GradBetter helps students preview their postgrad lifestyle by comparing projected graduate earnings, college costs and living expenses. Our radar graph aims to visualize these tradeoffs so families can find the combination that best fits their personal and financial goals.

We combine data from multiple government and non-profit think tank sources. With that said, we are not economists. The information is organized on a best efforts basis for illustrative purposes. Refer to our disclaimer and consult a qualified professional regarding financial decisions.

Earnings data from graduate tax returns is compiled by the U.S. Department of Education and made available for each college on a per major basis within the College Scorecard.

GradBetter provides location-based earnings that adjust for the cost of living where graduates live. Simply put, colleges that send most of their graduates to high cost of living cities, such as NYC, reflect this premium in their graduates’ earnings. Why? Because employers increase salaries to compensate for the higher cost of living in those cities. As argued in Inside Higher Ed, by the College Scorecard making “no adjustment for where those graduates live, it ends up providing misleading information about how successful the graduates of different colleges are.”

Please refer to Doug Williams’ article and our story for a further explanation. We have organized our methodology to match the order of the data presented on each colleges’ lifestyle tab.

Costs

1. Net price is the families out of pocket cost after aid.
2. Sticker price is most impacted by the in-state vs out-of-state tuition differential at public colleges. Expenses are reported by the college.
3. We note when housing & means (room & board) are on campus. Families typically save when the student lives off campus with family. “Other” provides an option for families to adjust the sticker price as needed.
4. A common example would be families saving on personal expenses because they are able to drive their student to campus instead of flying.
5. Estimated aid is adjusted by family income. Colleges report the level of aid within these standard income brackets. Aid typically increases as family income decreases, meaning their financial need is higher.
6. Many colleges detail both need and merit aid. Merit aid is based on student academics, not financial need and is paid by the college.
7. The 4-year net cost is the net price times 4 adjusted for compounding inflation of 3%. This is the total out of pocket cost a family may need to fund over 4 years.
8. A link to the college website, specifically its net price calculator, is available and we recommend all families complete it.
9. As possible, we attempt to toggle associate degrees to 2-year net cost.
10. Funding gap is the 4-year net cost less any college savings.
11. Savings can also include money earned or contributed during college. No inflation is applied to savings. 529 is a common college savings account.

Earnings

1. Earnings data is from graduate tax returns. Only graduates who received federal loans are included in the dataset provided by the College Scorecard.
2. At GradBetter, we believe this helps exclude ultra-wealthy families whose students may have better access to “connections” to land a well-paying job. Given the low interest rates on these federal loans, many wealthy families consider them a cost effective option that gets the students “skin in the game.”
3. Earnings 4 years after graduation is used by default simply because there is more earnings data in the dataset. The government privacy suppresses data with few graduates over concern its data could be linked to individual graduates.
4. If data is limited and earnings after 1 year is available, we show that. We label this clearly because using data after 4 years may inflate a graduates ability to repay debt and cover cost of living expenses.
5. We estimate earnings when possible if earnings after both 1 and 4 years are not available. We identify estimates with a lighter number color and tooltip flag.
6. Colleges report a list of similar colleges they view as academic peers. If this list is long enough and enough schools on it offer the same major (denoted by CIP code) that’s missing, then we average that major's earnings from similar schools to estimate it for the missing school.
7. If there are not enough similar schools for a sample size, then we do not estimate major earnings and instead label them N/A.
8. Real earnings are adjusted for interim inflation. Simply put, it takes 2 years or so for the data from graduate tax returns to make it into the earnings dataset. Since we want to compare these earnings to current rents a graduate would expect to pay, we adjust for interim inflation so that current earnings are compared to current cost of living.
9. 25% is the default tax rate. At GradBetter, we decided to keep this simple and let families edit it as needed. We provide a link that calculates taxes based on the exact earnings and location provided.
10. We do not apply any loan-related deductions. Single tax filers with earnings below $90,000 can typically deduct up to $2,500 of paid interest on their tax return. Please note that these deductions are on a sliding income scale. 6% is the default interest rate. We assume all loans are federal, not private and a mix of 80% undergraduate student direct and 20% parent PLUS loans. The interest rate is editable as private loan rates are typically higher than federal rates available here: https://studentaid.gov/understand-aid/types/loans/interest-rates
11. Debt repayment provides 3 plans: 10-year repay, 25-year repay and repaying as a percent of earnings. This selection determines the level of annual debt repayment and thus, earnings after tax and debt, which shapes the green area in the radar graph.
12. Families can increase the green area by decreasing the funding gap through savings, contributions, additional aid and other discounts to the net price.
13. Graduates that limit their cost of living or move home cannot reflect this visually in the radar graph by shrinking the purple star. However, they can copy the table below and easily edit the calculations for ending savings / deficit.
14. Given the current interest rate environment, students with significant savings may want to pay student loans off early to limit interest paid. There is no prepayment penalty for student loans and families can use percent of earnings to study this.

