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.
Except certain sciences... IMO NO.
For a slide show of the Top colleges that pay off ( value for the tuition you pay ), see here :
http://www.smartmoney.com/Personal-Finance/College-Planning/colleges-that-pay-off/
How much of that is because of the education itself and how much because of contacts made in college and the families who send their kids to those schools?
According to Ray Kerrison of the NY POST, Here’s a list of some of the main players in this financial crisis and their academic credentials ( notice the Ivy League credentials) :
It was then discovered that Fannie Mae had improperly deferred $200 million in expenses, allowing Johnson and his cronies to walk away with huge bonuses. Johnson took down $21 million.
His credentials: A master’s in public affairs from Princeton University, later a member of its faculty.
Franklin Raines: Served as Fannie’s chairman and CEO from ‘98 until he took “early retirement” in ‘04, when he was accused of promoting massive accounting shenanigans enabling him and others to earn huge bonuses.
Raines left with a $90 million payout. He set in motion the subprime avalanche resulting in charges of “pervasive and willful” earnings manipulation, lax controls, perverse incentives, unjust bonuses.
Raines is a graduate of Harvard Law and was a Rhodes Scholar at Oxford.
Jamie Gorelick: Vice chairman of Fannie from ‘97 to ‘03, serving alongside Raines. In an interview with Business Week in 2002, Gorelick said, “We believe we are managed safely. Fannie Mae is among the handful of top-quality institutions.” A year later, regulators accused Fannie of a $9 billion accounting scandal, of which she was a prime beneficiary.
She walked away with $26 million.
Gorelick’s education: A BA (magna cum laude) from Harvard and a JS (cum laude) from Harvard Law.
Richard Syron: Chairman and CEO of Freddie Mac until he was terminated on Sept. 6. Like the rest, he made a killing while the ship was sinking beneath him. In 2007 alone, he took home $19 million in cash, stocks and other compensation.
Four years ago, Syron was warned by his own risk officer that Freddie Mac was embracing too much risk underwriting shaky mortgages. He brushed it aside.
Syron graduated from Boston College with a BA and earned advanced degrees in economics (can you believe it?) from Tufts University.
Rep. Barney Frank: One of Fannie and Freddie’s biggest boosters in Congress. In 2003, when the Bush administration recommended tighter regulation of the two companies, Frank rejected the idea out of hand, saying: “They are not facing any kind of financial crisis.” Famous last words.
Frank graduated from Harvard.
Sen. Chuck Schumer: Second only to Frank in the Congress in his unwavering support of Fannie Mae and Freddie Mac.
Three years ago, when Fed chief Alan Greenspan warned of problems with the two institutions, Schumer replied, “Fannie and Freddie have problems, and there are ideologues who want to undo it. But there are ways to fix the problems . . . When the sink is broken, you don’t want to tear down the house.”
Last July, Schumer raised an alarm on the solvency of a mortgage bank, IndyMac, setting off a panic among depositors, who withdrew $1.3 billion from the bank. Financial analyst Jerry Bowyer charged that Schumer had set off “the second largest bank failure in US history.”
Schumer got his BA at Harvard and JD at Harvard Law.
Sen. Chris Dodd: The No. 1 recipient in Congress of campaign funds from Fannie and Freddie. When they were about to crash with a thud heard round the world, Dodd said, “They are fundamentally sound and in good shape. To suggest they are in major trouble is not accurate.”
Dodd has a BA from Providence College and a JD from the University of Louisville.
The question arises: How could so many learned men and women, endowed with so many honors from America’s highest institutions of learning, set in motion the financial catastrophe that now grips the nation?
Conclusion: The evidence here is overwhelming that a superior education can certainly rake in big money - tens of millions of dollars, in fact - but sadly it is no guarantee of competence, judgment, prudence, trust or integrity.
Especially in politics.
An Ivy League education will open doors for the rest of your life. Damn right it’s worth it.
Exactly. Just as important as Ivy education was their baseness and corruption.
Any honest and decent person wouldn't have made it to the positions of the above mentioned illustrous characters.
A lot of business graduates from small, less well known colleges went on to open small businesses.
Which isn't a bad thing... and "small" businesses generally pay-off attending "lesser known" colleges.
Absolutely. And in quality of life measures beyond income.
But in a world of subsidized lending for college, who cares about the ROI on tuition anyway? Only absolute return should matter.
It isn’t the education it is the Rolodex.
Depends on what you define as “worth the money”. If it means securing the highest paying jobs, than often no. If it means becoming an expert in a certain academic field, than often yes, its worth it. If you want to study under great academics and do research for famous scientists, Ivy League may be a good idea. If you want to start a business, a good internship might be a better use of your money.
Not every institution of higher learning offers a course in "Scoring Major Moolah at the Public Trough While Undermining a Nation" in the curriculum?
Yup. The education is there for free in libraries all over, but the contacts can be worth their weight in gold and then some.
That's why I made a distinction between hard sciences and humanities.
The vast majority of Ivy faculty on the humanities is commie. There is no way of putting it mildly. You can't study under great academics in these areas, unless you become yourself a flaming liberal.
I would say yes only if you make good contacts that will assist you in finding a job. The alumni is very strong at Ivy League schools.
Compare the number of times someone from an Ivy League college says something like "I learned more about supply and demand curves than someone from a public university" versus "I had classes with/roomed with/was a fellow alumnus with X which helped me get a job at Y."
I know the Ivies also give some 100% to poorer students, but I wonder if they are kept out of that most important part of their private college experience.
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