Money Magazine entered the crowded arena of college rankings with its method of evaluating schools on “quality, affordability and outcomes”. Yes, it’s another imperfect way to rank schools. But it offers another viewpoint, somewhat limited, for families seeking information during the college search process.
To calculate its rankings, Money evaluates colleges in three equally-weighted categories: quality, affordability and outcomes. Because it’s hard to directly measure the educational quality of a college, Money relies on many of the same proxy measures used by U.S. News and others, including SAT scores, graduation rates, student/faculty ratios and admission yields. These favor colleges that are wealthy, rich and exclusive. Predictably, Harvard and Princeton are near the very top of the quality list.
Affordability is based on “net price”, and considers the average time students take to graduate.
The affordability metrics, by contrast, are more sophisticated than the simple measures of spending per student and published tuition favored by other rankings. Money starts with a college’s “net price” — tuition and room and board minus discounts and institutional scholarships — and then multiplies it by the average number of years students at each college take to graduate. The rankings also factor in levels of student borrowing and federally financed parent debt. Finally, Money includes two measures of student loan default rates that account for the percentage of students who borrow and the demographics of the student body.
Outcome is based on Payscale data, adjusted for demographics and majors.
The third category is the most interesting, and sure to be the most controversial. Money magazine defines outcomes almost entirely in terms of how much students earn after graduation. It uses Payscale, a website that allows people to compare their salaries with other people with similar jobs, as the source of the earnings data.
First, Money rates each college based on the median earnings of graduates within five years of starting their career and again after more than 10 years. Then it calculates separate scores that adjust for each college’s student demographics and mix of academic majors. A college that graduates an unusually large number of public-school teachers, for example, would see its earnings adjusted upward, so it would not be penalized for focusing on public service. A college with many science and engineering majors, who are typically higher paid, would have its earnings adjusted down.
Payscale salary data has limitations. It is self reported, and the unemployed have no earnings to report so they are excluded from the figures.
Limited disclosure makes these rankings of limited use.
Money Magazine’s report does not break out the individual components used to calculate the total score for a school, leaving the public to wonder how the different factors measure up. Because of this, these rankings are of limited use. US News college rankings, on the other hand, disclose many of the individual components that make up a school’s total score, making their report much more useful.
Another important point to remember is that none of these rankings fully incorporates the qualities of the individual student, who “is actually responsible for a significant percentage of the higher wages attributed to college graduates”.