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The 500th school on Forbes' list shows $105,837 in median earnings a decade out
Forbes ranks Penn fifth on median 10-year earnings of $151,328 and Marietta College 500th on $105,837, so 495 places in the ranking are worth $45,491 a year to the median graduate. Four years of average college cost runs $157,624.
The Investor · Invest desk
What happened
- Forbes' new ranking of America's top 500 colleges is led by MIT, Princeton and Harvard, whose graduates are expected to earn median salaries above $120,000 a decade after receiving a diploma.
- Marietta College, a private liberal arts college in rural Ohio, sits at No. 500 on the list with median 10-year earnings of $105,837.
- Nearly every school among the 500 shows median earnings above $90,000, according to the Forbes data Fortune reported.
- Marietta has run budget shortfalls in recent years that forced it to eliminate academic programs and lay off faculty.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint Expected pay will not carry a large price difference between two schools on the list: the entire prestige spread is roughly 1.3 times what the average bachelor's borrower owes.
- exposure Marietta has already eliminated academic programs, so a student who picks a school on its pay line takes on the risk that their major is among the next ones cut.
- contradiction Because Forbes weighed financial health when it built the list, the $90,000 floor describes institutions that passed a solvency screen and cannot be read as a floor for American higher education.
- cost The average borrower's $35,000 covers about 22% of a four-year sticker, leaving $122,624 per student to come from grants, savings, work or family.
Marietta's median runs 2.53 times the high school benchmark the Education Department publishes [4], while Penn's runs 1.43 times Marietta's [2]. Fortune noted that the two datasets measure different populations and timeframes [7]. They do: the Forbes figures are taken a decade after a diploma [2], the federal one covers full-time workers aged 25 to 34 [6]. Take both ratios as rough.
The $90,000 floor belongs to a set of 500 [5][1]. Huron Consulting Group counts 1,700 private, nonprofit four-year colleges and universities before anyone adds the public systems. It forecasts that 442 of them are at risk of closing or merging within the next decade [12]. That is 26% of the private nonprofit sector [8].
The Education Data Initiative puts average all-in cost, books and supplies and daily living expenses included, at $39,406 per student per year, more than double the level of two decades ago [10]. Four years comes to $157,624 [5]. That is 1.49 times what Marietta's median graduate earns in a year at the ten-year mark [13].
The near-term market is tighter than the decade-out numbers suggest. The unemployment rate among recent college graduates is 5.7% against 4.1% for all workers [13], a gap of 1.6 points [9]. And 2015 was the first year the graduate rate exceeded the rate for all workers [14]. Gallup's share of Americans calling college "very important" has gone from about 75% in 2010 to a record low of 35% [15]. That is down 40 points [10]. "I'm not sure that college is preparing people for the jobs that they need to have today. I think that there's a big issue on that, and all the student debt issues are...really big," Mark Zuckerberg said in an interview with podcaster Theo Von last year [16].
In my view the useful variation in this dataset is on the price of the seat and on whether the institution is still there in year four. It is not on the pay line. A lender pricing a loan against a median that moves 43% between the fifth and the five-hundredth school [2] is pricing a narrow band. Medians compress tails, and the dispersion behind each school's number is not in the figures Fortune reported. If Penn's return sits in its top decile, the spread between fifth and five-hundredth understates what the name buys. And the floor is conditional on making the list at all. If the unranked schools cluster well below $90,000, the comparison that decides a family's money is Marietta against the college that missed the cut.
What to watch
- Closure or merger announcements among schools in the ranking's lower reaches, measured against Huron's 442-college forecast.
- Whether the recent-graduate unemployment gap holds at 1.6 points or widens from 5.7%.
- Whether Marietta's program eliminations and faculty cuts continue into the next budget cycle.