Posted on 12/25/2008 7:56:25 AM PST by SeekAndFind
The debate over the long-term value of a pricey private-school education is heating up, especially in this tough economy. Sure, everyone knows that by sticker price alone, public schools are a sweet deal, with out-of-state tuition and fees that run about 30 percent less than most of their private rivals—and in-state fees running up to three-quarters less.
Indeed, the math is pretty jarring; the difference, on average, ranges between $7,700 and $18,600 a year, obviously no small matter with stock market woes depleting so many people's savings. But in the back of everybody's mind, there's that nagging question: Is the extra money worth it?
To their credit, elite private schools do boast lower student-to-faculty ratios, fat endowments and name-brand cachet that, along with their active alumni networks, have long provided entrée into the upper echelons of the working world.
But if long-term career and salary are what matters—and what else should, especially in today's economy?—then a growing chorus of private-school critics point out that the public-school scenario may actually deliver a far better bang for your buck. The SmartMoney Rankings
In a new twist on traditional college rankings, SmartMoney took a crack at quantifying the long-term value of a college education. Our goal was to spotlight the relationship between tuition costs and graduates' earning power. Working with consultant PayScale.com, which recently published a groundbreaking survey on alumni salaries, we first looked at what graduates from 50 of the most expensive four-year colleges earn in their early and midcareers. Then we factored in their up-front tuition and fees. The result? A unique "payback" ratio for each school.
In the end, our scorecard may be music to the ears of many state-school admissions deans—not to mention a lot of struggling parents. After all, who would've guessed that Texas A & M, No. 1 in our survey, would deliver a payback more than two and a half times that of Harvard? Or that the state universities of Delaware and Rhode Island would beat out every Ivy in the ranking?
Indeed, those unheralded public universities turn out to be a far better deal than virtually all the privates we surveyed. The Ivies in general? They deliver nowhere near the payback on tuition that most parents staring at a six-figure bill over four years might expect. Return on Tuition Investment
Ultimately, we weren't trying to measure the quality of education or colleges' selectivity. Other rankings take ample care of that, and dedicated students will thrive at any of these fine schools. But with boutique private colleges coming under heavy criticism for spiraling costs, our payback numbers certainly raise questions about the actual "return" on an educational investment. For parents fretting about sending their kid to the University of Washington versus, say, Columbia or Brown, they can rest easier knowing that Husky alums recoup their tuition costs, on average, twice as fast as grads from those two Ivies.
Of course, rating colleges is not an exact science, and our methods did get their share of criticism from the private-school sector. At Carleton College, a small liberal arts school in Minnesota that normally ranks very high in college surveys—but only 39th in ours—Dean of Admissions Paul Thiboutot says we underestimated their alums' average salaries by including only those who stopped at a bachelor's degree. "The real earning power is what they end up doing in professional and graduate school," he says.
Other private schools, including the Ivies, say that many of their students pay less than the full sticker price we used for tuition, because of grants and scholarships. (True, but public schools also discount their tuition, especially for in-state students.)
Then there are the schools that argue that payback surveys miss the whole point, since you should enter their hallowed halls to enrich your mind, expand your cultural IQ and improve your critical thinking. (Why else would anyone suffer through Descartes, Dostoyevsky and differential equations?) Caesar Storlazzi, Yale's director of student financial services, for one, points to his school's world-class faculty, libraries and art collections. "Put this all together and the experience is without compare," he says.
Leg Up on Financial Independence
Still, critics of the elite-school path have a quick retort to all this: Show me the money. In a recent survey by the Higher Education Research Institute at the University of California, Los Angeles, 70 percent of college students said making more money after graduation was a major reason for going to school.
And it's no wonder. Along with that diploma comes an average debt of $22,000 (more than double that of 10 years ago), a financial parasite that eats away at starter paychecks, making it harder for grads to upgrade from their beater cars and ramen-noodle dinners. And in this economy, more families are hard-pressed to help support low-earning kids who've boomeranged back home—making financial independence a more compelling goal than ever.
