When is a California college degree worth the cost? A new study has answers

He’s one of hundreds of thousands of California low-income students who attend colleges that, because they’re affordable enough, cost the equivalent of a few months of a typical salary that students earn within a few years of graduation.

A new report today compares California’s colleges by analyzing how long it would take low- and moderate-income students to recoup the money they spent to earn a college credential. It shows that many community colleges, Cal States and University of California campuses — all public campuses — have better returns on investment than most nonprofit private colleges and for-profit institutions.

Reyes’ only expenses are car upkeep, gas, a few books and helping his family with some housing costs. The third-year student didn’t need to take out loans.

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“I feel very lucky,” Reyes, a communications major, said. “In high school, I was always stressing about, ‘Oh, man, I’m gonna have a whole bunch of debt racked up after college’. And now that I’m in my third year, I don’t have to worry about any of that.”

Reyes, who’s 20 years old, receives state grants to cover all his tuition and federal aid for other academic and living expenses. He also works for a state volunteer program that pays students a stipend.

Report calculates time it takes to recoup cost of degree

The report was commissioned by College Futures Foundation, a nonprofit that promotes college completion. The report merges several concepts into one number:

• The net price of a college degree after all financial aid is calculated
• The typical earnings 10 years after a student first enrolls in a school
• How much higher those wages are compared to what young adults earn with just a high school diploma.

It defines low- and moderate-income households as those earning below $75,000 annually.

The data, all from the federal government, show that the time it takes to recoup the net costs of earning a degree at Cal State San Bernardino is less than three months. That’s because low-income students there incur about $5,000 in out-of-pocket expenses if they finish in four years. Within a few years they earn about $53,000 a year — double what young adults with only a high school diploma make.

At Cal State Los Angeles, the time to recoup the net costs of earning a bachelor’s is also less than three months of a typical post-college annual salary.

“​​This is really a first-of-its kind look,” said the report’s author, Michael Itzkowitz, who headed the federal government’s first consumer tool for comparing college costs under the Obama administration. The approach is a mathematical way of demonstrating which colleges confer economic value to students beyond what a high school diploma would.

A CalMatters analysis of Iztkowitz’s data found that the average time needed for a student to recoup their net costs is about two years at public institutions and a little over three years at nonprofit private colleges in California.

Some of those private campuses are as affordable as a Cal State, UC or community college after factoring in financial aid. Stanford University costs low-income students nothing. However, only 4% of students who apply are admitted, while all but three Cal States admit more than 70% of the students who apply. Most undergraduates in California attend a public institution.

Pitzer, Pomona and the University of Southern California and several other highly selective nonprofit private colleges cost students less than a year’s worth of the typical salary they’ll earn within a few years of completing their degree.

Return on investment varies by college

While some for-profit colleges have strong returns on investment, most do not.