Top HBCUs Fare Poorly in Georgetown Ranking of College ROI

In a recent article, I highlighted several problems with a new report by the Georgetown University Center on Education and the Workforce. The report, entitled, A First Try at ROI: Ranking 4,500 Colleges, rates institutions by return on investment (ROI). Focusing on earnings at specific times (10, 15, 20, 30 and 40 years) after first attending an institution and on net price (average cost of attendance) data from the U.S. Department of Education, Georgetown calculated the net present value (NPV) of higher education institutions and deemed it ROI. Problematic is the lack of consideration of other factors, such as the socioeconomic status of students entering and leaving those institutions, and non-financial returns on investment, which might range from workplace engagement to alumni connections to overall quality of life.

According to US News & World Report, Spelman College and Howard University are the best HBCUs in the country. In Georgetown's new ranking of college ROI, they rank #4,445 and #3,176, respectively, based on 10-year net profit value.

As someone whose research and career has centered on diversity, inclusion and equity, I became curious as to how the nation's Historically Black Colleges and Universities (HBCUs) fared in Georgetown's rankings. Not to be confused with colleges and universities that simply have high enrollment of Black people, HBCUs have a specific, legal definition. The Higher Education Act of 1965, as amended, defines an HBCU as, “…any historically black college or university that was established prior to 1964, whose principal mission was, and is, the education of black Americans, and that is accredited by a nationally recognized accrediting agency or association...or is, according to such an agency or association, making reasonable progress toward accreditation.” 

Emerging from a history where it was illegal for the majority of Black people in the United States to learn to read or write, most of the 101 institutions on the Department of Education's list of accredited HBCUs were founded before 1900, when Black people were still almost universally barred from attending predominantly white institutions (PWIs). Most HBCUs originated as "normal schools," which focused on training teachers, or as theological or agricultural schools. They emerged to be, and still remain, pillars of African-American society, educating first-generation college students alongside students whose families have been attending HBCUs for, literally, generations.

This article is not intended to provide a comprehensive history of HBCUs or an analysis of their place in society. There are sufficient resources available for that. I would be remiss, however, if I did not provide context before critiquing Georgetown's methodology of evaluating ROI and providing my opinion that its deficiencies become glaringly clear when viewed through the lens of how HBCUs fare in its rankings. I believe it is a textbook case of what can go wrong when an overly simplified approach is taken to address complex questions -- questions that are fundamentally steeped in issues of equity and access.

The Georgetown methodology inherently over-values the financially privileged in its rankings, both institutions and individuals alike. Though I haven't yet tested it, my hypothesis is that a variety of institutions dedicated to under-served populations - not only HBCUs - have significantly low rankings in Georgetown's report. The issue is simple: certain institutions and institutional types, by their very mission, enroll students (1) who are likely to earn less than students attending other institutions, largely due to pernicious and persistent inequities, and (2) who select their college for the very specific non-economic factor of finding a supportive environment that will, explicitly or implicitly, teach them how to process those inequities while developing a self-image strong enough to withstand them.

It is not entirely surprising, then, that in Georgetown's finance-only characterization of ROI, the nation's top HBCUs consistently rank near the bottom of 4,500 institutions. In this article, I focus only on Georgetown's 10-year net profit value ranking (based on earnings ten years after first attending an institution and the institution's net price). While the report also provides 15-year, 20-year, 30-year and 40-year net profit values and rankings, in which, by the way, a number of HBCUs see a rankings increase by the 40-year mark, I believe the 10-year NPV and rankings have the most potential to immediately influence students, their families and legislators keeping an eye on higher education. Human nature is that people tend to be more concerned with things occurring in the near future than with things occurring forty years from now. To the extent that is true, a low 10-year ranking could negatively impact the enrollment decisions of students and the political and financial decisions of legislators. So, let's take a brief look at Georgetown's ranking of HBCUs.

Below is a list of US News & World Report's top ten HBCUs for the year 2020, with the Georgetown ROI ranking of each institution listed beside it, based on 10-year NPV.

