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College tuition can vary from less than ten thousand dollars a year at a state college to more than $30,000 a semester at an elite private college or university. Considering that many students go on to graduate or professional school and the amount of student loan debt that some students graduate with, you have to wonder, “Is it really worth it?”
Or more to the point: does it pay to go to really expensive college or university?
In my college planning presentations, the first thing I tell parents is that how much you pay for college almost always comes down to one thing – the school your kids choose to attend.
Whether or not it pays to attend a more expensive school is a decision the student and parent will have to make. For a lot of families, the decision comes down to more than just money. It also includes internship and job placement opportunities, the size and location of the college, campus life, and many other factors.
I am not aware of any independent research that supports the argument that graduates of schools with the lowest acceptance rates and the highest cost of attendance make more money or have more career opportunities than those who go to more affordable schools. Although, I have read some articles and blog posts arguing that elite schools provide better career opportunities and potentially higher income for their grads.
The problem I have with these articles is that even if they include statistics to back up that argument, I am still skeptical. For example, was the student successful because of the specific college they attended, or was the student successful because they were already a cut above the rest even before they enrolled?
Here’s what I mean: Harvard University accepts fewer than 4% of the students who apply. Of those that get accepted, the average ACT score is 34. Many also have perfect GPAs, come from families with above average means and boast a long resume of extracurricular achievements before they even finish high school. If this is Harvard’s average freshman student, is it any surprise that the average Harvard grad has better career opportunities and makes a superior income over their lifetime?
To look at it another way, wouldn’t that same student have a better than average chance of a superior income and career opportunities even if they went to more affordable college or university?
To be fair, I really don’t know what the average student is like at Harvard University. Or Stanford. Or Northwestern. Or any other school for that matter. But I do know the numbers and the stats that these schools report. It doesn’t take a Harvard grad, to see that most of the kids who attend these schools are exceptional from the start. And exceptional students make for exceptional graduates who just might skew the future salary data in favor of their alma matter.
Another thing to consider is your student’s career path. For example, a teacher’s salary is a teacher’s salary. The school district hiring your recent grad doesn’t care that she spent $60,000 a year on her undergraduate degree.
What if your student’s career requires an advance degree like a medical or law degree, professional certification, or master’s degree? According to the Education Data Initiative, the average medical student debt exceeds $200,000 and that doesn’t count what they spent on their bachelor’s degree. Is it possible that paying top dollar for an undergraduate degree could burden a young person to such a degree that they wouldn’t be able to afford the advanced degree necessary for their career goals?
If your student plans a career in education, non-profit management, the arts, public service or any other career with modest income potential, or if they have to get an advanced degree to pursue their career does pay to spend the money for an elite education?
I am not knocking Harvard University or saying that an elite college is inherently a bad idea. No doubt, the quality of education is fantastic. And in many cases, these elite colleges offer need-based financial aid that can make them much more affordable than what their sticker-price might suggest.
I would also agree that some of these schools may offer opportunities that other schools do not. Years ago, a professor from the Wharton School of Business told me, “Certain opportunities go only to those who graduate at the top of their class from the best schools.” Specifically, he was referring to Harvard, Yale, Princeton, Stanford, and MIT.
That may be. In fact, if you can afford it and if your student has the ability to graduate near the top of their class from one of these schools, they should probably go for it. However, I would hesitate to commit to an elite school, potentially doubling or tripling the cost of my student’s college education, just because certain opportunities might happen.
As a financial planner I can affirm the adage, “It’s not what you make that matters. It’s what you keep.”
Young people today face multiple threats to their long-term financial success. The median cost of a home in the United States, and the Twin Cities, is nearly $400,000. The Center for American Progress ranks the Minneapolis-St. Paul metropolitan area #6 in the nation when it comes to paying for childcare. The average cost for infants exceeding $16,000 a year. With a national debt in the tens of trillions of dollars, many argue that taxes for high earners must rise in the future.
Most of these things are out of the control of your student, but choosing an affordable college that is a good financial fit as well as a good educational fit isn’t one of them.
To the students who are considering mortgaging their future to attend an elite college, and to their parents who will risk their own financial security to support them on this journey, I suggest you carefully consider all your options and ask yourself, “Is it really worth it?”
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.