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A liberal arts education pays off — but it takes decades

What to consider when paying off student debt
  • The median return on investment for a liberal arts college degree is 40% below other colleges 10 years after graduation.
  • But after 40 years, the ROI on a degree from a liberal arts college is 25% higher than all other colleges. 
  • The increase in ROI could be due to the "value of the credentials" becoming more evident over time, the study said.

Liberal arts colleges have gotten a bad rap in recent years, with critics questioning the value of history or English degrees. But a new analysis finds that earning a degree at one of the nation's 210 liberal arts colleges pays off in the long run. 

The new study from Georgetown University's Center on Education and the Workforce comes as some small liberal arts colleges are shutting their doors amid a slump in enrollment. Students majoring in history are vanishing, with the number of undergraduates studying the subject plunging more than any other field from 2011 to 2017. 

At the same time, majors that can tie directly into a career, like computer science, are gaining students. That's left some parents and students questioning the value of a degree from a liberal arts college. 

The Georgetown study aims to address those concerns by analyzing data including the cost of a degree and future annual earnings to come up with a college's "return on investment."

"Given these challenges, it is worth asking: How do students who attend the 210 or so liberal arts colleges in the United States actually fare financially once they enter the labor force? It turns out that they fare quite well," the study found.

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Still, in the short term, there's evidence that grads from schools such as New York's Hamilton College or Ohio's Kenyon College lag their peers, with the 10-year ROI on liberal arts colleges standing at $62,000, or 40% below the ROI of all colleges. 

But patience can pay off, because grads of liberal arts colleges catch up over time, the study found.

"By 40 years after enrollment, the median ROI at liberal arts colleges reaches $918,000, more than 25% above the median ROI of all colleges, which is $723,000," the study noted. "At the 40-year mark, most of those who attended liberal arts colleges have been in the workforce for the majority of their adult lives, and the value of the credential is more evident."

The research echoes findings in 2018 from employment data company Burning Glass. Its analysis found that English majors and other liberal arts students have a higher chance of finding a good job than more occupational majors such as business or biology. The reason? Liberal arts majors learn skills that are valued by employers, such as critical thinking and communication. 

Selective colleges

Even so, there's a large variation in returns on investment, with the most selective liberal arts colleges providing even more bang for the buck. Colleges seen as elite — such as Williams College in Massachusetts and Middlebury College in Vermont — produce a median ROI of $1.13 million, almost on par with the $1.14 million median ROI for doctoral universities with the highest level of research activity, the study found. 

"In other words, the ROI from attending one of these colleges is approximately the same as that associated with attending doctoral-level institutions, which typically offer liberal arts majors alongside a panoply of professional degrees in such areas as business, engineering and nursing," the report noted. 

Of course, liberal arts colleges aren't only about "soft" subjects such as English or history. Many offer engineering and science-related fields, such as Harvey Mudd College in California, which is known for its STEM-focused curriculum. Not surprisingly, liberal arts colleges with a high percentage of students with STEM majors tend to have higher ROIs because those students typically have higher earnings once in the labor market. 

And some colleges lag the median ROI, the study found. These tend to be liberal arts colleges with low graduation rates and those located outside of New England. Geography matters because workers in the Northeast tend to earn higher wages than in other regions, impacting lifelong earnings, the study said. 

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