R.O.I.

There has been a lot of talk recently about ROI and its role in higher education.  I have prepared this article to de-mystify ROI and to connect this concept to the values that members of Town & Gown place in our mission to provide scholarships to deserving students at Chapman University.

ROI means Return On Investment.  It is considered, first off, a financial metric in the business world used to evaluate the profitability of an investment by comparing its gain or loss relative to its cost.

More recently, ROI has been utilized in higher education to measure the financial benefits of a college education relative to costs to attend (tuition, fees, living expenses) to ultimate lifetime earnings, career advancement, and other outcomes. It’s meant to be applied to understand the financial value of a college education in terms of immediate financial gain after graduation (first job), but also in terms of long-term career success. It is often computed by measuring the time it takes for a student to recoup their investment (i.e., what they owe after graduation until they are debt free). From a purely financial algorithm, students who major in Business, Science, Pre-Law, and other professional degrees will have a better ROI since they often begin their careers with higher wages.

The current Federal Department of Education, which awards Pell Grants and other student loans based on FAFSA, has embraced the concept of ROI.  They have recently announced that they may consider utilizing ROI financial measurements in order to award their grants.  That is to say, “Under this proposal, students would be eligible for a larger Pell Grant if they enroll in a program that has a track record of generating high earnings for graduates.” Further: “Congress should consider limiting or eliminating colleges’ ability to use Pell Grants if the data consistently show that students who attend those schools do not earn a sufficient income after leaving school.”   (Source: an interview with economist Preston Cooper of the American Enterprise Institute as reported in The College Fix.)

This new more rigid application to ROI measures by the U.S. Government may impact deserving students who are majoring in liberal arts degrees  (music, English literature and creative writing, education, philosophy, etc. ) for which their initial, and even eventual, wages will not compare to other fields of study, possibly resulting in a lower ROI score, taking into consideration the purely financial metrics. And perhaps a threat to the liberal arts universities and departments which educate them.

However, the Return On Investment for liberal arts students can be valued in other less tangible, but equally important ways. Here are just some of the values of a liberal arts education taken as important in and of themselves, but also valued by employers, no matter the chosen field.  These values include the following:

  • Critical Thinking:  (analyzing and forming well-reasoned conclusions)
  • Problem-Solving: (identifying problems in order to explore and implement effective solutions that lead to an informed citizenry)
  • Communication: (written and oral skills, collaboration, and inspired leadership)
  • Adaptability: (through a broad curriculum across disciplines to adapt to changing circumstances)
  • Creativity and Innovation: (thinking outside the box to develop innovative solutions)
  • Interdisciplinary Thinking: (holistic understanding)
  • Ethical Reasoning: (a moral compass to make sound judgments)
  • Cultural Understanding: (to broaden and promote a global perspective)
  • Lifelong Learning: (to continue to grow and learn)

The Scholarship Program funded through the Town & Gown Endowed Scholarship Fund awards meritorious scholarships to students who show promise of a successful college career, embracing Chapman’s mission to provide a personalized education that prepares students to be ethical, inquiring, and productive global citizens. Chapman’s education focuses on the intellectual, physical, social, and spiritual dimensions of life. Town & Gown is proud of its success in supporting deserving students, no matter what their majors or ultimate career goals may be.  We believe in this as our Return On Investment.

We invite you to become a member or sustain your membership in Town & Gown.  The entire amount of your membership dues goes directly to the Town & Gown Endowed Scholarship Fund. We funded 5 students at $7,000 each this past year.  We have given over 65 scholarships in our 60-year history.  We can do better.  Join us now to continue our commitment to our Chapman students.

(Note:  Generative AI assisted me in the research for this article.)