the “name brand” recognition that the more competitive college may provide. I understand that the most competitive admission colleges offer a unique experience. At the end of my post titled, “Want to Apply to a Competitive Admission College? Think “Outside” the Box”, I provide a link that says there is no correlation to future success if you earn an Ivy League degree in all majors except maybe Finance and Political Science. Earning a degree in these two fields at an Ivy League school can have its advantages. When it comes to other majors however, (Engineering, Nursing, Education, etc.), you can earn your degree at many other schools and find yourself earning the same or more amount of money. There are plenty of colleges that provide many internship and networking opportunities that are not in the top 50 of the US News and World Report and I would encourage you to really look closely at these schools because they will be the schools that award more merit scholarships. Here is a link to a US News and World Report list of 22 colleges that are best for internships or co-op programs and only two are high competitive admission colleges (Cornell and MIT). Two other colleges that are high on the list of providing internship opportunities are George Washington and American Universities in Washington, DC.

2. Tuition/Scholarships

If you going to get a great ROI, you most likely will be making sure that you are not paying more in tuition than you have to. Let me also say that getting a great ROI also means that you are not spending as much of your own money than you have to. You are using Other People’s Money (OPM). What do I mean? Even if you saved up for college and realistically can pay for more of your child’s college expense, it is still smart to get that tuition and room and board cost down that you have to pay because you are spending less of your own money and you are letting the school or government pay for you to attend that school. It may be best to explain this point with an example. A dad and mom save $180,000 (which is a lot!) in their daughter’s college fund. She is accepted to a more prestigious university that would cost them $60,000 a year because they are a “meet need” school. This means that they do not offer merit scholarships. All of their money goes to meeting the financial need of students that attend their school. She was also accepted to a great flagship state university and received a scholarship that covered full-tuition and room and board. She would have had enough money to cover the first three years at the more prestigious university but she would have had to take out loans her senior year for $60,000. What she did, however, was go to the flagship state university that she had a full scholarship to and used that $180,000 for graduate school and to start her career eventually…THAT is a proper perspective of ROI. Merit scholarships are the best way to achieve ROI from colleges. If you have done well academically in high school, you have put yourself in great position to receive large merit scholarships from colleges. Find those colleges and see what opportunities they provide for you. Even if you have mostly B’s and some C’s…there are colleges out there that will give you good merit scholarships!

1. Student Loan Debt

We are down to the #1 factor that impacts ROI and that is student loan debt. If you are going to have a great ROI from your college education, you will need to keep your student loan debt amount down. It would be great if everyone can avoid having to take out student loans to pay for their college education but for most, this is not realistic. Honestly, I tell parents who can pay for their child’s entire college education that I think it is good for their child to have to pay back some of their college education if they can’t earn the money during college to pay it off. Just to have them take out the subsidized portion of the Stafford Loan ($2,000-$3,000 a year) allows them to have some “skin in the game”. Then they know they are investing in their own education and if they slack off or get lazy, they know that it is costing them. What is a great rule of thumb for how much in student loans a student should take out to pay for college? You should keep your total amount of student loans over four years under the amount of your projected starting salary. For some professions, this means keeping it under $30-35,000, for others in professions that pay more, this could mean keeping it under $50-60,000. Nevertheless, if your total student loan debt over four years is more than your initial starting salary right out of college, it is going to be more strenuous and you will need to make some life decisions to be able to pay the debt off. However, this decision shouldn’t be considered while in college or after you graduate. If you applied to the appropriate colleges you knew going into the application process and then in the decision process and were wise about total cost, merit scholarships, internship/networking opportunities, location and what major you will or may pursue, you already have made a very wise decision on ROI that will pay large emotional, physical and financial dividends for years to come!

1/2. How Do You Approach Life After College?

Based on a book by Jeff Selingo titled, “There is Life After College”, Twenty-something’s nowadays transition into adulthood in one of three ways. They’re either SPRINTERS, WANDERERS or STRAGGLERS. Click here for a great two page document that explains these transitions to adulthood in detail.

