How liberal arts degrees pay off in the long run

40 years after enrollment, ROI rises to $918,000—nearly $200,000 higher than the median ROI of all colleges
By: | January 27, 2020
The ROI for liberal arts degrees grows over time but the benefits are not spread equally among all students.The ROI for liberal arts degrees grows over time but the benefits are not spread equally among all students.

Liberal arts degrees pay off in the long-term.

The median return on investment for liberal arts colleges 10 years after enrollment is $62,000, which is $45,000 below the median ROI of all colleges.

By 40 years after enrollment, that ROI of rises to $918,000, which is nearly $200,000 higher than the median ROI of all colleges, according to a new report, “ROI of Liberal Arts Colleges: Value Adds Up Over Time” by the Georgetown University Center on Education and the Workforce.

More selective liberal arts institutions have even higher ROIs. The 47 most selective liberal arts colleges have a 40-year ROI of $1.13 million—nearly as high as the ROI from doctoral institutions with the highest research activity.

“As with many four-year institutions, financial returns from liberal arts colleges start low, but enrolling at one of these colleges is a good investment in the long term,” lead report author and the Center’s director, Anthony P. Carnevale, said.


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Yet that ROI may not be spread equally, and debt is partially to blame. New federal data on bachelor’s degree recipients reveal disparities in the time it takes Black and Latinx students to graduate, the debt they face and their employment prospects, according to the Center for American Progress.

Black students borrow more than any other group, at a rate of 86%, compared to an average 67% of white students. Black students also borrow an average $36,900 compared to $30,500 for white students.

Latinx students borrowed less—an average of $26,900—which could reflect that they are much more likely to attend community colleges, which are less expensive, the Center for American Progress found.

“One year after receiving a bachelor’s degree, 70 percent of black graduates are offered benefits through their employer compared to 76 percent of white and 75 percent of Latinx graduates,” Ariana De La Fuente and Marissa Navarro of the Center for American Progress wrote. “Furthermore, the median income for black graduates is $36,000, compared to $40,000 for white graduates.”

Latinx enrollment continues to grow amidst decreases for other demographic groups, University Business reported last year. By 2025, Latinx students will constitute one-fifth of the college population, according to National Center for Education Statistics data.


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Along with the those disparities, not all graduates have realistic earnings expectations. A survey by Clever, an online real estate service, found Generation Z graduates expect to make about $10,000 more than they will actually earn at their first job after college and their anticipated mid-career salaries are inflated by about $15,000, UB reported last year.

“The counseling systems in higher education are virtually nonexistent in terms of a student’s ability to talk about what happens after they leave college,” Carnevale told UB. “We need a full set of information on the economic value of college.”

Historically black colleges and universities continue to play a crucial role in the success of students before and after graduation.

HBCUs Punching Above Their Weight,” a 2019 report by the United Negro College Fund’s Frederick D. Patterson Research Institute, found that HBCUs comprise just 8.5% of the country’s four-year institutions but award 26% of the bachelor’s degrees and 32% of the STEM degrees earned by black students, UB reported last year.

“The findings are just confirmation of what the HBCU leadership community has been saying all along,” Roderick L. Smothers, president of Philander Smith College in Arkansas, told UB. “When you look at the outcomes, one has to pause to ask how our institutions are doing this miraculous work with the resources we have.”


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