Degrees From Liberal Arts Colleges Are Still Worth It. Here’s Why.
By Anthony P. Carnevale
This time of year, high school students are sending in the last of their college applications. Some students may have already received acceptances. So the waiting game begins, as students prepare for making what for many is the first major financial decision of their lives.
As college price tags continue to soar, it’s no surprise that students are opting for degrees with more direct connections to the labor market. A rising number of bachelor’s degrees have been conferred in computer and information sciences, engineering, and business, increasing by 88 percent, 68 percent, and 10 percent, respectively, between 2008–09 and 2016–17. At the same time, degrees conferred in English and literature/letters declined by 26 percent, and degrees in social science and history declined by 6 percent. This shift away from a liberal arts education has led to program cuts and even college closings.
But what many don’t realize is that liberal arts colleges offer good long-term financial value. Because these colleges emphasize liberal arts disciplines, their students’ return on investment is a good gauge of the value of a liberal arts education. We found that the median return on investment of the 210 US liberal arts colleges is more than 25 percent higher than for all colleges. Forty years after students enroll at liberal arts colleges, they see financial returns of $918,000 — almost $200,000 higher than the median for all colleges, which is $723,000.
Liberal arts institutions offer good returns even when compared to schools focused on engineering or business. The median ROI of liberal arts colleges is close to those of four-year engineering and technology-related schools, at $917,000, and four-year business and management schools, at $913,000.
Financial returns are highest for the most selective liberal arts institutions. These colleges, which include Kenyon College, the University of Richmond, and Williams College, have a median 40-year ROI of $1.13 million, nearly as high as the returns from doctoral institutions with the highest research activity, at $1.14 million.
But not all liberal arts colleges offer high returns. At the 25th percentile, the median ROI of these colleges is just $766,000, and the lowest-ranking liberal arts colleges have returns of less than $550,000. The following factors help explain some of the variation in returns among liberal arts colleges.
- Graduation rates: Our calculations of ROI are based on earnings from students who enrolled in each institution. But not all of these students graduated. Selective colleges tend to have higher graduation rates, which contributes to higher ROI because students who earn a degree tend to have greater earnings potential.
- Low-income students: Institutions with smaller shares of low-income students typically have higher ROIs. The most selective colleges tend to enroll more students from families with high incomes, while less selective colleges have more students from low-income families.
- College majors: Liberal arts colleges with higher percentages of students majoring in STEM tend to have higher ROIs. Institutions in the top third by share of STEM students have 40-year returns of $992,000, which is $179,000 more than the returns from institutions in the bottom third.
- Geography: Institutions’ location also matter, since the majority of graduates of four-year colleges in large metropolitan areas end up working near their school. Liberal arts colleges are concentrated on the East Coast, especially in New England and the mid-Atlantic, where earnings are higher than in most other parts of the country.
To learn more about the ROI of liberal arts colleges, and sort through a table of the 210 US liberal arts institutions, visit cew.georgetown.edu/LiberalArtsROI.
Dr. Carnevale is Director and Research Professor of the Georgetown University Center on Education and the Workforce, an independent, nonprofit research and policy institute affiliated with the Georgetown McCourt School of Public Policy that studies the link between education, career qualifications, and workforce demands.