Is Ivy League Education Worth the Cost?
Do graduates of elite colleges earn more because of where they went to school? Or because of the traits that got them selected?
Nick Gillespie points to a NYT story asking “Is Going to an Elite College Worth the Cost?”
At first, the answer appears obvious:
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.”
But, if you read well after most people will have quit reading, thinking they’re wasting time with an obvious answer, you find:
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?
Several studies, going back as far as 1999, are cited. And the answer seems to be: “It depends.” In most fields, incomes wind up essentially the same. Which means that, if you’ve had to take out massive loans to finance an elite education, you may come out behind.
Nick titles his essay “Going to an Elite College Won’t Get You More Money; Being Good Enough to Get Accepted at One Will.” And that’s a satisfying answer for someone, like Nick, who managed to do reasonably well for himself despite undergraduate and doctoral degrees from non-elite institutions. But even he admits that it’s not quite that cut-and-dried.
In some fields, especially those that rely on semi-rigid grad school pecking orders as a filter, there’s no question that it’s probably always better to pick Princeton over Rutgers (two schools mentioned in the Times piece and the latter being my undergrad haunt). That’s especially true at the grad school level. It’s much rarer for a Rutgers Ph.D. to teach at Princeton than the reverse. But in most cases at the undergrad level, if money is an issue (and lord knows it always is), how “smart” you are at the all-important juncture of your life when you’re 17 (I’m being ironic) is a better guide to your future than what school you, your parents, and taxpayers via many different subsidies end up paying for.
Nick’s kid is a junior in high school and mine’s about to turn 2. (We’re about the same age; I just got a later start.) I’m not sure about him but my intention is to help mine get into the best school she can get into and thrive in. I’m not sure that a Yale education is any better than one she’d get at Alabama, much less Virginia. But I have little doubt that the first will open more doors. It’s a bizarre fact of life that a lot of people are impressed by the school people attended, even late in life. Recall recent presidential elections, Supreme Court nomination fights, and the like. People still judge middle aged people deep into their careers by what schools they went to in their 20s. That this is ridiculous doesn’t change the fact that it is.
That calculation, however, is based on the presumption that I can weather the impact of ridiculously high student loans. My general advice for people, especially those with multiple kids, would be “Send your kids to the best school they can get a scholarship to” or, at least, “Send your kids to the best school you can afford.” And recognize that “best” is about perception rather than the actual quality of teaching.
As I mentioned, I find this Reuters article to be an excellent wrap-up of education and competitiveness issues. (Gerry, you’ll like it.)
When you narrow it to advice to a kid (“is an ivy-league education worth it”), it depends on the kid. If he’s smart, motivated, and has the money, go for it. To the degree that those three things are not satisfied, less so.
Isnt this the same kind of question about going to college in general?
I college degree does three things to enhance your income:
1. you learn new material and skills that makes you more productive
2. its a screening process for employers to see that you have minimal skills
3. it allows for connections to be made that lead to jobs
Though all 3 increase you income going to college, only 1 is an actual productivity enhancement. The other two are just about job distribution, The same competent person with just a HS degree could be as productive but loses out because of the screening process.
So its kind of a game theory problem. From an individual’s point of view, going to college generally makes financial sence. But taken on the aggrgate, because the bottom 2 things are zero sum games, the aggragte cost of college education is likely not worth the total benifit.
Just an anecdotal data point. My niece is graduating from Dartmouth this year. In a very tight job market, she had no problem getting an internship with the federal government this past summer and has already lined up a job upon graduation. Yeah, I think having that Ivy diploma and pedigree does make a difference. I’m no an Ivy, far from it. But for my kids, my advice would be if they can get into one, go for it.
@James – my son started high school, and we attended a session the counselors had on college loans. Their point was that you will not necessarily pay more for an ivy education than for a state school. It all had to do with your income and what they believe you can afford to pay. The ivys with their large endowments can provide a lot of grants or scholarships that state schools can’t (if the ivys accept your kid and wants him/her to attend).
It also depends on what field you go into. I think the study more or less is correct for undergraduate schools. A 4-year degree really doesn’t mean much anymore. I know few people who have jobs that have anything to do with their undergraduate degrees. But if you pursue an MBA or JD (I’ve done both), pedigree matters.
The top-ranked students in my law school can’t even get an interview at places where a mid-ranked Ivy League student gets a serious look. For example, one of my peers at a Tier 2 law school is ranked in the top 10 (maybe top 5) of his class and is doing an internship with a federal judge. His fellow interns are Ivy Leaguers and they’ve got multiple job offers at prestigious firms. He’s put out over a hundred applications and gotten two interviews – for unpaid internships.
