New Study Looks at “Return on Investment” of a UNC System Education

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A controversial report on the “return on investment” of a UNC System education is on its way to the North Carolina General Assembly, which required the system to study the issue two years ago.

Key findings from the 80-page report, discussed Wednesday by the UNC System Board of Governors:

North Carolinians who receive bachelor’s degrees through the UNC system were found to earn a median of $572,000 more than those without, a “return on investment” for students of about $500,000. Those with bachelor’s degrees earned a median of about $1.2 million over their lifetimes.Those who earn graduate-level degrees saw a median “return on investment” of $938,000 compared those with bachelor’s degrees, earning a median of about $2.1 million over their lifetimes.

To come to those numbers, the private research firm Deloitte worked with the consulting firm rpk GROUP and The Burning Glass Institute to study more than 700 undergraduate and 575 graduate programs in the 16-campus university system along with decades of earnings data for graduates still living in the state.

Using that data, the researchers compared “the expected lifetime earnings of UNC graduates against the expected lifetime earnings of those without a college degree for undergraduate programs or with a bachelor’s degree for graduate programs, as measured by the American Community Survey, in the state,” according to the report.

“The way to essentially interpret it is, the instant you graduate from that program, it’s like I wrote you a check for $500,000,” said Peter Fritz, the higher education analytics expert from Deloitte, in a committee meeting with members of the UNC System Board of Governors Wednesday.

As mandated by the legislature, the report also looks at the cost to the state and the return on that investment. It found for every dollar the state invests in the UNC system, students can expect to earn an additional $23 in lifetime earnings.

Of course, Fritz said, some degrees are more lucrative than others.

The report found 94 percent of the system’s undergraduate programs and 91 percent of its graduate programs resulted in a positive return on student investment.

The highest return was in science, technology, engineering and mathematic (STEM) fields, the report found. Degrees in Biotechnology were found to be the most lucrative, with a median lifetime return of more than $3.2 million.

Among graduate students, the study found medical science programs provided the highest return on investment, with a median lifetime return of over $5.2 million.

The study found graduates of 42 of 235 undergraduate programs and 83 of 244 graduate programs earned a median lifetime return on investment of more than $1 million. Many of these high-return programs are aligned to critical workforce needs in the state.

But the study doesn’t just emphasize which programs lead to the highest earnings for students or concentrate on creating “the next wave of millionaires,” Fritz said.

Upward economic mobility for graduates across programs and disciplines is significant, he said, with 89.6% of graduates whose families were in the lowest income group at the time of enrollment moving up at least one “income band” as their careers progress.

“For low-income students (defined here as students with an income of less than $17,900 at time of enrollment), 89.6% experienced some economic mobility — meaning they moved up at least one income band from where they started over a 20-year period,” the report reads “[Forty-two percent] of all low-income students rose four income bands leading to a yearly income of $91,300 or greater after 20 years while 65.4% of low income students rose at least 3 bands to an income of more than $51,800 per year.”

“This data demonstrates that by removing barriers to access, the State of North Carolina and the UNC System have ensured that students from disadvantaged socioeconomic backgrounds have a high likelihood of upward economic mobility if they complete a degree,” the report reads.

Limitations and political friction

While important in demonstrating the value of higher education at a period when more American are skeptical about it, the study’s authors acknowledge it has limitations.

An important blind spot in the study: students who earn degrees in the UNC System but move to other states to pursue their careers, making their wage data unavailable through the North Carolina Department of Commerce.

“One of my early questions was about the school of the arts,” said UNC System President Peter Hans Wednesday. “Most of their graduates immediately go to New York and Los Angeles and such.”

Graduates in journalism and media related fields often leave for major media markets outside the state as well and high performing graduates in political science and the social sciences may also decamp to Washington D.C. or to political careers in other states.

In Wednesday’s committee discussion of the return-on-investment report, members of the board of governors and UNC System President Peter Hans suggested it took as long as it did to produce — more than 18 months — because of resistance from the state Department of Commerce.