So who gets there faster? It's probably no surprise that when it comes to paycheck size, private-school alums still outearn their public rivals. Using PayScale.com data, we found that three years out, Ivy and liberal-arts grads pull in an average of $51,500, compared with $48,500 for their state-school counterparts. And looking 15 years out, the public-private gap widens more.
But once you factor in the tuition investment, the picture changes dramatically. In our ranking, no private school even makes the top 18. Dartmouth grads, for example, report the highest average midcareer salary, but their payback ranking falls to 21st on our list after you factor in historical degree costs. (Georgia Tech's payback, by contrast, is twice as high.) Got No. 40 Swarthmore on your wish list? While its grads pull in the same early-career salary as alums from Texas A&M, the Aggies' long-term payback is three times better. University of Georgia President Michael Adams, for one, is not surprised at his school's high ranking. "We are such a bargain," he says. Shift at Public Schools
Of course, public schools reminded us that it's not just lower degree costs that explain their ranking; they're also attracting brighter students than before. Experts say that with the number of high school grads soaring (last year marked an all-time peak), state schools have been fielding more applications—and becoming increasingly selective. Many public schools we spoke with report a steady rise in their incoming students' SAT scores, GPAs and class rankings. "The competition to get into top schools has trickled down," says Alexandra Robbins, author of The Overachievers: The Secret Lives of Driven Kids. "There's no such thing as a 'safety' school anymore."
And roping in more-promising freshmen is only a start. For most students, it's the course of study they choose that determines how fat their future paychecks can be. Considering a fine arts, religion or drama major? Such liberal arts degrees are "bottom of the list, earning-wise," says Al Lee, director of quantitative analysis at PayScale. According to its research, the best dough comes in fields like engineering and business—strong programs in many of our survey's top-ranked public schools.
That's a fact that doesn't go unnoticed in corporate America, where recruiting pros say the bias toward brand-name schools is on the wane. "Often, there's a waiting list of companies trying to meet our students because they know we're a rich ground for recruitment," says Fred Wood, a vice chancellor at University of California, Davis. Indeed, according to a study published in the Harvard Business Review, nearly half the top executives at Fortune 100 companies now hail from public schools.
Whether or not they agree with our payback rankings, few private schools deny that their price tags can be daunting, especially in an era when family savings have been so hard-hit. Their financial-aid officers stay busy looking for new ways to help worthy students. In a well-publicized move, many Ivies have started rolling back costs, with Harvard, for one, offering tuition breaks for families earning under $180,000 a year.
But many public schools are staying ahead of the game—by focusing on keeping costs down instead. Elsa Murano, president of No. 1–ranked Texas A&M, bragged to us about how stringently it economizes on administrative costs. In fact, she says, it recently bucked the education-inflation trend by limiting this year's tuition hike to its lowest percentage in 10 years.
It's the kind of thinking that's getting into the heads of more parents, like Kelley Atkinson. Her son, Doug, is still in the 11th grade, but the Eldersburg, Md., mom says they've already decided to up the number of public schools he'll apply to. "There's no way of telling how much money we'll have a year or 18 months from now," she says.
PA state universities have been unable or unwilling to restrain their tuition increases and are among the most expensive state universities in the nation.
Alot of folks do undergraduate at public universities and get RAs to pay for grad work and support research at Ivys later.
You would expect the Ivy League graduates to be some of the highest performing folks in society. Just getting and finding a way to pay for it makes it self selecting. In addition you have the connections for the less ambitious/skilled legacy students. It really does make a difference who you daddy is.
What I have found at my employer is it is more a function of your sex (preferred female), race/ethnicity (black or hispanic), and who you daddy or mommy is (nepotism) in my employer. I used to worry about it, but, since none of the rockets, wants my job (or even to be my supervisor) it does not impact me that much. I can always walk out the door anytime that I want.
