The Biggest Mistake College Advisors Still Make When Evaluating ROI

The Metric That Changes Everything

Colleges are not priced based on value. They are priced based on strategy. The focus of advising conversations should not be prestige or published tuition, but rather what the college is likely to actually cost and what the intended degree is likely to return.

For years, college selection has often been based on prestige, but this factor alone does not reflect the actual financial outcome of a degree. Today, we have better data. The College Scorecard allows us to see median earnings by major, by institution. That’s a powerful starting point.

But earnings alone don’t determine return on investment. The equation advisors should use is: ROI = Earnings – What The Student Actually Paid. What a student actually paid is rarely the sticker price; it is determined by merit aid strategy and institutional enrollment priorities.

What Advisors Are Missing

The cost of college should not be treated as fixed, but rather as flexible. Merit aid isn’t random. It is often used strategically by colleges to shape an incoming freshman class.

Families are often surprised to learn that at many private colleges, more than 80% of students receive some form of merit aid, reducing the published price by tens of thousands of dollars per year. Without completely understanding how widely merit aid can vary across institutions, families can make haphazard decisions when choosing the right school.