Quantifying the value of attending more selective schools

Parent Cafe
21

This is the $64,000 question on this site, or as I refer to it, the $280,000 question.

I have angst over this as well and agree that there are too many variables. I don’t think you really can quantify all aspects of this decision. If you are strictly looking at ROI, it usually is a no brainer, but there are intangibles that have to do with the overall experience. If it is a matter of taking on that much debt for undergad, I would tell anyone not to do it. However, in cases, for those who are paying for some, or all, of it out of pocket, it can be a tougher decision and one that someone can only decide based on their own family’s circumstances.

I have found myself saying out loud, “I’m not paying $70,000 for x school.” However, I might be willing to pay that, or close to that, or half of that, for a different school.

Very personal choice, but I don’t think there’s a hard and fast way to quantify it.

22

We could have saved a ton of money if our two kids had gone to an in-state public university rather than out-of-state private colleges. But we gave the kids the license to attend the college they most wanted to attend. In retrospect, they both made excellent decisions and have interesting careers.

However, undergraduate degrees aren’t always the end of college. One of our children chose to earn an MBA after working in the economy for a few years. Her undergraduate degree was a BFA in industrial design. The MBA cost a lot of money, and we bailed her out of usurious Federal Direct Loans to wipe out the loan debt. But this investment is paying off in career advancement.

Our other child ended his education with a BA in economics, at a private institution in a major league city. His career is going extremely well.

We don’t miss any of the money we spent. We had saved it to help our kids. They’ll still have a nice inheritance some day in part because they’re not a financial burden for us now.

23

Dd attends a large school that does coop placements for their students. They have access to and publish the data on the earnings of the coop students. There is a 400% spread in earnings for senior- level CS students within that one school.

24

FWIW, MIT & UMass (and many other schools) publish median salary data in their graduating senior surveys:

https://capd.mit.edu/sites/default/files/about/files/GSS2017.pdf

https://www.cics.umass.edu/careers/articles/destination-report-2018

It looks like the median starting salary for a computer science major at MIT was $107,000 and the median starting salary at UMass was $81,000.

I think these are both great starting salaries for a new college graduate.

25

“I don’t want to pay such a heavy penalty.“

First of all, the penalty can be modest (if the money is distributed to your son then the income taxes are payable at his tax rate not yours, also if he gets a scholarship then the penalty on distribution of that amount is waived) and you don’t pay it.

But my point is that he should choose. Maybe it’s better to pay the penalty if he can use the money to help him develop a start up? Maybe he’ll do better using the money to buy a house rather than renting? Maybe he will want to get an MBA? Or maybe he will decide to save it for the long term, but you shouldn’t force him to do that.

It’s his life, so it’s best that he should decide what is the best ROI for him.

26

You can’t put a number to the value of an MIT (or any other tippy top college) over a lesser college. I went to MIT but much of the cost was need based aid. The education I got was top notch and the opportunities afforded me because of it being MIT were excellent.

Could I have done just as well at a college a step down from MIT? Probably, but as it was the path not taken, who really knows. My kids went to lesser, but still excellent colleges. They have had opportunities that, while very good, were not at the same level I had. That is probably more a function of the business climate than the college, but again who knows.

If money is a real issue, private colleges a step down typically offer merit as well as need based aid. My son went to a public college and my daughter a private. We got no need based aid for either kid. My son got no merit aid while my daughter was given merit aid that actually made her cost slightly below what I paid for my son. It seemed apparent that the colleges know how to play the money game.

My advice would talk to each of the colleges financial aid departments and get price estimates from each, including MIT. Who knows, you might be surprised (good and bad) by what you find out.

27

If the OP’s “net worth is in 7-figures” they are probably going to be full-pay at an elite private college and will not get a net price discount.

The only way to know for sure is to try each college’s Net Price Calculator.

28

@boulders in post 22 makes the point that I like to make to my kids all of the time. No matter what school you go to, the name of that school will only take you so far and you have to create your own “prestige”. We live in a state (GA) where the top options bring some prestige and great value, especially for my CS/Computer Engineering based child so that makes things simple since undergrad will cost only about 17K per year after lottery funded grants at Georgia Tech.

If your son loves UMass Amherst, that makes it an easy decision from my point of view. I am of the belief that no school is worth 75-80K per year, but that does not mean that I would not pay that cost, but my wife and I would need to see the fit and value they would bring to my kid. I am a person who thinks about legacy often so I understand your thought of being able to use the 529 for future generations, because my own end game is to pay for education for future generations of my family so that money is never a factor again. Good luck to your son.

29

For a bachelors in computer science, it’s not worth it to pay that much. The tech industry is driven entirely on applied knowledge and CS is ridiculously employable and should be more than sufficient to get a good entry level job out of college. The “big bucks out of college” idea is a myth. He gets an entry level job based on local market demand. If the employer goes any higher on salary, they can attract an experienced professional to do the job.

30

I think there is value in being surrounded by people sharper than yourself. As a student you will need learn how to up your game. This skill will serve you well in the future.

31

Irrelevant to MIT vs Umass-A, but it seems impossible to me to evaluate these different salaries without a lot more info - first to mind is where they are working. What’s the COL? $81k in Columbus Ohio goes a lot further than $107k in San Jose CA.

Kids working in lower COL areas are likely paying off loans faster, saving more, living in a nicer house or apartment, etc.

And salary doesn’t tell the entire story either - benefit costs, stocks or bonuses and all that can make some packages much better than they appear.

Even if salary info were accurate - and if it’s based on Payscale I doubt it is - there is a lot missing, so much that I see it as a dubious measure of ROI even if the goal is to earn the most.