Large employers become like the government eventually. We have more watchers than workers, and it is getting worse. We have rockets that spend 14-18 months in a job before moving to the next job. How can anyone honestly assess the performance of someone in such a short time span?
“But in a world of subsidized lending for college, who cares about the ROI on tuition anyway? Only absolute return should matter.”
There are so many problems with this attitude, I won’t even try to explain it to you. You have a bright future in government waiting for you.
Jeez, thanks for the kind words. I am only responding to the error in their financial calculation as a financial calculation—and pointing out the effect of subsidies. In no way was I trying to suggest that college choices more broadly should be about financial return.
“How much do undergrads see of these great academics? For getting your PhD, yes. Particularly since if an employer sees an MIT PhD, he won’t even ask where you got your BS.”
For better or worse, going to an Ivy undergrad increases the chances of getting into a top doctoral program as well.
“I am only responding to the error in their financial calculation as a financial calculation—and pointing out the effect of subsidies. In no way was I trying to suggest that college choices more broadly should be about financial return.”
Well, apologies for that - but I do think that ROI IS a reasonable thing to do, even in the subsidized environment. There is a great flaw in the Ivy League expectation in my opinion. It is true that on average, Ivy Leaguer’s do make more money in certain areas. The answer to this is probably more tilted towards their entrance standards - which select for higher IQ (on average) than, for instance, a public university. It would follow that smarter people, on average, will be more successful.
Connections can help, but rarely, in my opinion, can connections alone make someone successful - the performance is the biggest part, and that correlates with IQ (on average).
So, all things being equal, I don’t think it is a legitimate comparison to compare an Ivy League student’s salary (where the average IQ is higher) to a bright student from another venue who may have the same IQ, but whose earning statistics are diluted by a fair number of folks who are not as bright, as is the case with most public universities.
I think you’d find that IQ and starting/mid-career salaries is a greater correlating factor than anything else.
Yes, Ivy paper may help in certain specific circumstances, but I think that when all is said and done, there is a financial value component to education, and an ROI is a reasonable way to assess it - as long as you have statistically similar assessment populations. A higher cost institution would have a lower ROI - and that wouldn’t work to Ivy league’s advantage by that measure.
Subsidy or no, it is a reasonable question to ask, and the results could be of use in selecting or not selecting an Ivy League education.
An Ivy pedigree has never in and of itself influenced a hiring decision that I’ve made - it’s always capability and motivation that I look at. I suspect it is what counts for most other folks too.
I don’t dispute really anything that you say, except for a couple of things. In a number of fields, Ivy or equivalent is a common screen for top job opportunities. Connections sure do help in a number of areas.
And, back to my original point, on a financial level, in a subsidized environment, it doesn’t really matter if an education that costs 3x as much only ‘returns’ twice the lifelong salary: you’re better off earning twice the long-term salary, because that income dwarfs your original education costs—and you’re not paying those costs fully anyway.
In a nutshell, YES. Sure, there are certain courses that are 'better' taught in Ivy league (or Ivy league-esque) schools ...for instance my sister went to one of the best institutions for chemical engineering in the United Sttaes, and from what she tells me there are few other institutions that she would have gotten that level of scale and scope.
HOWEVER (particularly when it comes to business) the main advantage of Ivy League (or esque) institutions is PRIMARILY the contacts and pedigree. It is not about the competence of staff (which is generally higher, with a lot of ex-professionals who actually did what they are teaching in the real world), or the student-professor ratios (which are better than in average universities), or the resources available (which are top-notch and can offer certain advantages) ....the main thing is the contacts.
If one person has an A but has no contacts, and another has a C but has major contacts, the person with a C will have it quite easy starting out. Sure, the one with the A (I am not talking about grades ....more about will to power and a strong self-drive) will still become very rich (may even become richer than the other person), but he will have to do it the hard way (the traditional way that necessitates good old fashioned sweat equity). The person with a C but with contacts may be totally incompetent and totally unworthy of the position, but due to contacts and pedigree he will get a major boost.
