For a long time, U.S. News & World Report had a monopoly on the college rankings game. Every August, the magazine would announce that, once again, Harvard was America’s best college, or Princeton, or, to shake things up, a tie between Harvard and Princeton.
But in recent years, there has been a profusion of rankings competitors, each with a different perspective on what “best colleges” really means. Playboy ranks America’s best party schools, much to the chagrin of administrators at the winners. The Princeton Review ranks colleges in no fewer than 62 categories, including financial aid and campus food.
On Monday, Money magazine took its shot, releasing a new best colleges listfocused on, unsurprisingly, money. While some elements of the rankings are familiar, the list is distinguished by the depth of its attention to a pair of questions on the minds of many students and parents. First, how much money will I actually have to pay — and, probably, borrow — to earn a diploma? Second, how much money will my diploma be worth in the job market when the time comes to pay my loans back?
The Obama administration has committed to answering some of those very questions about economic costs and benefits in a federal government rating of colleges that would, in the president’s words, determine “who’s offering the best value, so students and taxpayers get a bigger bang for their buck.”
The mark of a good new college rankings system — or, at least, an interesting one — is a deft combination of familiarity and surprise. Publish a list of nothing but unknown colleges and you lose credibility. Simply replicate the U.S. News hierarchy and you haven’t done anything worthy of attention. By this measure, the Money rankings are successful.
M.I.T., Stanford and the California Institute of Technology are all in the top 10. But so are Brigham Young, Harvey Mudd College and Babson College. Babson is a business-focused institution in Massachusetts that most people have probably never heard of. According to Money, it’s the No. 1 college in America.
To calculate its rankings, Money evaluates colleges in three equally-weighted categories: quality, affordability and outcomes. Because it’s hard to directly measure the educational quality of a college, Money relies on many of the same proxy measures used by U.S. News and others, including SAT scores, graduation rates, student/faculty ratios and admission yields. These favor colleges that are wealthy, rich and exclusive. Predictably, Harvard and Princeton are near the very top of the quality list.
The affordability metrics, by contrast, are more sophisticated than the simple measures of spending per student and published tuition favored by other rankings. Money starts with a college’s “net price” — tuition and room and board minus discounts and institutional scholarships — and then multiplies it by the average number of years students at each college take to graduate. The rankings also factor in levels of student borrowing and federally financed parent debt. Finally, Money includes two measures of student loan default rates that account for the percentage of students who borrow and the demographics of the student body.
Extreme affordability helps propel Webb Institute, a tiny college on the north shore of Long Island, all the way to No. 2 on the Money rankings. Each of the 80 students at Webb receives a full-tuition scholarship to study naval architecture and marine engineering, keeping costs, debt and defaults to a minimum. (Graduation rates at Webb are also very high.) Costs are also unusually low at B.Y.U., particularly for a private university. Its net price is barely $12,000, and loan defaults are almost nonexistent.
The third category is the most interesting, and sure to be the most controversial. Money magazine defines outcomes almost entirely in terms of how much students earn after graduation. It uses Payscale, a website that allows people to compare their salaries to other people with similar jobs, as the source of the earnings data.
First, Money rates each college based on the median earnings of graduates within five years of starting their career and again after more than 10 years. Then it calculates separate scores that adjust for each college’s student demographics and mix of academic majors. A college that graduates an unusually large number of public-school teachers, for example, would see its earnings adjusted upward, so it would not be penalized for focusing on public service. A college with many science and engineering majors, who are typically higher paid, would have its earnings adjusted down.
This is where Babson excels. It offers one undergraduate major, a bachelor of science in business. Babson graduates who logged onto Payscale reported earning almost $60,000 early in their careers, and $123,000 after more than 10 years. Those numbers are comparable to Harvard, Princeton, Stanford and Caltech. Because Babson isn’t as selective as those institutions, and business majors typically don’t earn as much as, say, computer engineers, Babson’s statistically adjusted earnings also stand out.
Over all, the Money list of top-earning colleges is a mix of elite universities with a pipeline to high-paying finance and management consulting jobs, and colleges like Cooper Union and the Colorado School of Mines, which are tightly focused on specific, well-paying professions.
Defining outcomes this way does ignore important aspects of the collegiate mission. At its best, higher education does more than train people for jobs. College should clarify the mind and enlighten the soul. But colleges also expect to be paid in dollars, and you can’t provide evidence of enlightenment in lieu of installments on your student loans.
This conflict is on the minds of Obama administration officials currently deciding how to rate colleges. There will be some thorny methodological issues for the administration to work out. The Money rankings formula allows unusual performance on a few factors, like earnings or net price, to drive a college all the way to the top of its rankings — or the bottom.
Morehouse College, for example, is a highly respected historically black institution in Atlanta. But because its students and their parents, many of whom come from low-income families, borrow substantial sums for college and sometimes struggle to repay their loans, Money ranks Morehouse second to last out of 665 institutions.
The Obama administration could use a more balanced approach. It also has access to better information about student earnings. Matthew Chingos of the Brookings Institution has found that Payscale earnings estimates are 14 percent higher, on average, than calculations made with more complete data sets. That may be because the unemployed don’t have earnings to enter into the website in the first place. Since this limitation applies to all colleges equally, it’s less of a problem for rank-ordering institutions. But it doesn’t account for the possibility that well-paid Babson College business majors are just unusually enthusiastic about seeing how their salaries stack up.
The federal government, by contrast, has earnings data for the vast majority of workers, as reported to the Social Security Administration. The Department of Education is already using this data to evaluate programs at for-profit colleges, and it could easily apply the same approach to public and private nonprofit institutions. The more complicated question is how to fairly evaluate earnings outcomes at colleges with diverse academic missions and student bodies.
With higher education prices continuing to rise and college degrees remaining a crucial ticket to economic prosperity, it’s certain that someone will rank the economic payoff of going to different colleges. Money’s attempt is one of the best, and more are sure to come.