The real “are elite colleges worth it”? question

[Data10]

@Greatpyrmom

Here is another recent study out of Georgetown rating the ROI of over 4000 colleges. Spoiler alert: number one is a pharmacy school that most of us have never heard of. Harvard rolls in at number 45, way behind Lehigh at number 25, and tech focused schools such as MIT and Caltech ( tied at no 4) and Harvey Mudd (7). Schools with relatively low name recognition such as Bentley and Babson at numbers 8 and 9 edge out elite powerhouses Penn, Stanford and Princeton at numbers 10,11 and 12.

Such analyses are severely flawed for a variety of reasons. The numerator assumes the college name is entirely responsible for earnings, and the individual student has no influence. For example, suppose a kid who is admitted to Harvard decides to take a full ride scholarship to Alabama instead to save money for med school. The analyses assumes when he/she shows up at Alabama, he/she will suddenly become the average student at Alabama who has a 28% of failing to graduate from college, and has a low rate of med school admission, dramatically reducing average future earnings.

This also relates to the major correlation you mentioned, with tech focused schools doing well. Not all students at a particular college have the same expected earnings. Instead it is highly correlated with choice of major and planned career. Pharmacy, tech, and similar tend to have higher average earnings than humanities majors.

Cost also wildly varies from one student to another. Some students at Stanford or Princeton pay $0 and others pay $80k. The denominator instead assumes everyone at Stanford or Princeton pays $11k. That’s great for the few students who pay $11k, but not as meaningful for the other >90% of students who pay significantly different amounts.

With a severely inaccurate numerator and severely inaccurate denominator for most students, the resulting output is near meaningless.

[DigitalDad]

@eyemgh

expected salary based on the known averages

Are they actually known?
If not, then all this ROI calculating is purely speculative: using known costs and some “best guess” returns, based on various sources, for whatever sample size of graduates, and whatever arbitrary window in time.

Otherwise, if they were truly “known”, how come I keep seeing different reports highlighting different lists of schools for their supposed great ROI?

I’ve yet to be convinced that it’s not just people trying to “tangibly rationalize” decisions they’ve already made based on anecdotal evidence of intangible benefits.

@Data10

The numerator assumes the college name is entirely responsible for earnings, and the individual student has no influence.

THAT.
Maybe (on average) there is a certain type of personality with a certain level of ambition, and of course bringing in superior studying & testing skills proven in high school - that ultimately results in different outcomes for certain schools – which then becomes attributed to the college?

[sevmom]

That thing provided by @Greatpyrmom
seems very flawed. Brown, UVA, Michigan, and then a Practical Nursing school. Similar outcomes.

[ucla_cs_god]

When CC posters talk about “elite colleges being worth it”, they speak of strong (and wealthy) alumni networks, advantages in obtaining certain East Coast jobs, and being a “shoo-in” to top graduate programs with the world’s leading experts. Each of these are more or less measurable with a concrete dollar amount (MBB may pay 50k more starting to new grads than middle-of-the-barrel consulting groups, etc.), and the actual effective value of this dollar amount can be hotly debated.

I would like to shed light on the more abstract aspects “prestigious” schools. There is no way to quantify the glint in someone’s eyes when your educational background comes up even in a casual conversation, and you can list a famous school as your alma mater. There is no way to quantify the "wow"s, the "you must be smart"s, the smiles and admirational looks from people of all ages. But, despite not having material value, these nuances provide social status and social capital for your 40 working years after your 4 in college.

I would argue that the status, depending on your social circle, could be the most valuable aspect of going to a prestigious university. This is especially true of certain immigrant communities of the US (mine included). For my community as an example, the school you go to is only partially about you. Another large part of attending a prestigious school is the prestige for the rest of your family; our children are the absolute pride and joy of our parents, and the success of children directly correlate to the social standing of their parents in the community. Hence the parental pressure on academic success and attendance to a brand-name university. I truly hope this post provides some context to the large number of posts on CC that are akin to this:

Demographics: White (Middle Eastern, 1st gen)
…
Schools: All Ivies, Stanford, UCLA, UCB, …

Now, as a numbers guy myself, I should probably provide some numbers relating to the COA. I will again use my situation as an example, as a computer science major (surprise!). My state flagship (T10 for CS) will have a 4-year average COA of $35k/year. The elite public school I’m attending (OOS, T20 overall) has a 4-year average COA of $60k/year. Stanford (for comparison’s sake) has a 4-year average COA of $85k/year. Over 4 years, I will have to scrape together $100k more for my school than if I had stayed in-state, and I would have had to pay $200k more for Stanford had I been admitted. On the surface, these six-figure differentials seems significant. That is, until you consider the fact that $100k is the equivalent of 1 year of total compensation in my field, AFTER federal and state income tax.

Now of course this is not for everyone. Those needing significant financial aid and/or are not studying high ROI fields should be acutely aware of their financial saliency, and choose a college accordingly. Those planning on further education (e.g. med school, law school) really only need to consider the prestige of their final degree. And those who don’t really mind where they go to college, congrats! you just saved enough to buy 150 iPhones, 3 cars, or a down payment on a house!

But for a large number of nervous rising seniors here on CC, a (let’s be honest) large percentage of applicants in general to “elite colleges”, and me personally, are 1-2 years of salary worth the social prestige that follows you and your family for the rest of your life? The question answers itself.

NOTE: As was hopefully clear in the post, I do not intend to generalize, nor claim in any way to speak on any culture/ethnicity other than strictly my own.

