We are in dire need of a completely different approach to assessing institutions of higher education. Instead of prioritizing reputation and selectivity, we propose a new rating system known as the Economic Mobility Index (EMI) that attempts to answer the question: “If the primary purpose of postsecondary education is supposed to be to catalyze an increase in economic mobility, which schools are succeeding in that goal?” The following analysis is designed to give policymakers, researchers, and consumers a better way to assess which colleges are delivering on that promise for low- and moderate-income students—and which ones are falling woefully short.
Creating an Economic Mobility Index
To assess the degree of economic mobility that institutions of higher education provide, we examined which schools enroll the highest proportion of students from low- and moderate-backgrounds AND provide them with a strong return on their educational investment. This index builds upon previous rounds of research focused on generational mobility, most notably Harvard economist Raj Chetty’s inter-generational mobility studies comparing students’ post-enrollment incomes to those of their parents.4
Our first step in creating the EMI was to determine the return on investment that the average low-income student obtains from attending a particular institution of higher education. To do this, we use our Price-to-Earnings Premium (PEP) metric that looks at the time it takes students to recoup their educational costs based off the earnings boost they obtain by attending an institution. In particular, we looked at the PEP for low-income students, defined as those whose families make $30,000 or less upon their enrollment in college. The data show that many institutions provide low-income students enough of an earnings premium that allows them to pay down their higher education costs within five years or less. However, others show these students unable to pay down their costs even fifty years later—or worse—provide no return on their educational investment whatsoever.