Return on investment should be taken into consideration in regards to major, career

Phil Schurrer and Phil Schurrer

Return on Investment, or ROI, has long been used in finance, engineering, manufacturing, technology and retail.

Put simply, it measures what the rewards or output is for a given amount of work or investment.

ROI is becoming important in the process of selecting a college major. Perhaps it’s always been part of the decision process, albeit on an informal basis. Until now, its lack of widespread use is due to the lack of available data.

But things are beginning to change.

As Anthony Carnevale, of the Center on Education and the Workforce at Georgetown University, said, “Education has finally been invaded by 20th and 21st century management practices.”

The database used for formal ROI in selecting a major is small but growing. Most of the information comes from the states that gather student data from publicly funded universities whose students remain in the state after graduation and work for a company that furnishes statistics.

For example, the University of Texas has a database using statistics from five campuses broken down by median salaries of those who graduated one, five and ten years ago.

It’s also sorted by selected majors and by average student debt load by major and by campus.

California is requiring the California State University System to provide information in compliance with new legislation enacted in November. Minnesota is likewise sponsoring a database that began this past May.

At the national level, the president is expected to release a ratings system or scorecard sometime this fall. There is also bipartisan interest in legislation at the national level that would gather information about retention, graduation, employment and student debt.

There are good reasons for this. Colleges and universities annually receive $150 billion in federal student-aid funds.

Yet, half of recent college graduates are either unemployed or hold jobs for which they are overqualified, according to the Wall Street Journal. And parents and students are increasingly aware of the debt load and the relative marketability of certain college majors.

Not all educational institutions are happy about these developments.

Some say the analysis can be misleading. Other academics argue that the value of a college education can’t be measured simply in terms of median starting salaries sorted by majors.

Some in academia may still hold to the traditional purpose of a college education as being to enlighten, to refine critical thinking and to produce a broadly educated individual ready to take his or her place in society.

But the simple truth is that post-secondary education is evolving into something more.

A university’s “customers” — those organizations that higher its graduates — as well as the graduates themselves are coming to view a college education as an undertaking that will prepare students for the world of work in a specific area or field as well as developing a well-rounded individual.

A balance needs to be struck between the world of the academic past and the view of the university-as-trade-school.

Mr. Chips, the fictional educator of a century ago, has long retired. ROI is assuming a leading role as a tool in selecting a major.

Everyone is urged to “follow his or her passion,” but the post-graduation demands of food, clothing and shelter are, and will always be, ever present.