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Are Elite Schools Worth the Cost?

Is it worth spending the extra to go to a prestigious school, or will a less selective university be just as good? Can you save some bucks, or will those college savings end up costing you when it comes time to make a living? Is a student at Harvard destined to make a better living than a person at University of Michigan?

There was a study that started in 1976 and was released in 1999 that followed students from both prestigious schools and not-so-prestigious schools. This study showed that students from Yale earned 30% more than students from Tulane. Ok, so it sure seems like the “better” the school the more money you will make over the course of your life. That’s a sound investment, right? Well… not so fast.

The study went a bit further and also followed those students who were accepted into an Ivy league school but didn’t attend. So they were smart and talented enough to get into Yale but for whatever reason went to less a selective school. How did they fare against Ivy league grads? Turns out, they did just fine. The study showed that on average, both sets of students had the same income levels after 20 years.

Huh. So it’s not the fancy school after all. It’s the student that makes the difference, not the school. Researchers estimate that 75% of education comes from the student. From their abilities and work ethic. Only 25% comes from the school itself. One of the advantages of an elite school is the other students. Surrounding a student with the nation’s best and brightest may spur them to reach greater heights. But for another student it may lead to a breakdown from too much pressure to always perform.

The researchers did note that one group in particular benefitted the most from the environment of an elite school, those from poor backgrounds. These kids need exposure to the culture of an elite school to then move on into elite jobs. Kids from well-off families and neighborhoods already have this exposure and therefore don’t benefit from additional socialization in this manner.

Part of their socialization, Lubrano wrote, is learning to act dispassionate and outwardly composed at all times, regardless of how they might feel inside. Students from well-off communities generally arrive at college already trained to masquerade as calm. Students from disadvantaged backgrounds may benefit from exposure to this way of carrying oneself—a trait that may be particularly in evidence at the top colleges.

So back to the question. Is an elite school worth the extra cost? For the average person, it doesn’t look like it. If you have some special circumstances then maybe. I just don’t think you can buy your way into a better life. At the end of the day it’s up to you and you alone. If you have the drive, passion, skills, desire, dreams, and plans to make a wonderful life for yourself, you will do it! The presence, or lack of, a Harvard diploma doesn’t direct your life. You do!

18 thoughts on “Are Elite Schools Worth the Cost?”

  1. You can lead a horse to water…

    It always comes down to the efforts of the individual student. That is what makes many of the success stories so enthralling. I enjoy reading about those who overcome obstacles through intense effort like Isaiah Thomas or Ben Carson.

  2. Eric @ Debt Snowball Calculator

    I agree with cashflowmantra

    It does depend on the individual!
    For most students, I’d say no.

    I’ve heard too many sad stories of people getting suckered into these high student loans then having the following happen:

    Didn’t graduate
    Didn’t obtain the job they wanted with the degree
    Didn’t stay in the workforce (stay at home parents)
    Illness not allowing them to work
    Graduated with a masters or doctorate in a degree, then only makes $30k/year or so
    So on…

    Just my thoughts. Obviously I’m a bit biased with my thoughts on debt though 🙂

  3. I live in New Haven right now, and my girlfriend is a grad student at Yale!

    I went to a state university for my undergraduate degree, and saved A TON doing it. I think that the school itself was inferior to private universities for a lot of things. The facilities weren’t new. The food wasn’t awesome. There weren’t enough professors. But, I think a lot of the college education is what you make it for yourself. A lot of people go to private schools, fool around, and pay a huge amount of money to do so. I still think I learned a ton at my state school, and I’ve never regretted it.

    My conclusion: an elite school is definitely not always worth the extra cost.

  4. Hunter @ Financially Consumed

    Interesting. An aunt of mine always said to me that a good student will succeed, no matter the environment. It seems like this study is confirming her sentiment. We plan on meeting our children half-way with higher education costs. I think this article and study make stong arguments for choosing a solid state school with more affordable costs, over any perceived benefits of an Ivy League institution. If future studies are important and the student would benefit from further education, then they can always pay for their master’s themselves, if they think it is justified.

  5. Andrea @SoOverDebt

    I went to a private school for my undergrad degree. While I kick myself now because it was so expensive even with scholarships, I do feel I got an excellent education. I went to a small university with about 800 total students – the president of the school knew me, my classes were small, and I can walk on campus 6 years later and my professors remember me. I had a great college experience; I just wish I could have done it without so much student debt.

    Would I have been as successful at a state school? Probably. I was one of those nerds that loved school, loved learning. I don’t think I can credit the private college with making me the type of person I am.