Resources from “Return on Investment in College Admissions” Presentation:

Georgetown Center on Education and the Workforce (CEW) Study- “Ranking ROI of 4,500 US Colleges and Universities”

CLEP Exams

Earning College Credit While in High School– College Counselor Corner Blog Post

“Choosing Your Major” by Alex Chediak

“Vocation Plans” by Alex Chediak

“Finding Colleges that Offer Big Scholarships”– Lynn O’Shaughnessy

“New FAFSA Changes: Winners and Losers”– Lynn O’Shaughnessy

“What Are Soft Skills and Why Are They Important?”– College Counselor Corner Blog Post

“Sprinters, Stragglers and Wanderers”– Review of book titled “Life After College” by Jeff Selingo

When someone tells you to “stay in your lane”, it is normally after you have tried to do something that you didn’t have the knowledge, expertise or experience to do. What they’re saying to you is, “keep doing what your good at.” Should this be advice we always adhere to? Not necessarily. There will be times when one decides to take a risk and “step out of their comfort zone” and that’s fine. Honestly, at certain times, it’s encouraged because you can learn a lot by taking risks. Yet when someone does do this, they shouldn’t expect the ideal result. Why you might ask? Because if you are taking a risk, this probably means that you are moving forward without the preparation or credentials others may have who are taking on this challenge with you or it’s something that will be competitive.

I once applied for a job that others around me (family and friends) were saying “that’s great” or “you would be good!”. I knew I didn’t have the related experience other applicants would have or even what the employer was ideally looking for. However, I thought I would be very good at what the job was and since I heard a number of people encourage me, I spent the time to apply. I didn’t even get an interview but that’s okay, I didn’t come into it with many expectations and I was proud of myself for putting in the effort.

Having assisted high school seniors for 20+ years now as they apply to college, this “stay in your lane” saying has run through my head numerous times. Every senior comes into the college application process differently. Nobody is exactly the same. There are just too many factors that vary (family, background, extracurriculars, grades, courses, test scores, etc.). Nevertheless, many seniors try to apply to colleges that they have very little chance of getting accepted to because of the schools prestige, name, or rank or because they aren’t getting honest feedback from friends and family. What’s even more frustrating is that some of these seniors actually expect to get accepted. Now, there are definitely seniors that understand getting accepted to a certain college is a long shot but they would still like to complete the application. That’s fine with me! These seniors will also have additional colleges that they apply to as well that are a good fit for their credentials.

One aspect of “staying in your lane” when it comes to college admissions, is to “blaze your own trail”. You are different than anyone else that is going through this college application process. You may hear of the colleges your friends, neighbors or relatives applied to and were accepted to, but their “story” is different than yours! Don’t compare yourself to anyone else who went through or are going through the college application process with you. Just because they may have gotten accepted to a specific school, doesn’t mean you will or should.

Below are 3 additional factors to consider when trying to understand if you should “stay in your lane” when applying to colleges and understanding if you are applying to colleges that are “in your lane”.

1. Academic– If you don’t have straight A’s (maybe a couple of B’s), your chances of getting into a highly competitive admission college (top 25 of rankings) go down dramatically. You also needed to have taken the most rigorous course load at your school and have been very involved in extracurriculars at your school and outside of your school. Although we live in a test-optional world now, these highly competitive admission colleges also would like to see test scores at their mean that they post each year (typically, this means as close to 1500 or 34 ACT). Even if you meet all four of these criteria, it is a “reach” to get into the most competitive admission colleges.

If you haven’t done all four of these things, it’s OKAY! 95% of high school students in American haven’t either. If you’ve done one or two of these things, that’s great! I applaud you for working hard, completing what you have as well as you possibly can and for trying to be involved as much as possible inside and outside of school. There are still MANY colleges out there that would love to have you. There are excellent flagship state, private and Christian colleges that would be a great fit for you. The overwhelming majority of colleges accept students with A’s and B’s, a few C’s and even a D on their transcript. Go to websites like College Data, College Scorecard or SCOIR to search for colleges that match what you have done.

