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Is An Ivy League Education Worth the Price?

March 30th, 2010 . by economistmom

It’s a question I am asking this week, as my oldest daughter hears about her admission status at the 7 schools she’s applied to–4 of them Ivies, who do not give any merit-based aid. As I tweeted yesterday, she’s received a national merit scholarship of $2500 (one time) to any school she decides to attend, but that is only about 1 percent of the 4-year cost of her going to Dartmouth–which in a money-blind contest she picks as her first choice.

There are big reasons why her dad and I chose to raise our (four) children in northern VA when we first decided to come work in Washington, DC, and two of them are called “U VA” and “William and Mary” (or is that three of them?!)–note their places in this Kiplinger “best value” ranking.  She’s gotten into both. As an “Economist” and a “Mom” readers will understand why I find this agonizing.

If you are willing to follow my agony over the next few weeks, I am willing to share…

I am looking for advice everywhere–from Ivy League grads who believe they wouldn’t be where they are today were it not for their Ivy League education, to Ivy League grads who regret graduating with so much debt, to public university grads (like myself) who don’t believe life could have turned out that different had we gone to an Ivy League school instead (and who paid off their small loans rather quickly after graduation).

And naturally I’ve been scouring the internet, which is how I found the ABC News video above with the very bright young man who is the CEO and founder of Unigo.com–a fascinating site that features “insider” info on colleges and which I had never heard of until tonight when I was googling on this very question.

Stay tuned for updates, and feel free to advise!

31 Responses to “Is An Ivy League Education Worth the Price?”

  1. comment number 1 by: SteveinCH

    Diane,

    I’m a Dartmouth graduate. I grew up in New England and everyone wanted to go to an Ivy League school. Fortunately for me, my parents could afford it so I didn’t leave with any debt.

    Given my path through life, I think an Ivy league degree was helpful (I also went to grad school at Princeton) but I think it was far more important how well I did in school.

    I guess the best advice I can offer you (I’m two years behind you with my first son) is to have your daughter go to the place that is most likely to make her happy. I think being happy at college is a big driver of how well you do.

    I can say many great things about Dartmouth, probably the most unique of which is the degree to which the actual instruction was and I think still is conducted by professors. With all due deference to grad students, I think they are grad students for a reason. That said, this is a characteristic of a small liberal arts school, not the Ivy League per se.

    Good luck. I know I’m not looking forward to going through the experience.

  2. comment number 2 by: catyler

    I am a W&M BA and a UVA PhD who never applied to an Ivy because I was turned off by the competitiveness and cold weather. I’ve received excellent job offers coming out of both schools, right there with Ivy grads. I think people often forget that the variance of student ability within a school is always greater than the variance across schools. I now have National Merit students at an average State U in the middle of the country who go on to top 10 PhD programs. In my opinion, success has much more to do with the student and what they do with the opportunities in front of them than the school.

  3. comment number 3 by: hanmeng

    I went to a public univ as an undergrad, and to an ivy for my PhD. I don’t believe the public univ. degree has made any difference for me, but the ivy PhD may have tipped the scales for finding (liberal arts) teaching jobs. (Given the state of the market, I don’t suggest a liberal arts PhD, by the way!)

    I get the impression that it’s easier to become part of the political & business elite when you can make connections with that class as an underdgrad in the ivy league, but that’s not something that ever interested me.

  4. comment number 4 by: npm

    There’s this, which speaks to financial returns (but not nonfiancial):

    http://www.mitpressjournals.org/doi/abs/10.1162/003355302320935089

    Estimates of the effect of college selectivity on earnings may be biased because elite colleges admit students, in part, based on characteristics that are related to future earnings. We matched students who applied to, and were accepted by, similar colleges to try to eliminate this bias. Using the College and Beyond data set and National Longitudinal Survey of the High School Class of 1972, we find that students who attended more selective colleges earned about the same as students of seemingly comparable ability who attended less selective schools. Children from low-income families, however, earned more if they attended selective colleges.

  5. comment number 5 by: AMTbuff

    If you are good enough to graduate at the top of your class, it’s more impressive to do so at an Ivy League school. That’s the only scenario I can think of where it might be worth the extra cost. Even then, it’s probably not.