The system and its outside firms needed to partner with the department to get wage data. The system would also like the department to approve a partnership that would help them access wage data at the federal level, board members said Wednesday.

Those criticisms came as a surprise to the Department of Commerce.

“Having worked closely with UNC to deliver (in August 2022, 15 months ago) 26 years of confidential wage data – dating back to 1996 and representing more than 47.5 million data records and more than $543 Billion in wages, we’re surprised by today’s comments,” said David Rhodes, communications director for the department.

“No one from the UNC System has raised such concerns with us directly since we’ve been working with them,” Rhodes said.

“The wage data is derived from information submitted by employers as part of their unemployment insurance tax accounts,” Rhodes said. “As such, the data set contains highly sensitive personal identifiable information, so called PII, so as you can appreciate the upmost care must be taken to ensure all parties entrusted with such data have the equipment and procedures in place to keep it secure, a process that is complex and can take some time.”

“Even so, our team produced the requested data in a timely manner,” Rhodes said.

Commerce Secretary Machelle Baker Sanders is a Democrat appointed by Gov. Roy Cooper while members of the UNC System Board of Governors are political appointees of the General Assembly’s Republican majority.

Political tensions over the return-on-investment report have been apparent since before the legislature mandated and funded it two years ago in the state budget. Questions about how it may be used and whether those decisions will be made with politically have only grown louder.

A controversial undertaking

Members of the board of governors emphasized Wednesday that the study is just the beginning. More information is needed, they said, before decisions are made about investing in some programs more than others or, as administrators, faculty and students across the system fear, eliminating some programs entirely because they are found to provide a lower return on investment.

But tensions are high across the system, as illustrated by UNC-Greensboro, where the UNC Board of Governors met Wednesday and Thursday of this week.

As Newsline has reported, thousands of faculty, students and alumni at the school have signed a petition opposing a review of academic programs at the university that could result in the elimination of some programs.

Protests were held on campus last month and again this week, as the board of governors met on campus.

An independent audit of the university’s finances, funded by the campus chapter of the American Association of University Professors, found that though UNCG has struggled with enrollment and funding challenges in the last few years, it is on firm financial footing and doesn’t need to cut programs.

Chancellor Frank Gilliam has criticized that audit and its conclusions, saying the university has to align its programs with student and workforce demands.

More business focused language regarding academia – discussions of students as customers, of “return on investment” and upper level administrators as “CEOs” – has gone from conservative think-tank literature to Republican-led legislatures down to the campus level.

One of the firms used to produce  the system level return on investment report and in the academic program review now underway at UNCG is rpk GROUP. That firm was involved in a similar study at West Virginia University, where earlier this year university leaders proposed the elimination of 169 faculty and more than 30 degree programs.

Gilliam has waved off comparisons between West Virginia and what’s happening at UNCG, but in a board of governors committee meeting Wednesday he spoke to the philosophical tie between the return-on-investment report, his own university’s academic program review, and the pushback to both.

“We have made the argument, and we are coming under some fire for it, that we really need this data to do an analysis of how much it costs us to produce a student credit hour,” Gilliam said. “And does that line up strategically with where we’re trying to take the institution. Does it line up, let me say it more bluntly, with student demand? Student demands are high in certain areas. They’ve changed over time. And they’re less high in other areas.”

Gilliam said he was worried public perception will be that if the return-on-investment study shows almost all UNC system programs provide a good return on investment, there is no need for program reviews like the one now underway at UNCG.

“We’re doing well in North Carolina but there are going to be headwinds,” Gilliam said. “I’ve been doing this almost 40 years. The environment is changing at a sea change level. It’s not just little changes. And they’re not going anywhere. So I’ve argued we need to sharpen our focus. It’s not about cutting programs. It’s about meeting student demands and labor market demands.”

NC Newsline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. NC Newsline maintains editorial independence. Contact Editor Rob Schofield for questions: info@ncnewsline.com. Follow NC Newsline on Facebook and Twitter.

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