2. Financial- This is often an overlooked factor when it comes to “staying in your lane”. Even students who have great grades, test scores and are involved in many extracurricular activities, should not consider competitive admission colleges because if they have to pay 3/4 or full price to attend one of these colleges, I don’t think it’s money well spent, especially if you know you will need to go to grad school. If you have done well in each of the four factors mentioned above, MANY colleges will give you a lot of money to go to their college, and many colleges are going to provide you with a similar education and opportunities.

Most high school students have around a 3.8 weighted GPA, get between an 1100-1200 or 25 ACT and are involved in a number of extracurricular activities. Even if you didn’t achieve each of these criteria, there are plenty of great colleges for you to apply to. My biggest piece of financial advice is to not go into debt beyond what your potential starting salary would be. This may mean leaving off your list of colleges you are applying to, schools that have a more popular name because typically with the “name” comes more of a cost.

3. Major- Let me get this out of the way right away. Are there benefits to getting a high paid job in finance or the government/politics if you attend an Ivy League school, compared to a less known competitive admission college or another very good four year college? Yes. If you have the credentials (see #1) and you in essence “win the lottery of college admissions” by getting accepted to an Ivy League school, could you pay off thousands of dollars of debt if you were to get a high paying job in finance or government/politics? Yes…over time. Do graduates of lesser known, quality four year colleges get good jobs in finance or government/politics? Yes. It’s all about taking advantage of the opportunities presented to you, working hard, taking a risk and networking at whatever college you go to.

If you are not majoring in finance or government/politics, there is no correlation between the name of the college/university on your degree and the first job that you get after you graduate from college. After you’ve worked in your first job after college the school you went to becomes even less important because your next position is typically based on previous and related experience.

Find the major that would be a great fit for you to pursue. You can do this through internship experience and assessments like YouScience (students at DC take this free through SCOIR), MyMajors, O’Net Online or Career Direct. Another couple of good articles to read on this topic are Check on Return on Investment for Colleges and Academic Majors by Lynn O’Shaughnessy and a previous blog post I wrote titled “Choosing a College Based on ROI“.

This week a number of seniors will receive decisions from colleges that they applied to under the ED (Early Decision) and EA (Early Action) deadlines. Some seniors have already received decisions from colleges they applied to under rolling admission deadlines. Getting accepted to a college is exciting and should be celebrated! Nevertheless, there is still much work to be done after receiving an acceptance decision to make sure that the college you were accepted to is going to be the “best fit” school for you to attend. Below are important steps to take in order to choose the “best fit” school.

Take (another) visit. If it’s a college you are seriously considering attending, take another on campus visit if you have already visited in the past before you were accepted. A senior will approach the college visit differently after they have been accepted than they would if they were not yet accepted. They begin mentally putting themselves in specific situations, dorms, buildings, etc. as well as really paying attending to their major accommodations and classes. I understand that many of this year’s seniors, due to COVID, may not have visited many of the colleges they applied and were accepted to. I wouldn’t attend a college that you haven’t visited in person. This is advice I give each year but understand that this year may be the first that it just may not be possible to visit before you decide to attend. However, if it is possible, even if you have to wear a mask and cannot go into buildings, I would definitely make a campus visit.

Understand Merit Scholarship(s) You Have Received- Typically, when you receive your acceptance letter, you should also receive any merit-based scholarship money you have been awarded. For many colleges, you won’t know this amount until you receive your acceptance letter because they do not make public the exact amount you should receive (based on your grades and scores) on their website. Some colleges do make you aware of the amount you should receive (based on your grades and scores) so the amount of merit scholarship money in your acceptance letter shouldn’t be a surprise. I would not consider this a final offer. The amount of merit-based scholarship money you receive can’t go down but it can go up. Colleges are businesses, sometimes these initial merit-based scholarships amounts given are lower in the beginning BECAUSE:

1. Most don’t ask how they may receive additional merit-aid and follow through with attempting to earn more.
2. You may have been given a certain amount based on where you are positioned currently within the students that have been accepted. This position may change based on the students accepted in the regular decision pool.
3. You may get additional merit-based aid if you are patient and see if the college meets their yield (students that enroll compared with how many that were accepted).
4. Their overall applicant numbers are down for the year and they need to go back to certain accepted students and offer more merit aid to entice them to come.

