But how much does it matter where you go to college? Is there a big disparity in success and income
levels based on which four-year
university you attend? The answer to
this question is of paramount importance not just for alma mater bragging
rights, but because the cost of higher education has skyrocketed. More students are graduating with a student
loan debt-load they’ll be paying off for decades. So does it really matter if you get your
degree from a prestigious (and expensive) private school, or does any old degree
from any college pay off just as well? I
hit the library (ok, Google) to find the answer.
The first thing I noticed when
researching this question was the surprising lack of definitive studies,
especially considering the impact. The
cost of a degree is more than ever – some estimates are that a college degree
costs $300,000 on average if you add room and board, books, and opportunity
cost of missing 4 years in the working world – which makes college the biggest
purchase you’ll make in your life besides your home. For 7 out of 10 graduates, student loans pick
up a good portion of the bill, almost $30,000 each. Student loan debt load has now topped one
trillion dollars in the United States and paying for college is acknowledged as
one of the biggest stressers for Millenials.
And yet there are only a few comprehensive studies that analyze the cost
of college compared to the payout. Some
of the studies are from as far back as the 1970’s or look at only a small segment
of the population. But I wanted to get
to the bottom of this question so by pulling an all-nighter to cram for this
exam (just like in college,) I came up with an answer.
Does it matter where you go to college?
The short and sweet answer
is: Yes. But not nearly as much as you may think when it comes to getting a
job, professional success, or lifetime income levels.
The research on this is
complex and often contradictory:
A more recent study by Texas
A&M professor Mark Hoekstra in 2009 compared the income levels of white,
male students (so there was a homogenous and large sample size with controlled
external variables) who had just barely missed
the admissions cut-off for an unnamed public flagship university to those of
students who had barely been accepted. Ostensibly, this compared students of similar
academic standards to see if those who got into a good school later out-earned those
who were rejected, and therefore had to attend a more pedestrian
institution. Hoekstra found that
enrolling at a flagship university increased their wages by 20% over time –
which is significant.
A 1999 paper in The Journal
of Human Resources backed that up, showing that elite schools did equate to
higher paychecks and that effect did increased over time. From all high school graduates in 1980, those
who attended a top private university went on to earn 20% more than their
counterparts at bottom tier public universities. Antiquated as it may be, the data from 1980
shows that going to an elite school pays off.
But there’s a big caveat to
these findings - we don’t know how much of this is causation and how much is
correlation. Is it the degree that helps
them earn more, or the fact that they’re smart and motivated enough to attend
that college and able to network with other smart people? A follow-up study in 2011 came to the
conclusion that there’s certainly more parity and consistency in educational
quality these days, so where a student goes to school doesn’t matter as much as
other factors like their major, extracurricular activities, networking,
internships, and their grades. In
summary, there may have been a huge income divide 40 years ago, but less so
now.
Perhaps the most conclusive
study was conducted by professors at the University of Texas at Dallas,
University of Tulsa, and Cornell, who examined the wages of students who went
to college in Texas between 1996 and 2002.
The professors looked at data from four different schools; Texas, Texas
A&M, a group of the rest of the state’s non-flagship colleges, and finally
the state’s community colleges. They
found that students who went to the more prestigious U of Texas and A&M did
have better post-grad income levels, but the variance most depended on how well
they did at their own school. In fact,
the top students at A&M did better than the top at the U Of Texas. Having a valuable major – like engineering –
and how well they ranked academically was a far greater determiner of success
in later life.
Another study with a
fascinating conclusion was conducted by Stacy Berg Dale of the Andrew Mellon
Foundation and Alan Kreuger of Princeton.
By compiling data from the 1970’s, they matched students in pairs – one
whom was rejected and the other accepted by similar universities. Those who didn’t gain admission usually ended
up enrolling at a lesser university (which they could get in to.) Decades later they revisited those “student
siblings” and analyzed the data on income levels. Their startling conclusion was that it didn’t
really matter where you went to school – it mattered most where you applied! If
you were the kind of person who could come close to gain admission to a great
college – enough that you were willing to apply – then you’d most likely earn
and succeed post-graduation almost identically as if you actually attended that
same school.
All of these studies reinforce the notion that
there’s a correlation, but not causation, with the quality (and cost) of
college and later income levels. Of course you’ve got a huge advantage in
potential earnings if you attend Yale, Harvard, Princeton, or MIT. But once you discard those institutions from
the mix, whether you went to USC or Cal State Sacramento isn’t the most
important factor when it comes to getting a job and the income you’ll
earn.
So what factors are more important?
Look for part 2 of this blog
next week, what employers look for in a college graduate.