When I was in business school, several of my classmates traveled to career fairs at top-ranked business schools to meet recruiters who wouldn’t even bother looking at us (we were ranked in the top 100, maybe top 50) until they had sifted through the higher-ranked schools. Most noted that recruiters seemed uninterested upon learning that they were just there for the fair, and not students at the institutions hosting the events.
That is not to suggest that you are not going to get a job if you get an MBA or JD from someplace other than an Ivy League school. That’s foolish. But it definitely helps you to land a job more quickly, to immediately begin paying off loans, and to obtain more offers that will give you greater bargaining power. You will likely earn a higher starting wage, making you likely to earn more over your lifetime.
There is also the question of what you’re seeking from the education. I went to school with the intention of taking a “wait and see” approach. I ETS’d from the Army and paid my own way. My intent was to pursue an education in business, business law, and international law. I find those topics interesting and I was happy to take time off from deployments to pursue education for its own sake. If I found some employment that leverages that education and interests me, then I would pursue it. If not, I would return to the Army and hopefully provide some value added to the organization. For me, doling out the cash for an Ivy League education made no sense for me.
For others who are going to business or law school with the intent of finding a job that leverages that education, maybe they should consider going to the highest-ranked school they can get into. The “best school you can afford” advice should take into consideration the likelihood of earning income afterwards. If you opt for Tier 2 over Tier 1, because Tier 1 is $10K/year more expensive, that might be a bad decision. Saving $10K per year doesn’t do you much good if you spend your first year out of school working a part-time job while dropping 10 applications every week for full-time work because employers are unimpressed by the name of the institution on your diploma.
I’m old enough now that I can tell my stories more than once. And this is a good one.
I was in a computer science night class, in the early 80’s. It was on compiler theory, I think. Anyway, one night the professor comes in, scowls out at the class and says “how many people are here because they want to be rich like Bill Gates?”
A few hesitant hands rise.
The prof says “get out of my class!”
We are all kind of shocked and sit in stunned silence.
He repeats “get out of my class,” but then continues “if you want to be rich like Bill Gates you don’t need my class. Just go out there and do it.”
It ended up being a good lesson. Though, for the record I completed the class, and did not become a billionaire.
Going to an Ivy is very important is one wants to pursue a career in a log normal field such as law, consulting, investment banking, academics. However, going to an Ivy league to be an engineer, a dentist, or even a physician is a waste of time.
Going to Harvard or Princeton makes it easier to get into Harvard MBA, Yale Law, Wharton MBA, or Georgetown School of Foreign Service. In those fields, being an Ivy degree leads to more pay.
However, a dentist gets the same reimbursement whether they attended Harvard or directional state university. An entry level nurses gets the same pay whether they sent to Georgetown or George Mason.
What has happened over time is that the Ivy Leaguers have limited themselves to careers in a few, select fields and left everything else to the public universities.
It would seem difficult to determine the value of an Ivy league education alone, since it is generally accepted that many of these students come from privilege and from powerful families who trade in personal advantage. Those who gain privileged positions tend to hire from their alma maters as well.
Graduating from an Ivy League Scaool Has it’s own set of advantages, and eventhough the quality of the education is probably the best, it would be difficult to determine it’s share of the overall value.
Seems to me the research question should be at what point does the earnings of top students at the most open enrollment state school meet or exceed the Ivy league class rank. So if you’d end up in the bottom half of the Harvard class but in the top 10% of the state school, would the Harvard education bring that much more cash?
And of course, your field of study matters. Are their objective measurements of your talents independent of the firm for which you might work? Law, government, etc. rely more on credentials since perceptions are more important than objective accomplishment. Not in every endeavor since who’d hire a Harvard law plea bargaining defense attorney over the night school educated winning trial veteran when their freedom is on the line. In government, your school pedigree matters more in HQ and in the upper levels than in the field where people actually have to accomplish work with immediate impacts.
No one who went to an Ivy League is ever a civil servant. You go to an Ivy League to become a political appointee, work at a third tank, or become a policy wonk. Of course, those are long-normal career fields where a few people are successful and everyone else is unemployed.
If you want to be a civil servant going to the local state university is fine.
It is like the humorous video about going to law school. If you want to be a constitutional lawyers, you have to go to a top five law school. No one else gets the chance. Ivy league degrees are actually better in fields with few credentials such as consulting or being a wonk. Going to an Ivy league to become a nurse, pharmacist, engineer, physical therapist, etc is a waste of time and money. That is why you will never find an Ivy leaguer who is a pharmaicst.
However, going to an Ivy league to be an engineer, a dentist, or even a physician is a waste of time.
