Education ROI Calculations
There is often a disconnect between valuable education and the availability of good payment options. Climb’s program verification models were created to ensure that everyone involved in the education financing process benefits from it — especially the learners.
By creating measurements to gauge what value learners can expect to receive from their educational investment, we can help learners reach their goals in a financially responsible way.
Education value verification methodologies
Climb’s education value verification process has been upgraded over the course of 2021 and 2022 to be better and more robust from a data collection perspective. In coordination with the Education Quality Outcomes Standards Board, we finalized a new data collection methodology which allows Climb to have greater control over the collection of student outcomes data.
Education value reviewed:
Prior to partnering with a program, Climb calculates an expected ROI calculation where program cost and typical learner outcomes are reviewed to confirm that the education is expected to generate a positive financial impact. If the program ROI is found to be positive and within range of comparable programs, Climb will pre-approve the program.
Full verification:
Climb runs an additional ROI review based on actual learner-level data provided to or obtained by Climb after we work with students at a given school. Data reviewed includes program completion rates, placement rates, post-program earnings and overall learner satisfaction. In many cases, this data is obtained via surveys that were built in coordination with the Education Quality Outcomes Standards Board.
If the school and program outcomes meet Climb’s required benchmarks, they will receive Climb’s full verification. If the school or program does not meet certain benchmarks, they will be provided tools to improve those outcomes. After a period of time, if improvement is not seen, Climb will cease providing learner funding for the program.
Fully verified schools will receive a verification badge based on the predominant course objective at the given school. Learn more about badges here.
Program types
Climb supports three types of programs, each of which is held to suitable verification standards. These designations — career transformation, upskilling, and career exploration — help gauge what students can expect to receive from their educational investment, allowing us to hold schools accountable for the education they’re selling and to ensure that we’re helping students reach their goals in a financially responsible way.
Our career transformation verification
This ROI calculation is a formula we use to determine if an educational program is expected to be 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 and compare that to its long-term expected salary growth — all while factoring in the likelihood of graduation and job placement.*
What we're doing is working
Salary increase
Job creation
Employability
1 Based on nearly 7,000 survey responses. The data points include Climb’s all-time survey respondents, with duplicate responders removed, that both: 1) reported to have graduated from their program and 2) reported both pre-program and post-program income data.
2 Based on roughly 600 survey responses of students. The data points include Climb’s all-time survey respondents, with duplicate responders removed, that both: 1) reported to have graduated from their program, 2) reported being unemployed prior to their Climb-financed program and 3) have obtained successful placement after attending their Climb-financed program.
3 Based on over 8,000 survey responses. The data points include Climb’s all-time survey respondents, with duplicate responders removed, that both: 1) reported to have graduated from their program and 2) reported both pre-program and post-program income data.
4 Above outcomes data refers only to programs that have based our career advancement ROI calculation.
Data informing our calculation
- TUITION
- GRADUATION RATE
- JOB PLACEMENT
- BORROWING COSTS
- CURRENT INCOME
- POST-GRAD INCOME
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 learners, so we will only begin funding a course if it passes our pre-approval verification, and will only keep funding if it passes full approval. Not every program will pass the test — and we’ve discontinued funding because of this.
Our upskilling verification
This ROI calculation is used to determine if an educational program will help people grow in their current careers in a financially responsible way.
For those interested in leveraging new skills within their present career, whether that be through progressing in their current role or obtaining a new job in a related role, there are a wide variety of programs that can provide the skills needed, and that do so in a more condensed and targeted way.
Since there is incredible value in continuously learning and keeping up with modern technology and industry trends, we’ve long been interested in how we can provide access to the types of programs that can help people keep ahead in their fields — as well as determining the benefits and results education with a focus on upskilling (as opposed to career transformation) has. The key is ensuring learners have the right goals and expectations when choosing an upskilling program.
Upskilling programs
As we’ve evaluated and honed our mission of “career advancement” over the years, we’ve recognized that “advancement” is more than just a complete transformation. It’s also about learning and building the skills necessary to keep up with new trends and technology, as well as to better carry out your role.
This is why we’ve decided that upskilling courses are absolutely aligned with our mission of promoting career advancement.
That being said, we want to ensure that we’re helping people upskill in a financially responsible way.
Our upskilling ROI review
Our upskilling ROI model verifies that programs demonstrate success in delivering career- and skills-oriented education by reviewing their tuition cost — and probability of completion — relative to a reasonable salary increase. We ultimately assume this modest “career mobility” salary bump because, while we believe these programs allow learners to leverage and monetize their education in some way, we also account for a more limited expected impact on long-term earnings.
How important is this calculation in determining our partnerships? In a word: very.
We strive to work only with programs that benefit learners, so we will only begin funding a course if it passes our pre-approval verification, and will only keep funding if it passes full approval. Not every program will pass the test, and we’ve discontinued funding because of this.
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 transformation) has. The key is ensuring learners have the right goals and expectations when choosing such a career exploration program.
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 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.
Our career exploration ROI review
Our career exploration ROI model verifies that programs demonstrate success in delivering career- and skills-oriented education by reviewing their tuition cost — and probability of completion — relative to a reasonable salary increase. We ultimately assume this modest “career mobility” salary bump because, while we believe these programs allow learners to leverage and monetize their education in some way, we also account for a more limited expected impact on long-term earnings.
Why we've chosen a $5,000 tuition cutoff
While we can’t make an assumption about the types of wages that people will earn 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 (where applicable) 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 14.5% (under our 15% debt-to-income ratio preference from a financially-responsible standpoint).
When thinking about our mission, we believe it should be inclusive of not only people who know what their next career move will be, but also those 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 to our learners. 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 traditional student loans.
Our $5,000 cutoff is significantly below the costs of traditional education programs, which many people use for career exploration today.
1 Debt to income calculation assumes a minimum wage of $7.25 per hour, with 40 hours of work per week, and 52 weeks in a year—$15,080 salary or roughly $1256 / month. It also assumes a monthly payment between about $162 and $182 based on our lowest and highest interest rates and our standard origination fee (where applicable) on a 3 year loan for $5,000. Interest rates may vary based on a number of factors.
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, but part of our learners-first value is to be confident that we’re funding education which helps students reach their career exploration goals.