73 Appendix 3: Frequently asked questions (FAQs) Appendices How do my college’s rates of return compare to that of other institutions? In general, Lightcast discourages comparisons between institutions since many factors, such as regional economic conditions, institutional differences, and student demographics are outside of the college’s control. It is best to compare the rate of return to the discount rates of 4.4% (for students) and 0.2% (for society and taxpayers), which can also be seen as the opportunity cost of the investment (since these stakeholder groups could be spending their time and money in other investment schemes besides education). If the rate of return is higher than the discount rate, the stakeholder groups can expect to receive a positive return on their educational investment. Lightcast recognizes that some institutions may want to make comparisons. As a word of caution, if comparing to an institution that had a study commissioned by a firm other than Lightcast, then differences in methodology will create an “apples to oranges” comparison and will therefore be difficult. The study results should be seen as unique to each institution. Lightcast conducted an economic impact study for my college a few years ago. Why have results changed? Lightcast is a leading provider of economic impact studies and labor market data to educational institutions, workforce planners, and regional developers in the U.S. and internationally. Since 2000, Lightcast has completed over 3,000 economic impact studies for educational institutions in three countries. Along the way we have worked to continuously update and improve our methodologies to ensure that they conform to best practices and stay relevant in today’s economy. The present study reflects the latest version of our model, representing the most up-to-date theory, practices, and data for conducting economic impact and investment analyses. Many of our former assumptions have been replaced with observed data, and we have researched the latest sources in order to update the background data used in our model. Additionally, changes in the data the college provides to Lightcast can influence the results of the study. Net present value (NPV): How do I communicate this in laymen’s terms? Which would you rather have: a dollar right now or a dollar 30 years from now? That most people will choose a dollar now is the crux of net present value. The preference for a dollar today means today’s dollar is therefore worth more than it would be in the
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