If you’re trying to select a college, you’re probably considering a variety of large and small factors—everything from how the cafeteria food tastes to how much tuition is.
However, if you’re looking at college like the investment that it is, there’s one factor that you’ll want to strongly consider: the debt vs. earnings ratio you can expect after graduation.
What is that, exactly? That’s the amount of debt you can expect to carry after graduation, compared to your future expected earnings ten years after graduation.
Obviously, the more debt you carry, the more of your post-college take-home pay will have to be allocated for student loan payments. That can have a direct impact on how soon you’re able to establish yourself as a financially independent adult, or even do things like buy a new car or a house.
Because this ratio is so important, we decided to take a deep dive into which schools were more likely launch graduates into post-college life with a favorable debt-to-earnings ratio.
Here’s what we found out in our landmark research study on Student Debt and Future Earnings.
Non-profit schools came out on top!
Private, non-profit colleges generally performed best in terms of graduates’ future financial outlooks. These institutions are non-state schools that are typically run by a board of trustees.
Because non-profit schools are under no obligation to produce a profit, they are generally able to funnel more of your tuition dollars toward the cost of education, rather than toward recruiting and marketing efforts to boost the bottom line.
Graduates from these institutions left school with lower average student debt and demonstrated higher average earning potential in the 10 years after enrollment. That’s probably no surprise when you realize we’re talking about schools like Harvard, Stanford, and Yale.
Looking at the chart below, you’ll notice that Harvard is situated on the bottom right of the chart, indicating high earnings and low debt.
Why do these grads have less debt?
One obvious reason graduates of the institutions on this list have less debt is that these schools attract elite students. Students performing on that level are more likely to be awarded scholarships.
During our research, we also found a correlation between SAT scores and post-college debt. That is, the higher your SAT scores, the less debt you are likely to carry after graduation
This finding may further reinforce the idea that desirable students get more financial aid.
However, don’t despair if you didn’t get a top score on your SATs or you don’t have aspirations to attend an Ivy League university.
There are plenty of other excellent college values to be found among a wide variety of institutions.
Check out our special report on Student Debt and Future Earnings to learn more.