Weighing prestige vs. cost of colleges
Many families with rising high school seniors will spend part of their summer touring college campuses. The college application process has become a source of intense pressure for many young people, often driven by what the students understand to be their parents’ and society’s expectations. In addition, tuition rates have soared, and student loan debt has become a huge debate in politics and a burden on our economy.
Many parents believe that the high cost of an elite school is ultimately worth the price because their child will receive better opportunities and higher incomes. In actuality, research shows that where you attend college has little effect on future success or income. In addition, parents don’t realize the true cost of loans. In this article, we will examine what research has proven about prestigious colleges and what experts recommend for student debt.
Research Proves Elite Colleges Don’t Provide Better Results
Numerous studies demonstrate that attending an elite university does not inherently lead to more success, wellbeing, or better opportunities. Nowadays, whether you go to college definitely impacts your employment options. But where you go to college is not as important and matters far less than your academic performance and the skills you can show employers. Here are some research results:
- In 1999 and 2011, economists Alan Krueger and Stacy Berg Dale compared the earnings of graduates of elite colleges with those of “moderately selective” schools. The economists found that the earnings of the two groups 20 years after graduation differed little or not at all.
- In 2014, a Gallup-Purdue University study of college graduates showed that the type of institution they attended mattered far less than what they experienced while attending when it came to being engaged at work and experiencing high well-being after graduation.
- In 2015, a study from Brigham Young University and San Diego State University compared the earnings of individuals from schools with different selectivity rankings, controlling for their majors and their level of degree attainment 10 years after they completed undergrad. The study determined that for many career paths, it just doesn’t matter where a person got his or her education.
- In his book, David and Goliath, Malcolm Gladwell’s research found that, if you attend the second or third most selective and rigorous choice on your list, you are more likely to outperform your peers.
If prestige isn’t important in selecting a college, what is?
Financial cost is a very important factor. Many prestigious universities are so expensive that students are overburdened with debt upon graduation. When you choose a college you can’t afford, there are always long-term financial consequences, either for you, for your student, or both. Lenders and the federal government make it too easy to overspend on a college education, evidenced by the fact that nearly 20 percent of the nation’s 43 million federal student loan borrowers are in default. Student loan borrowers in the U.S. face significant challenges, including delinquency, default, and increasing balances, as they navigate the complexities of the repayment system.
Your 18-year-old child might think now that they are ok with the idea of paying student loans off for 20 years after graduation, but they don’t have any real concept of paying bills and managing a budget yet. More than likely, your son or daughter will be miserable in the future when their debt restricts their ability to have financial freedom. In addition, it’s hard to plan appropriately now for future problems later. Handling payments becomes more difficult with economic ups and downs and unexpected costs that inevitably happen in life.
Even if you think debt is necessary, limit the borrowing to what’s absolutely necessary. This might mean your child commutes or starts out at a community college for the first year. You should also consider whether your child is studying a field where a graduate degree may be necessary for employment advancement.
Experts agree that as long as the total debt at graduation is less than the annual starting salary, your child should be able to pay back his/her student loans in 10 years or less. If you stretch beyond that rule of thumb, your student may find their debt burden overwhelming.
In addition, teens should consider their values when determining which university to attend. Rather than the prestige of the college, teens should think about what’s most important in life to them and use those factors to determine the right institution for them. Factors might include culture of the institution, course of study, adventure, wealth accumulation, knowledge, creative freedom, and service.
Ultimately, what a student gets out of a college is mainly determined by what they put into it. So before you worry about getting your teen into an Ivy League school, remember that what’s most important is what your teen will do, at college and in life, to keep improving their skills, to develop their character, and to remain persistent. Your teen will be just as successful in a “less prestigious” university, but ultimately will be much happier without the stress and burden of debt.