Look into the world of business AND politics ...there are many people who are total incompetents who only got where they are due to contacts and pedigree. Take that out, and they would not even run a small family business in Enid Oklahoma! Yet, due to those contacts, they hold some of the most powerful positions in High Finance and Politics, and (as to be expected) they did a 'great' job of it in the process.
A person with an A (again, not an A of academics necessarily, but an A of personal fortitude) will always make it in life, and will always be rich and have plenty (in terms of money as well as other measures of 'wealth'). That will always be the case. However, one cannot discount the profound and prodigious advantages that can be garnered by being fortunate enough to be of a certain pedigree, or by attending an institution of a certain pedigree (there is a reason why during the Dot Com days one of the analysts ...either Grubman or Blodget ...wrote an incorrect assesment of a company because he had been offered a position for his child at a prestigious prep school ....thus it goes far beyond Ivy league. You have to go even lower, all the way down to schools like Sidwell in the US and Eaton in the UK).
When I have children, I know I will pay top Dollar (or whatever currency pertinent) for them to go to the very best schools possible. Not just for the education (although that will be a prime consideration, and I will supplement it with some home schooling to develop an edge), but also for the patina that arises from attending certain institutions.
If they can give a C personality a boost (as we've seen in some of our business and political leaders), I am sure they can give an A personality one as well.
In summation, Ivy League schools have never been about the education. Sure, they offer top-notch educational opportunities, with facilities and educators who are as close to the 'real thing' as one can get (since, in mnay cases, they used to do the real thing), but the main benefit of such an education is contacts. Contacts who can smooth things for you in getting a job, and being on the inside track, can be a major advantage.
If I were the CEO of a major operation, I’d have one special rule...no one from a Ivy League school as a top manager or financial wiz within my company. I want results...not “connections”. Everyone of these guys who allowed the SEC to screw up badly or members of the banks that went down in failure....were Ivy League members, and they got their position because of “connections”.
A&M is an excellent engineering school. But it would be financially better to go to A&M’s Redneck little step brother in Stephenville called Tarleton. Get the undergrad there and then transfer to A&M for grad work to get the connections. Tarleton will also more than likely have better teachers for the non core classes.
“And, back to my original point, on a financial level, in a subsidized environment, it doesn’t really matter if an education that costs 3x as much only ‘returns’ twice the lifelong salary: you’re better off earning twice the long-term salary, because that income dwarfs your original education costs—and you’re not paying those costs fully anyway.”
Fair enough- on a hypothetical situation where an Ivy education yields twice the lifetime salary, your point is well taken. That hypothetical is wildly improbable if you consider two comparable individuals one Ivy, one not though-
For the vast majority, a financial comparison and ROI is not only reasonable, but recommended - in my opinion.
Yes, but a graduate fellowship is just the extreme case of what is generally the case with the Ivy’s and similarly exclusive private universities: almost no one pays ‘rack rate’ except the rich whose kids get in on legacy or ‘leadership’ rather than grades.
My daughter went to Mount Holyoke, not an Ivy, but one of the ‘Seven Sisters’ from back in the day when the Ivy’s were men only, and there were comparably elite women’s colleges, and we paid about what a state university would have cost—a little more than it would have cost to send her to one here in Kansas, but less than U. Mass. Amherst would have cost us (and Massachusetts doesn’t have as huge an in-state/out-of-state differential as most states do).
Undergrads at the Ivy’s usually receive instruction from the eminent faculty once they are in courses populated by majors.
For distribution requirement courses and service courses, they typically get a junior (or visiting) professor as a lecturer and grad students as TA’s. Though sometimes they’ll get a senior faculty member as the lecturer. When I was on sabbatical back at my grad alma mater, U. Penn, I taught a section of Calc II to help finance the visit—I was having to maintain three residences (don’t ask)—one of the other lecturers for the course was a Dean who was also an eminent scholar in partial differential equations and just liked teaching the particular course.
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