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Bob O'Connor

How Money Ranked the Best Colleges

Jul 24, 2014

Here’s how we determined which of the nation’s roughly 1,500 four-year colleges and universities give you the best value for your money.

To make our initial cut, a college had to have an above-average six-year graduation rate in its institutional category (public or private) or if the rate was below the median, we required a graduation rate at least 25% above what would be expected given the incomes and test scores of its students to be included. We then screened out schools with a speculative bond rating from Moody’s (indicating financial difficulties) or for which there wasn’t sufficient data available. We also did not include military schools that require a commitment of service in exchange for free tuition.

That left 665 schools, which we then ranked on 18 factors in three categories:

Quality of Education (1/3 weighting)

  • Six-year graduation rate (25%), which is widely recognized as one of the most important indicators of a college’s quality
  • Peer quality (15%), measured by the standardized test scores of entering freshman
  • Instructor quality (15%), measured by the student-to-faculty ratio (10%) and the college’s average grade from Ratemyprofessor.com (5%).
  • Students’ perception of quality (20%), measured by the percentage of accepted students who enroll in that college, known as yield
  • Value-added graduation rate (25%), or the difference between a school’s actual graduation rate and its expected rate, based on the economic and academic profile of the student body (measured by the percentage of attendees receiving Pell grants given to low-income students and the average standardized test scores of incoming freshmen)

Affordability (1/3 weighting)

  • Net price of a degree (40%), or the estimated amount a typical freshman starting in 2014 will pay to earn a degree taking into account the college’s sticker price; the school’s average need, merit, and athletic financial aid; tuition inflation; and the average time it takes students to graduate from the school
  • Debt (40%), taking into account both student debt upon graduation (20%) and parent federal PLUS loans (20%)
  • Student loan default risk (10%), a calculation of the odds that a student at the college will end up being unable to pay back a federal student loan
  • Value-added student loan default risk (10%), adjusted for the economic and academic profile of the student body

Outcomes (1/3 weighting)

  • Early (20%) and mid-career earnings (10%), as reported to Payscale.com by a school’s alumni
  • Earnings adjusted by majors (30%) to see whether students at a particular school earn more or less than would be expected given the mix of majors at that school, early in their careers (20%) and in mid-career (10%)
  • Value-added earnings (30%), adjusted for the economic and academic profile of each school's student body, in early career (20%) and in mid-career (10%)
  • Career services (10%), staffing per 1,000 students

Finally, we used a statistical technique to turn all the data points into a single score on a five-point scale, and ranked the schools based on those scores.

For a full description of the methodology, click here.

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