These 3 Colleges Provide the Best Return on Investment for Undergraduates

The cost of college is rising, but a new study reveals three schools reign supreme in allowing undergraduate students to turn dollars spent on tuition into dollars earned throughout their lives.

Apr 19, 2014 at 1:09PM

Classroom By Velkr
Image Source: Flickr / velkr0

Want to learn how to turn $50,000 into $800,000 in just 20 years? It turns out one college lets students do just that.

The rising cost and value of college
Students everywhere are now deciding where to go to college. But with the average cost tripling over the last 40 years and student debt in America now standing at more than a staggering $1 trillion dollars, price is a key consideration.

And while some may believe that because of the rising cost that college shouldn't be considered now, the Pew Research Center recently revealed the only thing more expensive than going to college is actually not attending.

A student in the millennial generation -- those between 25 and 32 years old -- with a bachelor's degree can expect to earn 50% more each year than those with a two-year college degree. Whereas those deemed early boomers -- born between 1946 and 1954 and likely the parents of many millennials -- saw an earnings gap of just 15%. 

Even in spite of the rising costs, college is becoming more and more necessary and valuable.

The need for careful research
But it's critical to know every college degree doesn't have the same value. In fact, in its recent survey to determine what colleges provide the best return for their students, PayScale recently found 23 schools (out of 896) actually cost more than what they're worth when considering out-of-state tuition (with financial aid) and on-campus housing.  

But that certainly isn't the case with all schools, and in fact three stand out as providing the best return on investment (ROI) for their undergraduate students.

 3. Cooper Union for The Advancement of Science and Art

 20 Year Net ROI

 2013 Total Cost

 Annual ROI

 Grad. Rate

 $801,000

 $65,010

 14%

 81%

Located in Manhattan with just 880 undergraduate students, Cooper Union is certainly a small and selective school. It provides a top-ranked architecture program and itself was recently named the top college in the North by U.S. News and World Report, the third year in a row it has held that title. It has also been recognized as one of the top locations for specific undergraduate degrees in electrical (ranked third), civil (ranked fourth), and mechanical (ranked fifth) engineering. 

 2. Stanford University

 20 Year Net ROI

 2013 Total Cost

 Annual ROI

 Grad. Rate

 $950,800

 $74,870

 14.2%

 95%

With its list of faculty including 31 Nobel laureates, former student consisting countless executives -- Elon Musk of Tesla, Marissa Meyer of Yahoo!, and Reed Hastings of Netflix just to name three -- Stanford is certainly well known across a variety of industries and fields, with Condoleezza Rice and Tiger Woods alumni as well. 

By Jurvetson

Source: Flickr / jurvetson

Yet what may not be well-known is the absolute value a degree from Stanford provides to its students, both to those who are famous and those who aren't. In fact, Stanford not only has the second highest annualized return on investment, but the fourth highest total ROI (topping nearly $1 million in just 20 years). But the three schools ahead of it from a raw dollars perspective are 25% more expensive on average.

 1. Harvard University

 20 Year Net ROI

 2013 Total Cost

 Annual ROI

 Grad. Rate

 $821,900

 $53,910

 15.1%

 97%

Harvard By Librarygroover

Source: Flickr / Librarygroover

Like countless other rankings, Harvard also came out on top in terms of providing the best return with a remarkable 15.1% return on investment. Like Stanford, this prestigious Ivy League school is well known for its alumni and rankings, but many people gawk at its expected billed costs of nearly $60,000.

But Harvard does a remarkable job of providing financial aid to students -- more than 90% of Americans would pay the same or less to go to Harvard versus a state school -- bringing the cost down considerably. And when you couple its top-class education across a variety of degree options, plus its great financial aid, it only makes sense Harvard also is the best school when it comes to providing value to its students. 

From earning to investing
While these three schools may provide the best return to their students, don't worry if you don't have a degree from them. No matter where you go or what you know, all too often, things related to financial issues -- like college choices -- are incredibly complicated. But it's never to early to start learning about saving, and knowing what companies to buy.Thankfully, we're here to help.

In fact, the smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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