You probably won’t be surprised to learn that graduates of the Massachusetts Institute of Technology earn more money than graduates of any other prestigious university in the United States. Those who receive federal student aid have a median annual income of $124,213 10 years after beginning college. Perhaps even more surprising is the fact that MIT is one of the least expensive American universities for students receiving federal aid, costing just $5,084 per year, including living expenses, books, and supplies.
New York University (NYU) is ranked in the Top 25 by the current US News & World Report rankings, with 28 universities listed due to four being tied for 25th place. However, NYU has the highest average cost for federal aid recipients and the third-lowest median income for former students. It’s important to note that these cost estimates are for the 2020-2021 academic year, and NYU has increased its financial aid substantially in 2021-2022.
This information is from the equitable set yearly school scorecard free from the US Division of Training, which gets the expense insights from its own Incorporated Postsecondary Instruction Information Framework and the pay measurements from the Interior Income Administration. The income figures don’t really surprise anyone and are more a reflection of students’ majors than the quality of the institution. MIT is brimming with engineers, while NYU has bunches of clear lines of sight and performing expressions majors. The fact that graduates of Penn and Princeton earn more money than Yale and Harvard graduates must be related to Penn’s undergraduate business school and Princeton’s relatively large engineering school.
The cost statistics reveal differences in resources and priorities among institutions, highlighting the somewhat dysfunctional nature of the US higher education system. They also provide a useful correction to university financial aid letters that typically understate or gloss over the true cost to students, as reported by Bloomberg News. MIT has the sixth-largest university endowment in the country, at $27.4 billion, trailing behind Harvard, the University of Texas system, Yale, Princeton, and Stanford. In contrast, NYU is in 35th place with an endowment of $3.5 billion. However, it’s not just about resources; the University of Pennsylvania and the University of Notre Dame have almost identical endowments, yet their average costs for students receiving federal aid differ significantly ($14,851 vs. $32,369 per year). This suggests that Penn places a higher priority on keeping costs manageable for students from lower- and middle-income backgrounds than Notre Dame does.
The majority of US college students currently receive federal aid, according to survey data collected by the Department of Education’s National Center for Education Statistics during the 2017-2018 academic year. Specifically, 59.1% of all undergraduates received federal grants, loans, or both, with this figure increasing to 59.6% American universities at four-year public colleges and universities and 64.2% at four-year private nonprofit ones. Recent administrative data also shows an increase in the percentage of students at all colleges who receive federal grants, rising from 42.6% in 2017-2018 to 51.8% in 2019-2020.
Elite private universities tend to have lower percentages of students receiving federal aid. For instance, in the 2020-21 academic year, 20% of MIT undergraduates received Pell Grants, the main form of federal student grant, compared to 19% at Stanford, 22% at Princeton, and 18% at NYU. Although these schools have need-blind admissions policies, high admission standards and the composition of the applicant pool often result in most students coming from affluent backgrounds. However, even reasonably affluent students can still receive some financial aid at elite schools. For example, around 60% of MIT undergraduates receive financial aid, with 93% of the funding coming from the university. On average, these aid recipients pay $19,599 per year, which is higher than the $5,084 paid by the smaller group of students receiving federal aid. Nonetheless, this amount is still relatively low compared to the earning potential of MIT graduates.
Even for in-state students, the richest private universities are now a bargain when compared to the majority of the best public universities. This is true even for students who do qualify for federal aid, which is determined by a formula that weighs factors such as income, assets, family size, and other factors. However, there is a fair amount of variation among states, with Pennsylvania, Virginia, and Florida charging students the most, while Indiana, Florida, and Florida charge the least.
California is notable for having numerous excellent public universities that offer great value to in-state students of all income levels. These universities are also closely integrated with the state’s community college system, creating a more affordable pathway for students to earn a University of California degree. However, in many other states, public universities are becoming less affordable for students who are too affluent to qualify for significant financial aid, raising questions about their continued status as public universities. While in-state students may still find these universities relatively affordable, they may be out of reach for others who are not eligible for aid.
Private universities with large endowments offer tremendous value to low- and middle-income students who are fortunate enough to gain admission. However, these universities enroll a relatively small number of students, comprising only about 0.3% of all four-year college undergraduate enrollment in the US. By comparison, the University of California system has 15 times as many undergraduate students. Public universities remain the primary venue for postsecondary education in the US, but the fact that so many of the top ones now cost close to $20,000 a year even for in-state students receiving federal aid is cause for concern.
While analyzing the data from the Department of Education, a few noteworthy findings emerged. One such observation was that many specialized art, design, music, and theater schools are among the most expensive four-year institutions for students who receive federal aid. Unfortunately, graduates of these schools often do not earn much money, American universities which makes attending them a risky financial decision for students who don’t come from wealthy families. While some of these institutions are of excellent quality, they can still turn out to be debt traps for students with limited financial means. To make room for the full names of these institutions, a different chart design has been used here, recognizing that they are generally less well-known. I acknowledge that it may still be challenging to read on mobile phones, but I felt it was better to include more names than fewer.
One notable exception to the low earnings trend among specialized schools is Landmark College in Putney, Vermont, which is designed for students with learning disabilities. Another outlier is Gnomon, a Hollywood school that offers programs in visual FX, games, and animation. Despite being a certificate program and not a four-year university, American universities Gnomon graduates earn about as much as those from Harvard. Other schools with high-earning graduates include Santa Clara University and Fairfield University, both located in wealthy areas (Silicon Valley and Fairfield County, Connecticut, respectively). Worcester Polytechnic Institute, a Massachusetts STEM school, and the Los Angeles campus of West Coast University, a specialized healthcare school, also outperform Harvard in terms of graduate earnings.
While researching the Department of Education data, I found that STEM and specialized healthcare schools are the top performers in terms of median earnings for their graduates. It was not a surprise to see this trend, but I was surprised to find that three lesser-known health sciences schools and Harvey Mudd, a science and engineering school in the Claremont Colleges in California, topped MIT in terms of median earnings for graduates. American universities
While projected earnings are not the sole indicator of a college’s success, they are crucial for students who rely on loans to finance their education. For the institutions listed in the previous chart, the potential return on investment is significant enough to justify borrowing. American universities However, at far too many reputable US colleges and universities, taking on debt is not a wise financial decision.