Lifestyle

1. The radar graph illustrates a safe zone in green where students want to keep the purple star inside of. Simply put, graduates need to keep their earnings after tax and debt above their cost of living so they have savings and are not in deficit.
2. The dotted red line is real earnings, such as the gross salary on an employment contract. The shaded red area deviates from the dotted line to show the higher earnings expected in high cost of living areas, or vice versa. The ratios in the table mirror this.
3. The dotted green line is earnings after tax and debt, such as take home pay to cover living expenses. The shaded green area mirrors the shape of the red because it starts with the same real earnings before tax and debt. A graduate with an earnings premium in a high cost of living location would see more green to cover the bigger star.
4. Taxes are not adjusted for location, such as for higher taxes in high cost cities.
5. Options to increase the green, safe zone include selecting a major with higher earnings, or a college resulting in a lower funding gap due to less tuition or more aid.
6. An unexpected takeaway from these calculations is a possible incentive for graduates with higher debt to seek salaries in higher cost of living cities due to loan repayment being fixed. For example, a $500/month student loan payment is the same for a graduate in New York City or a lower earning rural county.
7. The colleges’ location adjusted earnings ratio in the comparison table shows the weighted average cost of living of the popular graduate destinations listed below.
8. Simply put, a college with graduates in high cost of living cities will have a higher ratio. A college with a mix of high and low cost cities will have a ratio closer to 1.00x. The more popular a graduate destination is, the higher its weighting.
9. The baseline or location neutral earnings level of 1.00x is calculated by taking the weighted average ratios of all colleges in the dataset and taking that weighted average, which is roughly $39,000 or the cost of living in Salt Lake City, Utah.
10. Each colleges’ expected cost of living is based on where its graduates live compared to the baseline of $39k. For example, if half of grads live in Los Angeles ($44k) and the other half in Washington D.C. ($38k), then a college’s weighted average is $41k, for a ratio of 1.05x the baseline of $39k.
11. The goal is location-based earnings less taxes, debt and cost of living expenses above zero. The green or red dot signifies ending savings or deficit.
12. We have assumed that the earnings premium or discount closely tracks the increase or decrease in cost of living, meaning a graduate earns 20% more if the cost of living is 20% higher. In Doug Williams’ article, he addresses this, and in comparing Boston and Nashville, the earnings vs cost of living ratio is 0.65x to 0.70x, thus we decided to exclude any ratio differential for this calculation.
13. We did a cursory search of where grads live by major and did not see enough differential to warrant adjusting ratios for each major. However, we recognize some majors, such as government versus private sector employees like teachers and nurses, may not realize the full earnings premium from higher cost of living that we are assuming.

Expenses

1. Popular graduate destinations show where grads live and in what numbers, which drives the salary premium or discount within the college’s earnings data. The fuller the circle, the higher the concentration of graduates. Locations in purple are mapped to 613 searchable locations provided by U.S. Department of Housing and Urban Developments (“HUD”), which they refer to as Small Area Fair Market Rents.
2. HUD provides the rent ranges within cost of living, which are current year compared to those provided by the Economic Policy Institute (“EPI”).
3. After searching available units for rent on apartments.com, we decided to move the studio apartment rent from the average to the bottom of the range. We found suitable inventory at the bottom of the range. Further, many graduates will have roommates instead of a studio apartment and thus live in a nicer two or three bedroom apartment at or below the minimum studio rent level.
4. Cost of living is for one adult and no children. No child care costs are assumed.
5. Cost of living detail is provided by the Economic Policy Institute, including food, transportation, healthcare and necessities. Documentation is available here: https://www.epi.org/publication/family-budget-calculator-documentation/
6. Grocery shopping: USDA “Low-Cost Plan”, which is the 2nd lowest option between thrifty, low-cost, moderate-cost and liberal. Graduates buying organic or at Whole Foods should assume a higher plan.
7. Transportation: Given the three major categories are auto ownership, auto use and transit use, graduates in dense cities with accessible mass transit enjoy lower costs than those driving in rural counties.
8. Healthcare: Premiums and out-of-pocket costs. Assumes insurance is purchased through the Affordable Care Act’s healthcare exchanges.
9. Necessities: Clothing, internet, telephone, personal care and household supplies, including home furnishings. Entertainment is excluded.
10. Entertainment: Haircuts, dry cleaning and all meals not prepared at home. Added by GradBetter at 40% of necessities cost. We feel that recent graduates need a realistic budget for continued socializing with peers.

Families can adjust their sticker price and total cost of living by entering values in the other box.

Our calculations are for educational and illustrative purposes only and should not be construed as financial or tax advice. Please consult a qualified professional regarding financial decisions.

In addition, we wanted to document the overall college score, which is the number inside the purple circle. This score is the weighted average of the below factors:

1. Publisher ranking
2. Student review
3. Earnings after 4 years
4. Years to repay cost

Each factor is normalized on a scale of 0 to 100. Users can personalize their search by adjusting the weight applied to each factor. For example, if 100% of the weighting is assigned to publisher ranking and 0% to the other factors, then the score will be the normalized total for publisher ranking as it’s multiplied by 100%.

If the weight for publisher ranking is kept at 100%, and student review is moved to 50% weighting, then the publisher ranking is multiplied by 66% (100/150) and the student review is multiplied by 33% (50/150). Below is the formula for reference.

Overall Score= Ei ( oi x wi / Ew )

Where i represents a factor (eg. publisher ratings or student review):

wi represents the weight given to factor i and ranges from 0-100

oi represents the scaled value of factor i and ranges from 0-100