Understand Need-Based Aid You Have Received- In order to receive any need-based aid you must complete the FAFSA (Free Application for Federal Student Aid). Parents can begin filling out the FAFSA on October 1st of their child’s senior year. Click here to read an article on busting five FAFSA myths and instructions on how to complete it. There are around 400 colleges that also require the CSS Profile. Click here to see a list of these schools and here to access the application. Also, once you submit the FAFSA you will receive an email from PHEAA asking you to complete some information in order to see if you are eligible for a PA State Grant. Remember, grants are free money that you don’t have to pay back. Loans are money that you have to pay back eventually. Based on your EFC (Expected Family Contribution) that the colleges receives, you may get additional need-based grant money from the college as well.

Financial Aid Award Letter- From every college you are accepted to, you should receive a Financial Aid Award Letter. What do these letter’s look like? Click here for a few samples. Each award letter should show the full COA (Cost of Attendance), Financial Aid Summary (Merit-based scholarships, Need-Based Aid awarded and loan options) and then the amount you are responsible to pay. Two great resources you should use once you get your first financial aid award letter are:

1. TuitionFit– Allows you to compare your financial aid offers to other students who also were accepted to the same schools you were to determine if you may be eligible for additional financial aid.
2. CFPB Calculator– The Consumer Financial Protection Bureau has an outstanding tool that will allow you to plug in the information you receive on your financial aid award letter, along with additional financial information to give you an accurate number of what you will be expected to pay for college. This tool can also be used before you receive specific numbers in order to determine how much you may need to receive in merit-based aid in order to attend a certain college.

Will it pay to be patient? YES! YES! YES! Now, I’m not saying that for certain schools that are highly competitive to get accepted at, if you wait to make a decision, you will receive more money. These schools are typically 100% meet need schools anyway so you will know pretty quickly after they receive all of your financial information, what need-based aid they are offering you. Also, you will have a harder time getting additional aid from in-state public universities because they tend to keep their cost low already for in-state students. Here is post from a couple years ago about negotiating your financial aid award offer. One addition I would like to make is not to use the word “negotiate” with colleges. You don’t want to put them on the defensive. Simply let them know that you are waiting until you hear from every college you applied to, weighing each financial aid offer and you hope to make a decision when you know which school will be the best fit. Also, let a college know if they are your top choice or even in your top three schools you are considering at that time. Always ask a college you have been accepted to if there is any additional opportunities to receive more need-based or merit-based aid.

Make the “wise”, not the “popular” decision- One important piece of advice I give all juniors and seniors I counsel is to make sure you have a number of options when you are deciding on where you will eventually attend college. Nobody I know starts looking for a new house, sees the first one they like and puts an offer on it right away. They look at the market, get recommendations on a number of houses, visit a number of them and then make an offer on the one that they think is the best return on their investment (ROI). Then they even may negotiate the price more with the owners of the home to see if they can bring the price down even more. You should also do this when you buy a car. It’s not just about the best fit academically, socially, spiritually, etc., but also the best fit FINANCIALLY. If a senior wanted to go to a college that was $10,000 or more a year than another college they were accepted to, they better be able to convince me that there is something at that college that is worth the $10,000 or more investment. Typically, what the senior is trying to do is convince themselves that the name of the school and the reputation they think it has is worth the $10,000 or more a year investment. This is rarely the case!

As I tell my students often…paying for college is similar to when you are on an airplane headed to the same location, but most people on that plane paid a different price. You want to be one of those that paid the lowest price. You can also use the analogy of being in the same lecture hall at the college you decided to attend. You are all learning the same material but you all paid a different price to be there. Hopefully, you will be one that paid the least amount of money to be there.