Leveraging PEP and EMI Data to Improve Institutional Value and Student ROI

One of the biggest challenges students face is determining their return on investment for getting a college degree. Now, there is a new analysis based on the Federal government’s College Scorecard that ranks 4,000 higher education institutions, which can give prospective students a clear and detailed look at how much they will earn with certain majors and from specific colleges and universities and how quickly their graduates pay off their loans. Furthermore, the data identifies the top 1,320 U.S. schools serving low-income students, which challenges and debunks U.S. News & World Report findings.

In this podcast, Dr. Drumm McNaughton speaks with the person who generated and crunched these numbers, Michael Itzkowitz, president of the HEA Group and former director of the College Scorecard under President Obama. Michael discusses the specific type of school that leaves most students earning even less than the typical high school graduate and how university leaders can use this information, especially for programs that aren’t effectively serving students. They also talk about the careers with the best ROI and how those with liberal arts degrees fare by comparison.

• Michael has knowledge he acquired while working in the Obama Administration as director of the College Scorecard to generate easy-to-understand reports from the College Scorecard’s 2,000 variables. He analyses net cost, how much students pay out of pocket if students are lower or higher income, what students with certain majors and from specific schools are earning, and more to create reports available to the public.

• Since leaving the Department of Education, Michael has found that college is still worth it. If you go to college, you'll have more life chances than someone who doesn’t, on average. However, certain types of institutions lead to no economic return.

• When measuring ROI for higher education students, Michael invented the Price-to-Earnings Premium (PEP). This metric looks at how much students paid for a specific degree and how much they’re earning to see if they earn more than someone who graduated high school with no college experience. If a student pays $60,000 after four years in college and makes $10,000 more a year than someone who never went to college, the Earnings Premium is that the student can use that $10,000 to recoup those $60,000 costs after about six years.

• Michael used the Price to price-to-earnings premium for about 4,000 institutions across the United States. Almost two-thirds of institutions have students recouping their costs within ten years or less. However, 442 colleges (14%) left most students earning even less than the typical high school graduate. The study is limited to what students make two years after graduation. This data needs to be made available to students and families to better safeguard them and taxpayers who help finance educational endeavors.

• Usually, effective shorter-term programs from certificate-granting institutions provide one of the quickest paths to socioeconomic mobility. However, about half of these programs from smaller for-profit schools leave the majority of students earning even less than the typical high school graduate. At 30% of these institutions, students recoup their educational costs within five years or less.

• The careers with the best ROI are in nursing and STEM fields. Liberal arts majors still get an ROI, but it takes longer. After about five years, liberal arts students hit their stride in terms of earning potential and salary.

• Michael developed the Economic Mobility Index, with and for Third Way, to examine the top schools serving low-income students across the U.S. to see how they are doing. This Index combines the top-performing schools like Harvard, which helps the select few, and those that serve Pell Grant students. The top 10 schools in the Economic Mobility Index are Hispanic-serving institutions that have received seals of excellence from Excelencia in Education for years. Many of the schools on the list aren’t featured in the US News & World Report. Seven HBCUs are in the top 100 in terms of economic mobility.

• Without considering the number of Pell Grant students served, the best ROI for low-income students are schools such as Duke, Harvard, Yale, Princeton, and the University of Chicago. However, these schools had low Pell Grant numbers. When Pell Grant students were incorporated into the data, Harvard, which originally ranked 4th, fell to 847 out of 1,320. The University of Chicago, which ranked 8th, fell to 860.

• The data needs to be used to hold schools accountable for student outcomes instead of just providing transparency for transparency’s sake. For example, there are multiple programs perpetuating socioeconomic inequality that Federal Funding shouldn’t support.

• College and university administrators can use this information to help promote their effective programs and to address those that aren’t. Low-performing programs could be the result of how a department functions, the professors, the curriculum not providing the skills necessary to succeed in the workforce, career resource centers not actively matching graduates with employers, or schools offering credentials for careers that aren’t available within a specific geographic region.

Read the transcript →

About Our Podcast Guest

With 10 years of experience in federal education policy, Michael Itzkowitz has held senior roles inside and outside of government. His work and expertise are often cited by national news outlets, including the New York Times, Washington Post, Wall Street Journal, USA Today, and NBC. 

Prior to beginning the HEA Group, Michael worked as a Presidential Appointee in the Obama Administration at the U.S. Department of Education, assuming a number of roles in K-12 and higher education. Most notably, he was the Director of the Administration's College Scorecard, an initiative focused on higher education transparency and accountability. The Scorecard, announced by the President in February 2013, is the largest federal government release of higher education data ever. 

Michael also served as the Deputy Chief of Staff in the Office of Postsecondary Education, where he helped oversee the policy and administrative functions of the office, which includes over 180 employees across three divisions that disburse approximately $2.5 billion in grants and establish policy for nearly $120 billion in Federal student aid every year. There, he led the office’s Organizational Performance team and directed policy initiatives on accreditation, minority-serving institutions, financial aid award letters, and data transparency.

About the Host

Dr. Drumm McNaughton, host of Changing Higher Ed®, is a consultant to higher education institutions in governance, accreditation, strategy and change, and mergers. To learn more about his services and other thought leadership pieces, visit his firm’s website: https://changinghighered.com/.

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