This is the time of year when high school seniors across America are weighing college and university acceptances trying to figure out which, from among more than 4,450 degree granting institutions, is the most worthy of their deposit check. In other words, where will they spend the next four years in pursuit of an education that should be a launchpad for a successful career and happy life.
The stakes are high: four years at an elite private college now costs about a quarter of a million dollars. Thus the $240,000 dollar question for everyone involved in this process is which colleges or universities provide the best long-term value, or return-on-investment (ROI)?
About a year ago I came up with a relatively simple formula for measuring the value of a college degree called the Grateful Grads Index. The measure simply ranks colleges by the median amount of private donations per student over a ten- year period. The idea is that the best colleges are the ones that produce successful people who make enough money during their careers to be charitable and feel compelled to give back to the schools that contributed to their success. All colleges want rich, successful and grateful alums because their donations help fuel excellence in higher education and growth. In some ways the private not-for-profit college business model is all about admitting and producing the best crop of future donors.
Last year, our Grateful Grads ranking of private not-for-profit colleges was top heavy in the same elite schools on other popular lists but especially weighted toward colleges that produce uber-successful engineers and computer scientists: Caltech, MIT, Stanford were the top three.
After the ranking came out, I received a number of comments from readers who argued that measuring success, or ROI, purely based on money, penalizes a lot of great colleges that have high percentage of grateful alums who regularly give back to their schools but don't earn the high incomes you might expect graduating from Stanford or MIT.
It's a fair point; there are plenty of people who attended smaller "humanities" oriented liberal arts colleges like Middlebury College or Haverford College, who donate smaller amounts because of income constraints, but feel the "ROI" they got from their Alma mater is second to none. They excel in their careers and are happy, in the same way that a private equity banker or venture capitalist is. Think, for example, about great teachers, journalists or those working for nonprofits.
So for this year's list I tweaked the formula for the Grateful Grads Index to give a 20% weighting for alumni participation rates, or the percentage of graduates who donate each year to their colleges. Using data from the Center For Aid To Education, I calculated the average alumni participation rate by using the best three of the last four years. Any school with an average alumni participation rate greater than 30% automatically got full credit in the ranking.
Carleton College, for example, is situated among the corn fields and hog farms of Northfield, Minnesota and is known for its phenomenal professors and small class sizes. It has a median donation amount of only $14,876 compared to $25,000 for Harvard, but an impressive 50% of its alumni give back each year compared to only 19% for Harvard. Thus Harvard ranks 20th on Forbes Grateful Graduates list versus 17 for tiny, rural Carleton College.
For the purposes of the Grateful Grad’s Index I gathered private donation data from the government’s extensive database of information about institutions offering post secondary school education. I went back ten years, looking only at private-not-for-profit colleges that offered four-year degrees and had more than 1,000 full time students. Thus, you won’t see some great small schools like tiny Franklin W. Olin College of Engineering in Needham, Mass. or renowned public institutions like University of Michigan or William and Mary in Virginia.
This year's top five Grateful Grad colleges are: Princeton University, whose graduates like Carl Icahn and Jeff Bezos are both financially successful and active in giving back, Dartmouth College, with alums like comedian Mindy Kaling, Williams College, California's Claremont McKenna, and Maine's Bowdoin College, whose graduates include Netflix founder Reed Hastings and billionaire hedge fund manager Stanley Druckenmiller.
While many of the names on our list echo the findings of Forbes America's Best Colleges list and U.S. News & World Report's college list, there are surprises in the relative rankings, including tiny Hamilton College in upstate New York with a 46% alumni participation rate and Lexington, Virginia's Washington and Lee University, founded in 1749 and endowed by George Washington. Washington and Lee ranks 23rd, a full five places ahead of Ivy League powerhouse Columbia University, which reports that only 13% of its graduates give back.
For a view of the top 100 Grateful Graduate private colleges, including specific index rankings, a table is provided below. If you want to know who some of the notable graduates of these colleges are, plus get information on the total cost of attendance in 2014, please click on the slide show above (with reporting by Lauren Gensler).
