The rising cost of college and the growing burden of student debt are prompting students, families, and policymakers to ask a crucial question: Is higher education worth it? To answer this, many are turning to return-on-investment (ROI) frameworks, which measure college value based largely on graduates’ earnings. With the passage of the One Big Beautiful Bill Act (OBBBA), these measures now carry even more weight, as federal student loan eligibility is tied to whether graduates earn more than the typical high school graduate in their state.

But does this approach truly capture the full value of college?

This brief, produced in partnership with EdTrust, takes a closer look at two widely used ROI models — Third Way’s Price-to-Earnings Premium (PEP) and the Postsecondary Value Commission’s (PVC) framework — to see how fair and accurate they really are. The brief explores whether these models inadvertently disadvantage minority-serving institutions (MSIs), which enroll substantial shares of students of color and students from low-income backgrounds.

The findings reveal a clear pattern: ROI metrics are heavily influenced by who colleges serve, not just how well they perform. Institutions with higher proportions of low-income students — often measured by Pell Grant participation — tend to show lower ROI outcomes, even when they effectively support student success. In many cases, when socioeconomic factors are taken into account, performance gaps shrink significantly or even reverse. This suggests that current ROI frameworks fail to capture the complete picture of institutional effectiveness.

The study also highlights a key flaw in threshold-based models like those used in OBBBA. These systems label colleges as either “passing” or “failing” based on a single earnings benchmark, which can mask important differences between institutions. A college that narrowly misses the cutoff is treated the same as one that falls far below it, despite potentially providing significant economic mobility for its students. More flexible, continuous measures like PEP offer greater nuance but still fall short if they fail to fully account for student backgrounds and structural inequities.

At its core, this research shows that college value is about more than just earnings. While financial outcomes matter, they don’t capture the full impact of higher education — particularly at MSIs, which play a vital role in advancing opportunity, strengthening communities, and promoting social mobility.

If policymakers rely too heavily on earnings-based ROI metrics, they risk creating accountability systems that unintentionally penalize the very institutions serving students with the greatest need. A more balanced approach — one that considers socioeconomic context, local labor markets, and broader outcomes like learning and community impact — is essential for assessing the true value of higher education.

Michelle Chen and Sebastian Kane are senior undergraduates studying data science at Stanford University.

Photo by Allison Shelley/Complete College Photo Library