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Claremont McKenna College is ranked the #1 liberal arts college in a new analysis of the economic benefits … [+] of attending college. Many colleges that traditionally don’t do well in other rankings like US News and World Report still score well. (Myung J. Chun/Los Angeles Times via Getty Images)

Claremont McKenna College is ranked as the #1 national liberal arts college in a new analysis of the economic returns that students receive from attending college. The top five were Harvey Mudd College, Washington and Lee University, Davidson College and Virginia Military Institute.

While many of the schools ranked in the top 25 from this analysis were well-known, elite institutions, many others were high-quality, but still, less famous colleges that traditionally do not fare well in other university rankings such as US News and World. Report.

The newly released ranking is the work of DegreeChoices, a relatively new company that provides students, families and consumers with information about their college and career options. (Full disclosure: I am a consultant on web page content for DegreeChoices.)

Earlier this month, I reported the results of DegreeChoices’ economic analysis of the top national universities. The methodology used to evaluate liberal arts colleges is the same.

Using public data from the U.S. Department of Education’s College Scorecard and the Integrated Postsecondary Education Data System (IPEDS), DegreeChoices researchers ranked more than 2,000 undergraduate institutions based on to the mathematical combination of two results.

The first is payback—a measure of how long it takes students to recoup their educational investment after attending a given school. The second is earningsplus, a calculation of how much more or less students from a particular college earn than the weighted average of students from all colleges in that state.

Payout is essentially the same measure that Third Way uses to analyze colleges’ economic returns. Michael Itzkowitz, a senior education partner at Third Way who developed its reimbursement methodology, also served as a consultant to DegreeChoices on its grading system.

The payment is calculated by dividing how much money a student pays out of pocket to attend a given institution by the average salary increase they receive. The salary increase is calculated by comparing the average salaries of college attendees to the average salaries of peers with only a high school diploma in the state where the college is located.

Dividing the net costs by the premium that college attendees earn versus high school graduates shows the number of years it takes students to recoup the net costs of their education.

Earningsplus calculates the difference in median earnings for students from a particular college by subtracting the state’s weighted average earnings from the school’s median earnings.

To arrive at what is called the institution’s economic score, the factor on which DegreeChoices ranked schools, the school’s payment is divided by the advantage/disadvantage percentage of its earningsplus factor.

We use two highly ranked colleges in Virginia to illustrate. The pay for a student attending Washington and Lee University or the Virginia Military Institute is 1.9 years. Every school looks about the same on this measure.

But then consider earnings and earningsplus. Compared to the average earnings of all students ten years after attending any Virginia university ($42,984), Washington and Lee students earn an average of $86,020, twice the state average, while students from the Virginia Military Institute earns $71,910 or about 167% of the Virginia state average.

Both are doing well, but the longer picture provided by the earnings data looks more favorable to Washington and Lee. Dividing Washington and Lee’s pay by 2.o yields an economic score of .94; dividing the Virginia Military Institute reimbursement by 1.67 yields an economic score of 1.16.

Whether the payment or the earningsplus is more important will vary according to individual circumstances. Payback reveals how quickly educational costs can be recovered on average, while earningsplus conveys relative economic advantages later down the road.

Just remember: schools that earn more than 100% of the state average will see a lower economic score than their payment rate. And in this ranking system, the lower the economic score the better.

Top 20 liberal arts colleges

Here are the top 20 liberal arts colleges, ordered by their economic score. In addition, each list shows the admission rate, graduation rate, net cost, payment, average earnings and earningsplus.

Eight institutions on DegreeChoices’ top 20 list did not make the most recent US News Top 20 liberal arts colleges – Harvey Mudd College, Virginia Military Institute, Lafayette College, Wabash College, Wofford College, Rhodes College, Albion College and Bucknell University.

Twelve schools make both lists – Williams College, Amherst College, Swarthmore College, Pomona College, Bowdoin College, Washington and Lee University, Claremont McKenna College, Davidson College, Colby College, Hamilton College, Haverford College and Colgate University.

The overlap is limited somewhat by one factor, which is that DegreeChoices’ economic analysis requires cost and revenue data, which are not reported for military academies, two of which are ranked in the News Top 20 of the United States (United States Naval Academy and United States Military Academy). .

Of particular interest are the schools that significantly “underperformed” on the DegreeChoices list, which relies on financial pay as its ranking factor, versus US News, which uses various factors including interest rates. retention and graduation, reputation and institutional resources. Take these five examples—in each case, the DegreeChoices ranking is shown first and the United States News ranking is second:

Virginia Military Institute 5 versus 67

Consumer interest in the economic returns of college attendance continues to be strong, and researchers have developed several different methodologies to calculate those returns.

While financial payments are clearly not the only way to assess the quality or value of colleges, they are useful because of growing concerns about the high costs of a college education, the college debt that many students and their families take, and the fact that most students say that getting a good job is their main reason for going to university.

As students and families search for their college options, financial considerations will be important to most of them. In some cases, it can be the deciding factor. Calculating the return on investment from a college education is complicated and is influenced by many factors, such as out-of-pocket costs, academic program mix and the composition of the student body. The DegreeChoices economic score addresses some of this complexity and provides a useful means of assessing the economic performance of the nation’s universities and colleges.

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