Depends. Getting into medical school is really, really tough in some states (and going out-of-state can be really difficult as well). Then, if you want to get into a really competitive specialty, you want every leg up you can get. On the other hand, if you’re looking to become a general practitioner, it matters a great deal less.
Physician income is only mildly correlated with medical school attendance or even class standing. The rich plastic surgeons in L.A. did not go to Harvard.
@Superdestroyer: “Going to an Ivy league to be an engineer, a dentist, or even a physician is a waste of time.”
Probably true for engineers and dentists, although I don’t know the fields well enough to make a definitive pronouncement. For physicians, though, it’s not just, as Will notes, that any Ivy undergrad makes getting into a good med school easier but going to an Ivy med school makes it much, much more likely that you’ll get into a good residency program. Ditto getting hired post-MD at a teaching hospital. There’s a path determinacy based on your first job or two and the track in medicine is very, very fast. You’re either going to be a chief surgeon by the time you’re 45 or so or you’re not. And if you’re not on the track by the time you’re applying for residencies, you’re unlikely to get back on later.
The issue is that working at a teaching hospital is not any more high paying as any other job as a physician. CMS reimburses the same whether you did your surgery residency at the Mayo Clinic or at Texas Tech Medical Center in El Paso.
On of the great deals about medicine is an oncologist living in Des Moises Iowa will probably have a higher standard of living versus an oncologist in NYC because there is a limit to how many patients they can see and the reimbursements are the same.
That strikes me as quite plausible. I’m factoring in prestige and the esteem of one’s peers in with money. My sense is that the prestige jobs at teaching hospitals and the various national rankings benefit tremendously from having an Ivy or comparable imprimatur. But, yeah, a doc is a doc in terms of seeing patients and getting paid.
@superdestroyer – well, I didn’t actually ask to see his diploma but I had a guy work for me who was a Harvard man with 30 years of government civil service under his belt. Also, I worked with several MIT (is that Ivy league?) grads while in government. Plus most Presidential Interns are Ivy league doing staff work to get the resume to take agency and department level staff positions. I’ll admit that I judged by ability so barely paid attention to the school, just that they had the degree.
Seems the tendency is to compare the top of the Ivy League with the workaday of the state school. We must remember, not everyone can be above average but where they fall depends on the group they are measured against. Of course, it’d be hard to convince the Ivy league freshman that they are likely bottom of the barrel there but would fair better elsewhere.
And once you’ve got that degree, you have do something with the advantages it gives you. Some being given more advantages and more second chances than others depending on who they know.
I only have 25 years of working in and with the beltway types. I have never met an Ivy leaguer who was a civil servant. I have met a couple of MIT graduates at the Nuclear Regulatory Commission. However, no Ivy Leaguer is going to sit still waiting to work their way up from a GS-5 intern to a a GS-13/15 manager.
Besides, having an Ivy league degrees gets you more pay and more opprotunity in the media, in publishing, in consulting, in investment banking. However, a Harvard graduate who is a GS-14 gets the same pay as the directional state graduate who is a GS-14.
No one works hard enough to get into the Ivy League to settle for a normally distributed career field. The Ivy Leguers want the log-normal career fields. It is like the career advice that says that you either go to a top 14 law school or don’t go. In a log-normal field, name schools are very important.
Superdestroyer – The CIA and other intelligence agencies recruit quite heavily (and successfully) at Ivy League schools. The State Dept, Foreign Service, also has quite a few of them in their ranks. They certainly are civil servants in the true sense, making civil service salaries.
What DC Loser said. The most prestigious civil service jobs, including FSO and intel analyst gigs, are rife with not only Ivy Leaguers but Ivy PhDs.
Overall, though, I’d agree the civil service career path is less appealing to those with elite schooling.
I have been dealing with Defense Intelligence AGency, National Gorund intelligence Center, and Defense Threat Reduction agency. I have never meet an individual who went to an Ivy league as an undergraduate. I have dealt with people who had Ivy league PhD but went to state schools for undergraduate.
Considering that the CIA is about 75% contractor, I doubt if more than a few of the contractors are Ivy Leaguers. An Ivy Leaguer would not be caught dead working for Mantech, SAIC, CSC, or Booz-Allen.
I have less knowledge about the foreign service and there are probably some Ivy leaguers there.
I’m at one of the 3 letter agencies, and one of my colleague had an undergraduate degree from Princeton. They do exist. Trust me.
The difference is that consulting firms like McKensey, Bain, BCG are filled with Pirnceton graduates. The M-Street law firms are filled with Pirnceton graduates. The Investment banking firms are filled with Princeton graduates. Venture capital companies are filled with Pirnceton graduates. Silicon Valley tech ventures are filled with princeton graduates.