32

Fifty percent would be massive; I’d guess more along the line of 5% would be good. And again, there are few real ‘surveys’. Most folks have bought into PayScale’s marketing hype about the value of their self-reported anecdotes (which every AP Stats students knows is near worthless.)

33

The money in the 529 plan came from our earnings, not his, so I disagree. Legally, he is the named beneficiary, but we are the custodians. We would be within our rights to not pay for any school other than UMass and to change the beneficiary to one of the other children for the remaining balance after 4 years.

Rich people routinely set up trust funds because they want to control how the money they give to their children is spent. A 529 plan is a bit like a trust fund, where the custodian is the trustee.

34

Whenever you choose to buy or not buy something, you are “putting a number” on it. If he gets into MIT, we will pay the annual $73K cost. If it cost $100K, probably we still would. At $200K a year, we would not. So we just put a range of numbers on MIT – somewhere between $100K and $200K. We all have intuitions about what various schools are worth, but I am looking for a framework to come up with such values.

35

Graduating Senior Surveys are typically based on responses from the graduating student’s themselves and not third-party data like PayScale.

36

BTW, the Brookings Institution found that the Payscale salary data is highly correlated with IRS tax records earnings data used in the College Scorecard. Of course, there are many limitations and reasons for caution in any earnings dataset.

37

Ahh …here we go again…expensive private vs state flagship.

As virtually everyone has said, there is no way to quantify. Each will introduce variables that are unlikely to be recreated at the other, and therefore set one on a different path. Perhaps the biggest variable is how is your kid most likely to respond to all the variables. For example, if he attends elite private with stellar career services, will he be attending all the potential events, networking starting as a freshmen, etc? If the answer is no, then that’s a variable wasted. Would he seek out UG research available at a fine flagship, if not, variable wasted. You get the drift.

Ultimately, they are who they are so you can’t really worry too much about that. In our house we simplified it. We saved enough money to fund college for two without it dramatically changing our life. That’s what the money was set aside for. So, we basically felt we would pay for the school they were most interested in, felt was the best fit, etc. I view it as setting them up with a certain set of tools.

As someone upstream mentioned, it’s been a joy to watch him (soon his sister will join the college ranks) blossom at a place he loves. Makes his mom and I happy (and envious actually). No going back and I would do it all over again.

38

I know plenty of engineers who paid fully for their masters programs

39

Financial decisions are highly personal. What one person/family values is not necessarily going to align with another’s. You will see a strong divide over this topic constantly on CC precisely bc what is valued is different.

In terms of being taught and mentored by profs vs TAs and touting LACs/small colleges as the go-to option for personalized interaction–that is worth investigating individual Us in terms of whether or not it is factual. My kids have all attended mid-to very large publics. They have not been taught by TAs. Some recitation sections are TA-led, but that is only a small percentage of classes. My kids have all had great relationships with their profs who in turn have mentored them during their UG yrs toward our kids desired post-UG goals. My kids have done research directly under profs and not grad students, etc.

My most recent college grad graduated from Alabama and worked with a prof on research from freshman yr on. He started off just working with her on a small project and by jr he was part of her research team meeting right alongside with the grad and post-doc students. My current college student is at USC Columbia and has a fabulous support network with her profs and is participating in research with a prof as a humanities student. (so this is not limited to STEM students.)

In terms of ROI, well, paying our expected family contribution isn’t even under consideration for us b/c we have a very large family and our expected contribution across all of our kids comes to close to a million dollars…and we are very much not full pay upper class, but ~$30Kx4x8 adds up to way too much. (and, yes, we value having a large family more than providing expensive college educations. :smile: )

So our kids attend flagships/public Us. In terms of their post-UG outcomes, how does anyone know what would have known if another path were taken? You can’t. All we can do is assess the outcome that they did have based on the path they did take. Our 2011 college grad from a non-top ranked tech U is a chemE. He has a great career. Could it have been better elsewhere? Who knows. We do know that he is married, has 4 little kids with a SAHW, and in the 8 yrs since he graduated college he will completely debt-free in 2 yrs (they live in a very nice neighborhood in a 3200 sq ft house and have 2 cars). His income is far from shabby. And b/c he graduated from college debt-free, on top of having money to buy a house and start a family, he invests heavily in his 401K.

Our 2018 grad attended Bama on full scholarship and is now attending a top grad program in his field. Would his outcome have been different if he had attended a different U? Again, who knows. All we know is that his outcome was the one he wanted from high school.

All anyone can do is share personal anecdotes. I am thankful that ours are all positive outcomes. I am sure others have negative stories. Which ones are the ones that matter more?? Looking at my kids, I see where they end up is far more nuanced than which school they attend. Their personalities and internal drive play a huge role. My current 12th grader is not a self-driven, highly motivated individual. She only wants to live at home and commute. I can pretty much guarantee that she will be happy to graduate from college and take a job locally and just have a low stress 9-5 job. She isn’t going to be a go-getter out there pursuing high profile career opportunities. That isn’t a bad thing, either. It is just a who-she-is thing.

40

Mom, your post really resonated with me. I have a friend with a D who at the moment wants to be a guidance counselor, although last week she wanted to teach pre-school, and last year she wondered if she could support herself as Arts and Crafts director of her former summer camp (quick answer- no).

My friend is pulling her hair out. Uber achieving family, very driven siblings. They don’t compare their kids (at least not as far as I can tell) but they also are having trouble letting this D drive the train on her college search. They have enough insight to see that encouraging her to find her “peeps” in college is going to be huge for her; paying actual college tuition for a kid who might be happy with the two year early childhood certificate from our local CC (very cheap) is what’s going to sting.

You guys sound like very grounded parents!!!