Q&A of the Day – Florida’s Collegiate ROI
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station page in the iHeart app.
Today’s entry: Hi Brian, love the show! I would like to ask you a follow up question to your story about the performance of Florida’s universities. We’ve heard for a while now that Florida is the best state for overall value, but what I’ve not heard is the tangible impact. In other words, we know that certain degrees from certain prestigious schools may carry more weight with employers than degrees from lesser regarded schools. Is there a way to account for this within Florida’s collegiate system? Thank you.
Bottom Line: I believe I understand what you’re looking for here. Over the years I’ve had conversations with parents and students who may feel conflicted about staying in state, and attending a college or university within Florida as opposed to an IVY league school for example. And to the point of your question, on the one hand shelling out, or being on the hook for say $100k per year may be daunting, however if that leads to elite job opportunities it could provide phenomenal ROI in time. This is evidenced by the top three national universities, according to the US News and World Report rankings, consisting of Princeton, MIT and Harvard. Princeton, for example, isn’t only the #1 school nationally this year according to the study, it’s also the #1 value despite annual tuition of greater than $65,000 per year – a number that’s literally greater than ten times in the in-state tuition rate of Florida’s top performing university – the University of Florida. Sometimes you do get what you pay for in education.
Florida’s collegiate system ranks as the top state primarily based upon the consistently strong performance of that state’s colleges and universities, combined with the lowest-in-the-nation tuition costs for instate students along with graduation rates. In attempting to boil down today’s question to arrive at an answer for net ROI in comparison to the rest of the country...let’s dig in.
The return on investment for a college degree is the net present value of lifetime earnings of an average degree minus the costs of obtaining the degree. Nationally, the median 40-year ROI for bachelor's degree-granting public institutions is approximately $1.8 million, based on Georgetown University’s Center on Education and the Workforce analysis of U.S. Department of Education data.
Florida stands out in the study for our state’s exceptionally low public tuition costs— the lowest in the U.S. at an average in-state rate of $4,540 per year for four-year institutions—leading to stronger ROI still.
When compared to the country overall, the average Florida bachelor’s degree results in an additional $160,000 in ROI over the course of the 40-year period, or in other words, the net additional benefit for a typical Florida college graduate is a net of $4,000 more annually in today’s dollars, compared to the average student in the average other state, obtaining a degree from the typical college within their state.
And this is where you can have a lot of fun (or at least I can). Let’s say you invested that extra $4k annually at the typical rate of return for the S&P 500 (10.1%). The net value of that Florida degree would equal $1.82 million over 40 years! That’s the value of a Florida degree with the power of compound interest with stock market returns.