In 2002, economists Stacy Dale and Alan Krueger conducted a study showing that students who were accepted into elite colleges but attended less-selective ones ended up earning just as much money as students who attended elite colleges. That study was one of the motivating factors behind my decision to attend an affordable, in-state public college.
Now, the two economists have updated the study with new data, more detail -- and the results are even more compelling. In the abstract, they report: "When we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero."
And, unlike in the earlier study, they didn't find that tuition or a Barron's ranking had a statistically significant impact on earnings.
In the past, Krueger speculated that by attending a less-selective college, students of high aptitude possibly graduated with higher class ranks and emerged as campus stars.
For some students, the study showed that attending a school with a "better" student body actually correlated with reduced income. Economist Robin Hanson notes that the study "shows that attending a college with higher SAT scores clearly lowered the wages of women 17-26 years after starting college (in 1976) -- a school with a 100-point higher average SAT score reduced earnings by about 6-7%. . . . One obvious explanation is that women at more elite colleges married richer classmate men, and so felt less need to earn money themselves."
It's fascinating stuff, and required reading for anyone considering shelling out a six-figure sum for a fancy diploma.
One important note though, from a financial perspective: Because the most elite schools in the country generally have huge endowments and very generous financial aid, few students emerge from those schools with significant debt loads. Where you get into trouble with debt is the second- and third-tier schools (like that financial aid outhouse New York University).
And for students considering those schools, this research raises an obvious question: If you're unlikely to benefit financially from attending Princeton, who in their right mind would borrow $50,000 to go to NYU?
Zac Bissonnette'sDebt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parentswas called the "best and most troubling book ever about the college admissions process" by The Washington Post.