Accreditation and Financial ROI

April 13, 2022

Accreditation is an immensely important signal of quality for both colleges and interested onlookers, such as future employers. Students can trust the credits an accredited institution grants, and future employers can rest assured that a graduate from an accredited college is qualified in their field of study.

Despite its importance, traditional accreditation can nevertheless miss important aspects of how learners choose whether to attend college, or which college to attend. Focusing on factors such as resources available to students or the clarity and probity of institutional policies doesn’t necessarily provide insight into a prospective student’s decision-making process. Many students want a clearer sense that their time in college will be worth it. Such questions have become increasingly important as student debt has exploded over the past generation.

In recent years, researchers, politicians, and regulators have increasingly focused on a concept borrowed from business: ROI, or return on investment. Higher education, even as it has become more expensive, still provides a good financial ROI overall. According to a report published by Third Way, a public policy group, 75 percent of bachelor’s degree recipients recoup their college investment in 10 years or less. Such programs also provide access to alumni networks, which can more easily lead to graduates landing competitive internships and jobs.

Financial ROI is often measured over both the short- and long-term. Short-term analyses of financial ROI can give an idea of how quickly one might recoup tuition costs while long-term analyses focus more on measuring how well the investment in higher education repays over a lifetime. (See, for example, Georgetown’s Center on Education and the Workforce which measures ROI in 10- and 40-year increments.)

An important concept in ROI is opportunity cost, which encourages the prospective student to think about the money they are not making while enrolled full-time as a student. Choosing to enter or stay in the workforce can seem more rewarding in the short-run, as can a short-term credential like a badge or a certification. In the longer term, however, that calculation can change significantly, as even more expensive four-year options can pay off dramatically over a lifetime of unfolding career options. For example, vocational training programs such as coding bootcamps are focused on short-term outcomes, though the financial ROI tends to reach a ceiling more quickly. Extended training with a deeper focus on foundational principles, such as a bachelor’s degree program in computer science, tends to aim for higher long-term outcomes.

There is, of course, more to higher education than an impact on future earnings. Improved quality of life, more thoughtful conversations, new friends, and a kindled curiosity are just some of the substantial non-financial returns on higher education. Nevertheless, thinking about the long-term value of an accredited degree can help put things into perspective when deciding whether to start or continue with higher education.

Accreditation is an immensely important signal of quality for both colleges and interested onlookers, such as future employers. Learn how enrolling in an accredited program can impact your financial ROI in the short and long term.