Financial Return on Investment: An Analysis of the Top-Ranked Private Universities in the United States

Abstract

The increasing cost of an undergraduate education in the United States of America has caused alarming degrees of student loan debt with deleterious consequences to the lives of graduates. Although there are myriad considerations when choosing an institution to attend, the avoidance of unmanageable debt should be prioritized. In this regard, institutions of interest should be examined based upon potential earnings in light of the actual cost of attendance. The purpose of this study was to examine the return on investment for an undergraduate education (i.e., the ratio of median annual earnings after attendance to the average annual cost of attendance) between the top-ranked private universities in the United States as per the U.S. News & World Report top-20 rankings for 2024. Annual earnings and cost of attendance data were gathered from the College Scorecard. Findings for 18 private universities reveal major differences between published tuition and fees and the actual cost of attendance (on average, the latter is 32% of the former) with an average return on investment of 6.6; however, there is a wide range of return on investment (2.9–24.4). Findings further reveal that the Massachusetts Institute of Technology, Stanford University, and Princeton University are the top three institutions with respect to both the ROI and U.S. News & World Report rankings