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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 transformation programs, upskilling 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 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

stat card 1-2021

Job creation

stat card 2-2021

Employability

stat card 3-2021

1 Based on nearly 5,000 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) reported both pre-program and post-program income data.
3 Based on nearly 5,000 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. Climb’s placement rate when including part-time positions (in addition to full-time) equates to 86%. When including freelance / self-employed positions, in addition to both of the previous employment categories, that rate increases further to 93%.
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 obtain the data used in our initial ROI calculation from various public sources, in addition to self-reported data from the schools themselves. The select information provided to us by schools may be discounted depending on how confident we are in their reporting metrics. However, after we begin working with schools, we may get information directly from students and use that information to supplement the initial data we gathered. This can allow us to update our evaluation of schools on an ongoing basis.

Data informing our calculation

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.

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 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.

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.1 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.

How to Pay for a Coding Bootcamp

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.

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