[drillteam]

Excellent post that is realistic about human nature. It is “worth it” in a social capital sense to go to a prestigious school quite aside from the other benefits (earnings,career advancement,unique opportunities etc). It is not popular to say but that is a major motivation. Clearly you should not bankrupt yourself or your family but “what is the money for?” is a question to which an accountant or investment advisor cannot give an answer

[DramaMama2021]

Thank you for providing more current information.

That said, I’m skeptical of all rankings like this. Read the fine print, as they say.

[eyemgh]

There’s only so much you can know in any scenario. Anything beyond that, no matter your perspective is wishful thinking.

I personally believe what @Data10 suggested, that success potential is baked in at the end of high school regardless of undergraduate institution.

[bluedog23]

I disagree. Having high grades(lots of involvement in undergrad program) and working in a relevant industry prior to applying for grad school will have more impact than the undergraduate institution. My daughter graduated from a T-100 school but because of her involvement at her university she was heavily recruited in her industry. In the fall she starts her PHD program… fully funded at a T-10 school. That said in areas such as banking and consulting many firms will only recruit from Ivy or top schools so for certain industries “elite” schooling is a plus.

[1NJParent]

@eyemgh

success potential is baked in at the end of high school regardless of undergraduate institution.

Why not baked in at the end of middle school? Or elementary school? Or…

[1NJParent]

PhD students can come from a variety of schools. Reputations of PhD programs don’t necessarily correspond to those of the undergraduate programs at the same colleges. The selectivity of PhD programs in different disciplines/subdisciplines also varies greatly. Students who are interested in pursuing PhDs have an advantage at colleges with top researchers and well-known professors in their fields of interest, who can sponsor relevant researches and write recommendations that carry more weight.

[eyemgh]

Because that’s not what the literature tells us. It does tell us that students who have GPAs and test scores to be competitive for admissions at highly rejective schools are just as successful no matter where they go. There is an exception, first generation, low income students. They get a bump if they choose the highly selective school.

[ucbalumnus]

@Greatpyrmom

Here is another recent study out of Georgetown rating the ROI of over 4000 colleges. Spoiler alert: number one is a pharmacy school that most of us have never heard of. Harvard rolls in at number 45, way behind Lehigh at number 25, and tech focused schools such as MIT and Caltech ( tied at no 4) and Harvey Mudd (7). Schools with relatively low name recognition such as Bentley and Babson at numbers 8 and 9 edge out elite powerhouses Penn, Stanford and Princeton at numbers 10,11 and 12.

No surprise that schools focused on majors whose graduates are in relatively high demand in the job market tend to score highly on overall college financial ROI rankings. But a student attending MIT on the basis of its high financial ROI in this ranking but chooses to major in biology may be disappointed with post-graduation job offers compared to the expectations set by the financial ROI ranking.

More useful comparisons could be made across colleges for graduates in the same major for various majors.

[ucbalumnus]

@1NJParent

But in the real world (not just in a few careers), there’s a wide dispersion in abilities and outcomes. A checkout line at Costco, for example, moves much faster than the one at your typical supermarket. In any job, some are more skilled than others at what they do.

The speed of the checkout line at different stores likely has less to do with the skill of individual checkers and more to do with the skill of those who design the checkout procedure and methodology. Or perhaps not just the skill, but also the motivation to design the checkout procedure and methodology for speed.

[ucbalumnus]

@ucla_cs_god

I would argue that the status, depending on your social circle, could be the most valuable aspect of going to a prestigious university. This is especially true of certain immigrant communities of the US (mine included). For my community as an example, the school you go to is only partially about you.

It is not limited to certain immigrant communities that your college is only partially about you. For most students attending college immediately after high school, college choice is mainly limited by parent circumstances and choices (mostly financial, but sometimes parents impose other limitations, such as requiring a female student to live at home and commute to a local college). Only within those limitations (which can be very limiting for many students) will the student’s own achievements in terms of college admission and scholarship credentials matter in affecting the choice of colleges available to the student.

[ucbalumnus]

@eyemgh

I personally believe what @Data10 suggested, that success potential is baked in at the end of high school regardless of undergraduate institution.

This is not necessarily true. Common examples to the contrary are many non-traditional students who may have only barely graduated high school with no interest or likelihood of success in college at that time, but later successfully attended and graduated from college (community college transfer pathway).

[eyemgh]

I agree that’s possible. It’s just not likely.

[Shelby_Balik]

Disagree. I teach at a university where virtually every applicant is accepted and many had a rough time in high school, or perhaps dropped out of college at some point, or just got a late start for whatever reason. Lots of community college transfers (many of whom are trying to save money), lots of students who went straight from HS to the military, many students with GEDs. Lots of these students do a fantastic job – sophisticated, original, advanced work that leads to great careers and graduate programs. Not everyone is ready to buckle down at age 17-18. Many people hit their stride later.

[1NJParent]

@eyemgh

Because that’s not what the literature tells us.

You mean there hasn’t been any research done. But logically, why wouldn’t college matter, if high school matters?

[eyemgh]

Estimating the Return to College Selectivity over the Career Using...

[1NJParent]

@ucbalumnus

@1NJParent

But in the real world (not just in a few careers), there’s a wide dispersion in abilities and outcomes. A checkout line at Costco, for example, moves much faster than the one at your typical supermarket. In any job, some are more skilled than others at what they do.

The speed of the checkout line at different stores likely has less to do with the skill of individual checkers and more to do with the skill of those who design the checkout procedure and methodology. Or perhaps not just the skill, but also the motivation to design the checkout procedure and methodology for speed.

I paid some attention to this issue, and I haven’t noticed any significant difference in their designs that would explain the speed difference. However, some grocery stores that sell ethnic food (some of them even without scanners) also have speedy checkout lines. I attribute the noticeable differences to the people they hire.