Anyone who paid the money to go to Princeton to work in the intellgience community wasted their money. It would be the same as finding a GS-14 at the Health and Humane Service or Commerce who is an Ivy League graduate. They are the type who would avoid the alumni association due to embarassment.
You made a blanket statement, and I provide one data point to refute it. Then you proceed to impugn people you don’t know. You do not understand their personal motivations to pursue what they want. Not everyone is in it for the money. I guess the Harvard student who enrolls in ROTC is a sucker.
A Harvard student does not get to take ROTC classes for credit because the classes are held at MIT. I dbout if there are more than a couple and the probably get out at the first chance after getting their college paid for by the Army. Rice University lost their ROTC battalion because so many of their ROTC students suddenly developed medical conditions in their senior years so that they could get out of serving. I assume that Harvard is similar.
Why should an Ivy league student give up a chance at Investment banking or big law to have a career in the military.
Of course you could just drop out of high school, take a decade to do odd jobs and smoke a bunch of weed, then decide to start writing kid’s books and end up earning more in four hours a day than a Harvard-educated junior partner at a DC law firm. That might work, too.
Nose to the grindstone, boys.
Yeah, but the odds are a little longer with your route.
Yeah, I know, I’m just teasing. There are a thousand guys making barrista money for every one lucky asshole in my position.
And the Harvard Law graduate who became a community organizer was the ultimate loser. What a squandered education, and passed up opportunities to make millions.
Physician income is only mildly correlated with medical school attendance or even class standing. The rich plastic surgeons in L.A. did not go to Harvard.
Where it makes a difference is getting into the right residency. If you did not go to a good medical school and/or did not have good grades, you may want to be a surgeon (which pays well), but you’re likely to end up a General Practitioner (which does not). One makes nearly twice as much as the other, on average. One is hard to get into. The other one is not.
I have known many surgeons that did not go to Ivy leagues. Not every Ivy leaguer wants to be a surgeon. Residency is associated with academic success but the correlation is weak. Even the medical school at East Tennesse State University or East Carolina get some students into surgery residency programs. And those state school trained surgeons still make more money than pathologist who attended Harvard Medical School.
SD, I didn’t say that you have to go to Ivy League. I said that it does make a difference. As does class rank. If you have neither, it’s going to be much tougher to get into one of the more competitive specialties. Getting into medical school to begin with is the tougher hurdle. You don’t have to go to Harvard to do it, but it helps. My wife graduated with a 3.9 from a flagship state university and only barely got into medical school on the first go (though, once there, she graduated in the top third of her class).
So anyway, my main point is that saying that going to Ivy League is a “waste of time” is a pretty significant overstatement, in my view. For every person like my wife that barely got in, there are others that didn’t get in.
A Harvard law school graduate gets paid more because they went to Harvard. A Wharton MBA gets paid more starting out because they went to Wharton. A neuro-surgeon who did a residency at Harvard, the Mayro Clinic, or Alabama-Birmingham all get the same reinbursement from the insurance company. Medicine differs from Law, consulting, or investment banking in that all neurosurgeons receive the same reimbursement.
Thus, people want to get a physicians should not go into massive debt to for a top tier school if they can get a scholarship. honors program, and get into a tracking program.
A good comparison would be a kid from Virginia who has a 1450 on their SAT. They can attend Georgetown, pay $50K a year and probably not end up with a science degree compared to doing to George Mason University, getting a full scholarship, being a governor’s scholar, and having an inside track to Virginia College of Medicine.
If you really care about your children’s future, you would care about their well-being, too. Read The Overachievers: The Secret Lives of Driven Kids by Alexandra Robbins. This is an excellent well thought-out book. It describes the pressures parents put on children and also unwise pressure students put on themselves to get into Ivy League schools. And for what?
It describes kindergartens that prepare one for the ivy-leagues. My friend’s daughter that graduated from Stanford with a degree in education worked at one for a short period. Apparently, the pay was terrible. Her and her husband are now going into nursing. I guess the pay is better for nursing than for kindergarten teachers from Stanford.
Another friend whose husband graduated from Harvard, was so pleased that her daughter only had to provide $15,000. per year for her Brown education according to their FAFSA report. Her and her husband are computer geeks and self-employed, however, their salaries must not be that luxurious.
I don’t want to appear to denigrate my friends’ children’s accomplishments or theirs either. More children are applying to Ivy League schools with the same amount of openings available. Harvard admitted around 2000 students in 2000 and the same number in 2010 with applications increasing 10,000 (from approx. 20-30,000). Legacies are admitted at 47%, so the number of non-related students is very small.
Looking at your children’s giftings and not at academic elitism is a good beginning.