• Spelman College #4,445
• Howard University #3,176
• Xavier University of Louisiana #2,521
• Hampton University #3,983
• Morehouse College #4,457
• North Carolina A&T State University #3,074
• Florida A&M University #3,261
• Tuskegee University #4,461
• Claflin University #4,335
• Fisk University #4,440

Let's look more closely at Spelman College, the liberal arts college for women in Atlanta. Ranked the best HBCU in the nation by US News, and #57 on its list of National Liberal Arts Colleges, Georgetown's ROI rank puts Spelman in the bottom 2% of colleges and universities nationwide, based on ten-year net profit value. The message to every prospective student, parent and legislator who reads Georgetown's rankings is, "98% of colleges and universities in the country are better than Spelman College if you want a return on your investment." Though Spelman is a private institution, such (mis)calculations can be extremely damaging in their influence as more states emphasize performance-based funding (PBF) for public colleges and universities. This set of policies disperses state funds to public institutions by utilizing formulas related to student outcomes.

Let's ask ourselves a few questions regarding Spelman's ROI ranking, however. When looking at earnings, was there any consideration given to the gender wage gap faced by women who graduate Spelman and enter the workforce? No. Was the racial wage gap factored? No. Spelman's website says that 89% percent of its students receive financial aid and 48% are eligible for the PELL Grant, eligibility for which is based on a family household income of $50,000 or less. Is the financial aid received by those students, vastly increasing their ROI, taken into account in Georgetown's rankings? No. When Spelman, with its endowment of $346.9 million, is compared to wealthier institutions comprised of students with less financial need and, often, correspondingly higher academic preparation, is the graduation rate achieved by Spelman weighted in any way - to account for the value of educating students who may have otherwise fallen by the wayside in a different type of institution or been excluded from the opportunity of higher education altogether? The answer, again and again, is no. Instead, minority serving institutions (MSIs) in this report are judged by the outcomes of the very social inequities that, every day, they prepare their students to face.

Morehouse College, the alma mater of both Martin Luther King, Sr., and Martin Luther King, Jr., is a stone's throw from Spelman College. The only all male, four-year liberal arts Historically Black institution in the country, Morehouse is #4 in the US News ranking of best HBCUs, a few spots behind Spelman. In Georgetown's ranking of college ROI, Morehouse also ranks lower than Spelman - with Morehouse coming in at #4,457, based on 10-year net profit value.

The problem with equating NPV with ROI in higher education is that the historically and systemically under-valued will perpetually be stamped as valueless. The inequities reproduce themselves.

How can net profit value alone ever assess the return on investment of such institutions? The problem with equating NPV with ROI in higher education is that the historically and systemically under-valued will perpetually be stamped as valueless. The inequities reproduce themselves.

As I stated in my prior article, a more accurate title for the Georgetown report would be, "An Approach to Measuring the Financial Returns from College," because that is all that it does. It does not measure ROI. It simply tells us the extent to which the rich get richer, literally and figuratively, as institutions and as individuals. A true ROI assessment would be inclusive of non-financial factors. It would also be more nuanced about financial factors themselves, taking into account actual costs paid by students rather than net price data, which would more accurately reflect ROI for low-income students. In my opinion, it would also weigh the types of students educated by institutions, acknowledging that neither students nor institutions start at the same point. Some institutions face significantly more challenges because they are serving unique student populations. When institutions meet those challenges, they are providing unique value, which should be quantified and acknowledged. As I have previously written, Georgetown's rankings provide the opportunity for institutions born on third base to go through life thinking they hit a triple.

A lot of people in this country are ready for a strong analysis of college ROI. During education conferences, in university board meetings, on podcasts and in articles, discussion only increases about the expectations that students and their parents have for a return on investment. The analysis needs to be done. We simply must ensure that it is done well.

What do you think we should consider when determining college ROI? Leave your thoughts in the comment section below.

Donna Hay-Jones, JD, MA, is an educator, career expert and inclusion strategist based in Washington, DC. An alumna of Georgetown University Law Center and Teachers College, Columbia University, her focus is higher education policy and practice. For the purposes of this article, it's relevant to note that her undergraduate degree is from Oakwood University, an HBCU in Huntsville, AL.