  6. The study proves what i have felt for a long time. It is what you do with your education not where you went to school. The better the school, you are more likely do better. here is no guarantee of that!

  7. I went to a public university, so I have no real idea. Since I ended up not using my degree until starting my online business, I guess it worked out well for me to save the money. 🙂

  8. I’m happy to see that the study tracked people who got into the schools but didn’t attend too. That makes a big difference in how the results are perceived! (My vote would be no too, although I think that if you can get a full ride to the Ivy League schools, it wouldn’t hurt to have the degree from one.)

  9. My hubby and I have been talking about whether to send our future kids to a private school. We have friends who have and it seems to have worked out really well. I know it is expensive but the public school system where we live seems to be so overcrowded and kids get lost in the shuffle. They get more attention in the private schools and are taught a wider range of subjects. To me this will prepare them better for life as a whole. We still haven’t decided but I am leaning towards yes.

  10. I see elite schools as a paid privilege to say, “Shut up and listen.”

    Not really, but in a lesser context. If you go to an elite school, people are going to listen to what you have to say. This is probably true in interviews, sales pitches, etc.

    Suba makes a great point, too. It depends on what kind of job market you graduate into. First job does a lot to set the pace for earnings and general advancement. Connections matter a lot here.

  11. I went to an expensive top 5 engineering school for my grad school (undergrad in a different country). I agree that it is the student not the school that makes a lot of difference. The only thing that might have varied is the not-so-good students in both schools. I think there are quite a bit of initial opportunities for students from good schools. For example, there were tons of campus interviews in my school almost everyone had a job before graduating. The less famous school students might have to work a little harder to get that first job.

  12. I think Ivy league schools’ biggest advantage is the contacts you get to make. I don’t necessarily think the education quality is any better or worse. Either way, a good student can make up for it. But when it comes to contacts, Ivy league schools may have a wider opening.

  13. I think your final degree is the only one where this would be important. For example if you got a bachelors and later got a masters, get the bachelors from a state school and the masters would depend on the field, but would be more likely to be worth the top tier school.

    I think the true lose-lose are private schools with the high pricey tag and so-so reputation and programs. George Washington University in DC comes to mind. Some of the highest tuition rates in the country but certainly not the best school. I’d either go to a top 3, name brand school in your general field or go for the cheapest option.

    The study doesn’t quantify the effort involved with achieving the level of success. My guess is that it’s easier for someone with Harvard on their resume than someone with University of Minnesota. The kid who could have gone to Harvard, but didn’t, just works a lot harder to fill the gap. Colleges were also a lot less competitive in 1976 than they are now so I would imagine you might get different results.

  14. I agree with MoneyCone. The high-level contacts the student makes in an Ivy League environment are a large part of the real and perceived value. What with the legacy students and research-focused professors, the quality of the student body or its faculty may be no better or worse than other second-tier schools with good name recognition.

  15. Agree with Moneycone. With an Ivy League school, it is all about the contacts that you make. In addition, you have will have access to alumni who are likely in high level positions in all industries. That can make a big difference in finding a job.

  16. Super Frugalette

    I have a couple of thoughts on this. When my husband was accepted to a Ph.d program, he was the only one in his class from a state school. A year or two later another student was the only one in his class from a state school.

    As part of his program, he had to pass 4 major exams. It was common for the students to fail at least one of the exams and have to retake. These exams were so difficult that students often sat in classes for an entire year to prepare.

    My husband and the other student from the state school were the only two in recent years who passed all the exams the FIRST time.

    I bring this point up because if you want to go on to a competitive graduate school, where you go to undergrad does matter. It would appear that my husband and the other student must have been far better students than their peers and their GPAs must have been the driving force to get them into this program.

  17. Ivy League schools (and other high-end institutions) are good for two things – getting a foot in the door, and networking with other top quality talent. A degree is great pre-interview. Once your in, it all comes down to performance.

  18. A graduate of both a non-ivy and an ivy, I agree with most folks who have already commented. It’s been my experience that having an ivy league degree does certainly peak the interest of some employers. But once you open your mouth you’ve got to live up to that, “expectation”. If you’re a moron or an under performer, an ivy league diploma is just a piece of paper. There are plenty of really smart kids attending state schools and plenty of not so bright kids attending the ivy leagues. Ultimately, I believe that one’s desire to work hard and be a self-directed learner is more valuable then any degree. If you’re lazy and not motivated to learn, save your money, the ivy degree isn’t going to get you ahead.

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