Is Going to an Elite College Worth the Cost?
Published: December 17, 2010
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Many college guidance counselors will say, find your own rainbow. But that can sound like pablum to even the most laid-back parent and student.
Answers to such questions cannot be found, typically, in the sort of data churned out annually in the U.S. News and World Report rankings, which tend to focus on inputs like average SAT scores or college rejection rates. Handicappers shy away from collating such information partly because it can be hard to measure something like alumni satisfaction 5 to 10 years out. Moreover, in taking a yardstick to someone’s success, or quality of life, how much can be attributed to one’s alma mater, versus someone’s aptitude, intelligence and doggedness?
But economists and sociologists have tried to tackle these questions. Their research, however hedged, does suggest that elite schools can make a difference in income and graduate school placement. But happiness in life? That’s a question for another day.
Among the most cited research on the subject — a paper by economists from the RAND Corporation and Brigham Young and Cornell Universities — found that “strong evidence emerges of a significant economic return to attending an elite private institution, and some evidence suggests this premium has increased over time.”
Grouping colleges by the same tiers of selectivity used in a popular college guidebook, Barron’s, the researchers found that alumni of the most selective colleges earned, on average, 40 percent more a year than those who graduated from the least selective public universities, as calculated 10 years after they graduated from high school.
Those same researchers found in a separate paper that “attendance at an elite private college significantly increases the probability of attending graduate school, and more specifically graduate school at a major research university.”
One major caveat: these studies, which tracked more than 5,000 college graduates, some for more than a decade, are themselves now more than a decade old. Over that period, of course, the full sticker price for elite private colleges has far outstripped the pace of inflation, to say nothing of the cost of many of their public school peers (even accounting for the soaring prices of some public universities, especially in California, suffering under state budget crises).
For example, full tuition and fees at Princeton this year is more than $50,000, while Rutgers, the state university just up the New Jersey Turnpike, costs state residents less than half that. The figures are similar for the University of Pennsylvania and Pennsylvania State University. (For the sake of this exercise, set aside those students at elite colleges whose financial aid packages cover most, if not all, of their education.)
Despite the lingering gap in pricing between public and private schools, Eric R. Eide, one of the authors of that paper on the earnings of blue-chip college graduates, said he had seen no evidence that would persuade him to revise, in 2010, the conclusion he reached in 1998.
“Education is a long-run investment,” said Professor Eide, chairman of the economics department at Brigham Young, “It may be more painful to finance right now. People may be more hesitant to go into debt because of the recession. In my opinion, they should be looking over the long run of their child’s life.”
He added, “I don’t think the costs of college are going up faster than the returns on graduating from an elite private college.”
Still, one flaw in such research has always been that it can be hard to disentangle the impact of the institution from the inherent abilities and personal qualities of the individual graduate. In other words, if someone had been accepted at an elite college, but chose to go to a more pedestrian one, would his earnings over the long term be the same?
In 1999, economists from Princeton and the Andrew W. Mellon Foundation looked at some of the same data Professor Eide and his colleagues had used, but crunched them in a different way: they compared students at more selective colleges to others of “seemingly comparable ability,” based on their SAT scores and class rank, who had attended less selective schools, either by choice or because a top college rejected them.
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The earnings of graduates in the two groups were about the same — perhaps shifting the ledger in favor of the less expensive, less prestigious route. (The one exception was that children from “disadvantaged family backgrounds” appeared to earn more over time if they attended more selective colleges. The authors, Stacy Berg Dale and Alan B. Krueger, do not speculate why, but conclude, “These students appear to benefit most from attending a more elite college.”)
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Earlier this year, two labor and education professors from Penn State, along with a sociologist from Claremont Graduate University in California, sought to examine whether graduates from elite colleges were, in general, more satisfied in their work than those who attended less prestigious institutions.
Writing in April in the Journal of Labor Research, the three researchers argued that “an exclusive focus on the economic outcomes of college graduation, and from prestigious colleges in particular, neglects a host of other employment features.”
Mining a sample of nearly 5,000 recipients of bachelor’s degrees in 1992 and 1993, who were then tracked for nearly a decade, the authors concluded that “job satisfaction decreases slightly as college selectivity moves up.” One hypothesis by the authors was that the expectations of elite college graduates — especially when it came to earnings — might have been higher, and thus more subject to disappointment, than the expectations of those who graduated from less competitive colleges.
Still, one of those authors, Scott L. Thomas, a sociologist who is a professor of educational studies at Claremont, said high school students and their parents should take any attempt to apply broad generalizations to such personal choices with a grain of salt.
“Prestige does pay,” Mr. Thomas said in an interview. “But prestige costs, too. The question is, is the cost less than the added return?”
His answer was one he said he knew families would find maddening: “It depends.”
For example, someone who knew he needed to earn a reliable salary immediately after graduation, and as a result chose to study something practical like business or engineering, might find the cost-benefit analysis tilted in favor of a state school, he said.
“Students from less affluent backgrounds are going to find themselves in situations where college is less about ‘finding themselves,’ and more about skills acquisition and making contacts that will lead straight into the labor market,” Mr. Thomas said. For such a student, he said, a state university, particularly a big one, may also have a large, passionate alumni body. It, in turn, may play a disproportionate role in deciding who gets which jobs in a state in a variety of fields — an old-boy (and increasingly old-girl) network that may be less impressed with a job applicant’s Ivy league pedigree.
“If you’ve attended a big state school with a tremendous football program,” Mr. Thomas said, “there’s tremendous affinity and good will — whether or not you had anything to do with the football program.”
In the end, some researchers echo that tried-and-perhaps-even-true wisdom of guidance counselors: the extent to which one takes advantage of the educational offerings of an institution may be more important, in the long run, than how prominently and proudly that institution’s name is being displayed on the back windows of cars in the nation’s wealthiest enclaves.
In this analysis, one’s major — and how it aligns with the departmental strengths of a university — may be more significant than the place in the academic pecking order awarded to that college by the statisticians at U.S. News.
“Everything we know from studying college student experiences and outcomes tells us that there is more variability within schools than between them,” said Alexander C. McCormick, a former admissions officer at his alma mater, Dartmouth College, and now an associate professor of education at Indiana University at Bloomington.
“This is the irony, given the dominance of the rankings mentality of who’s No. 5 or No. 50,” Professor McCormick added. “The quality of that biology major offered at School No. 50? It may exceed that at School No. 5.”