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Education ROI Calculation

Education ROI Calculations

We believe there is often a disconnect between valuable education and good payment options. We created our verification models to ensure that, whether it be through career-advancing programs or career exploration programs, everyone involved in the financing process benefits from it — especially the students.

By creating measurements to gauge what students can expect to receive from their educational investment, we can hold schools accountable for the education they’re selling and ensure that we’re helping students reach their goals in a financially responsible way. This, in turn, makes it easier for students to pay back their loans, which benefits everyone involved!

Our career advancement verification

This ROI calculation is a formula we use to determine if an educational program is a positive financial investment for learners.

Before taking out most loans, you confirm the value of what you’re buying. You wouldn’t get a loan for a car without having it inspected, or a house without an appraisal confirming how much that property is worth. We look at the net cost of the program (including tuition amount and lost wages while attending school) and compare that to the expected salary growth — all while factoring in the likelihood of graduation and job placement.*

What we're doing is working

Salary increase

Job creation

Career growth

1 Based on 3,506 Climb student graduate survey responses.
2 Based on 588 survey responses in which graduates stated they were unemployed prior to program attendance.
3 Based on 952 survey responses in which graduates informed Climb they’ve held two different jobs since leaving their program.
4 Above outcomes data refers only to programs that have based our career advancement ROI calculation.

Our calculation evolves as we collect more data from students and partner schools.

We get information about our partner schools from various public sources and self-reported data from the schools themselves. After we begin working with schools, we often get information directly from students and use that information to supplement the initial data we gathered. This allows us to update our evaluation of programs on an ongoing basis. For the select information used in our ROI calculation that is provided to us by schools, we assess how confident we are in their reporting metrics by assigning ratings to them.

Data informing our calculation

Our proprietary ROI calculation incorporates school, student, and alumni data. We only partner with schools that have been vetted for quality and deliver results for students.

Balancing cost and expected salary

How important is this calculation in determining our partnerships? In a word: very.

We strive to work only with programs that benefit students, so we will only fund a course if it passes our verification. Not every program will pass the test, and we’ve turned away business because of this. We continue diligently to assess programs throughout our partnership, to ensure that they maintain their value even after the partnership is formed.

Our career exploration verification

This ROI calculation is used to determine if an educational program will help people explore career paths in a financially responsible way.

For those focused on exploring what is possible (as opposed to pursuing specific skills or job training), there are a wide variety of alternative programs out there that can give learners exposure to new topics or career areas, and that do so in a more condensed and targeted way.

Since there is incredible value in helping individuals better understand a subject or career path, we’ve long been interested in how we can provide access to these types of programs — and in determining the place education with a focus on career exploration (as opposed to career advancement) has. The key is ensuring learners have the right goals and expectations when choosing such a career exploration program.

Short course, upskilling, and career exploration programs

As we’ve evaluated and honed our mission of “career advancement” over the years, we’ve recognized that careers are so much more than just salaries. A third of our lives are spent at work — and we’ve heard directly from our customers, through student surveys and interviews, that the decision to take a course is not only about making more money, but often about making a change to something more enjoyable.

This is why we’ve decided that career-exploration courses and short upskilling courses are absolutely aligned with our mission of promoting career advancement.

That being said, we want to ensure that we’re helping people explore careers in a financially responsible way.

Why we've chosen a $5,000 tuition cutoff

While we can’t make an assumption about the types of current wages that people will actually have when going into these programs, from a mission standpoint we want to make sure the cost is reasonable for someone making minimum wage. After all, career exploration should be accessible to people who are just starting out. With that in mind, we calculated an expected monthly payment on a 3-year loan with our standard origination fee and compared it to someone making the federal minimum wage. The debt percentage of a Climb loan at $5,000 would be between 12.9% and 14.2% (under our 15% debt-to-income ratio preference from a financially-responsible standpoint).

When thinking about our mission, we’ve notably missed out on helping people who are “figuring out what they want to do.” In terms of return-on-investment, it’s very difficult to quantify what that is worth. However, we know that high school graduates pay thousands of dollars to “figure out what they want to do” through the traditional education system. While career exploration is certainly valuable, we don’t believe it is worth $100,000+ in student loans.

Our $5k cutoff is significantly below the costs of traditional education programs, which many people use for career exploration today.

How to Pay for a Coding Bootcamp

How important is this calculation in determining our partnerships? In a word: very.

We strive to work only with programs that benefit students, so we will only fund a course if it passes our verification. Not every program will pass the test, and we’ve turned away business because of this. We continue diligently to assess programs throughout our partnership, to ensure that they maintain their value even after the partnership is formed.