The Economist released its first-ever college rankings on Thursday, and they're all about the money.
Penn snagged the 15th spot in the rankings, which take a new approach to college comparisons by focusing exclusively on economic value rather than quality of professors, student experiences or housing options. The Economist defines economic value as the gap between how much money its graduates earn and how much they might have made had they studied elsewhere.
To determine this difference, The Economist pulled data from the Department of Education's “scorecard” website. They found that certain factors correlate with high earnings, like SAT scores. High scorers earn high salaries, no matter where they go. Location is also important, as urban schools tend to have graduates who make more money. If a school has high numbers of engineers or business majors, earnings also go up.
The Economist created a model to combine all of these factors and determine what alumni should theoretically make after graduating from a specific university. Penn students, for instance, should make $68,813 on average according to the model. Schools rank higher on the list when graduates’ actual earnings exceed this theoretical average salary, and schools rank lower when graduates make less. Penn graduates’ actual average earnings from 2001-2011 were $78,000, so Penn over performs by $9,387.
Topping the list is Washington and Lee University, a small, elite private school in Virginia. The Economist ranked it No. 1 not because graduates on average make substantially more than other schools — they make, on average, $600 less than Penn, for instance — but because Washington and Lee’s rural location and liberal arts focus mean graduates should be less likely to bring in high salaries. Washington and Lee's actual average earnings exceeded expectations by $22,377. The Economist said in an accompanying article to the rankings that Washington and Lee “combines the intimate academic setting and broad curriculum of a [liberal arts college] with a potent old-boy network.”
Babson, Villanova and Harvard come in second, third and fourth, respectively, and Harvard is the only Ivy League school ranked above Penn. The Economist's model shows that prestige isn't everything — Yale came in at number 1,270. Yale underperforms by about as much as Penn over performs, by -$9,590.
“Yale’s students are statistically identical to their Harvard counterparts. Yet its alumni made ‘just’ $66,000 a year,” The Economist wrote in its article. “Harvard students may well be more career-driven than cerebral Yalies.”
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