A new report from the College Futures Foundation and the research agency The HEA Group showcases the strengths—and variation—of California’s community colleges in setting up students for economic success. The report looks at the return on investment (ROI) for 1.2M students who attended 327 of the state’s community or certificate-granting colleges, from public to private for-profit and nonprofit institutions.
Forty percent of public community colleges delivered an ROI for the typical graduate within a year after they completed their credential. Over 90% achieved this over five years. In comparison, only 5% of private nonprofit or for-profit institutions delivered an ROI within one year and 35% within five years. Researchers calculated ROI based on the average cost to students after scholarships and grants were deducted and their annual earnings after graduation compared to a California high school graduate with no college experience.
The Big Idea: The report is part of a growing push to better understand the ROI of colleges and, in many cases, specific programs at the state and regional level, in order to better advise students and to inform state and federal investment. President Trump last month signed the Republicans’ major domestic policy bill, which will restrict federal loans for students in programs with a low ROI.
California educates about a quarter of all community college students nationwide, and its outcomes have an outsized effect on the nation as a whole.
“We launched our effort well before the federal framework, so this gives California institutions insight into where they’re at,” said Eloy Ortiz Oakley, president and CEO of the College Futures Foundation. “This is a movement that is taking hold at the federal level, the accrediting level, and the state level. We know that return on investment is more than a lofty goal for institutions to consider. It’s an imperative.”
High Performers: In the top 25 performers in the state—23 of which were community colleges—students typically paid less than $5K per year and earned at least $10k more than a high school graduate 10 years after graduation. Some colleges had much higher ROIs: At De Anza College in Cupertino, the median student earned $24K above a high school graduate. At Skyline College in San Bruno, they earned $23K more.
Michael Itzkowitz, president and founder of The HEA Group, pointed out some trends in the top performers.
“This education is affordable enough and students are earning enough to recoup their costs quickly,” Itzkowitz said. “We also noticed that a lot of these institutions typically serve lower-income students, so when we think about economic mobility, these institutions are starting to provide that.”
The range in performance was staggering, however. Three community colleges, three private nonprofits, and 87 for-profit institutions saw no ROI whatsoever 10 years after graduation.
The data showed that location is a big determining factor in how quickly students recoup the cost of their education. The majority of the top 25 performers were clustered around the Bay Area, Los Angeles, and San Diego. There was a lot of variation in ROI within these regions, but in the most densely populated areas, students have more opportunity to choose a high-performing institution, if they’re aware of the differences. The study was an attempt to help guide students to make smart decisions.
“Those learners who have the least amount of information about the programs of study that they’re entering, the least amount of information about the job market, they’re the ones who need to know that they’re getting the value that they’re being promised by these institutions,” Oakley said. “For millions of students in California, higher education is a leap of faith. … The hope and the intent should be that the investment they make leads to a meaningful outcome.”
Professions that Pay: While the report did not look at what programs of study the institutions offer, research published last fall from the College Futures Foundation and The HEA Group showed that nursing and other healthcare degrees—many at the associate’s level—offer the quickest and highest ROIs. Fields in the arts, cosmetology, and dental support were among those that offered the lowest or no ROI.
Unitek College, the only for-profit institution in the top 25 community colleges and certificate-granting institutions, offers nursing and medical assisting training. Ten years after graduating with a certificate, students were earning more than $55K more than a typical high school graduate.
“Institutions can use this as a moment to assess their impact and align with workforce needs in their regions,” Oakley said.