    All undergraduate education is similar in quality. Once you have a graduate degree few people care where you did your undergrad work. After you have a few years of work experience, few people will care about your graduate work either. At each step, who you know is more important than what school you attended, although obviously the latter can affect the former.

    The college you choose should provide a good selection of great people to have as friends and possible future spouses. Losers are present at all levels of college, so you have to trust your child to choose winners. A top state school will have plenty of them, especially now that private school costs are so high.

    Save the extra $80,000 to eliminate loans and to help out with grad school costs. I have a feeling that the next bubble to pop will be free rides to grad school on the backs of overpaying undergrads. The bubble in liberal arts degrees has, IMHO, already popped. A liberal arts degree probably carries negative present value when all costs are considered, so unless your dream job requires liberal arts credentials you’d have more job options with a science degree of some sort.

  6. comment number 6 by: mkneuman

    To echo what has already been said: an undergraduate education is more about learning who you are and what you are good at. I’m went to a state U, and am now finishing my Master’s in May at a different state U that is a strong competitor with the ivies in my field. My character and worldview were certainly developed as I interacted with a wider array of people (from vastly different socioeconomic strata) than I would have imagined at these institutions. That opportunity would not have been as present at an ivy. She’ll make friends and learn a ton anywhere she goes; save the money now until it really matters with her graduate education.

  7. comment number 7 by: economistmom

    FYI, I’ve opened up comments from people who haven’t commented before as automatically approved for moderation, because I want to encourage participation. I will go back to the screens if this proves too dangerous, but for now, keep the opinions on this question coming. As I write, my daughter Allie is down looking at U VA with her dad and 17-year-old sister Emily (just one year behind her in school). And tomorrow they visit William & Mary. I am staying back in northern VA with the younger two kids (just 7th and 5th graders), which is a little frustrating in that I can’t be doing the live lobbying! ;)

  8. comment number 8 by: rjs

    hmmm…which ivy did bill gates attend?

  9. comment number 9 by: Brooks

    Not to scare a kid by thinking too far ahead, but if grad school is highly likely and if financial resources may be insufficient to max out spending on both undergrad and grad school, top priority may be to ensure available funds for the best possible grad school, and go to a less expensive undergrad program that is good but not the top and kick a** on GPA and other resume-builders for the application to grad school. Anecdotally it seems to me that ultimately the reputation of the grad school (and the alumni network) provides a greater springboard for a career than that of the undergrad program if followed by grad school. For example, better to go to a cheaper, good public school for undergrad and do very well, then (perhaps after a year or two of work experience, depending on the field) max out on the best possible grad school.

    Of course, there’s more risk with that strategy since there’s no guarantee of doing exceptionally well as an undergrad (or of having sufficient funds later for grad school).

  10. comment number 10 by: Shane

    I went to a state university and graduated with a 4.0 in Economics. Right out of college I got a job with many Ivy League grads with my lowly state school education. Later I ended up attending another state university and finished tops in my class for my PhD. I don’t think going to a state university hurt me at all, and I NEVER PAID ONE PENNY OF TUITION MONEY FOR 10 YEARS OF EDUCATION. When I graduated I had a great job and ZERO debt.

  11. comment number 11 by: Mark

    This is one of those areas where emotion and status may muddle our thinking a bit. I recently heard Denise Clark Pope (Stanford) cite are some rigorous longitudinal studies of outcomes (health, income, zip code, likelihood of becoming a CEO, self-reported happiness, etc.) and their association with Ivy vs. other degrees… and while an Ivy degree was positively correlated with better objective outcomes in the 1940s through 1960s, she said the effect started to wash out in the 1970s and 80s… to the point that there is now zero (0) correlation now, provided your child graduates from one of the top [250, as I recall] schools in the country. Sounds a pretty broad swath. I wonder if you might summon some of that data, in service to some factual clarity around this?

    (I love your blog by the way.)

  12. comment number 12 by: Jeff Smith

    There is more to the literature on the effect of college quality on earnings than the (very good) Dale and Krueger paper, including papers by yours truly in the Journal of Econometrics and the Journal of Labor Economics. Most of the rest of the literature is more positive.

    My take more generally is that the “within” variation swamps the “between” variation. College is what your daughter makes of it. She can party for four years or she can experience amazing intellectual and personal growth. Which one is largely her decision.

  13. comment number 13 by: Bill C

    In terms of the actual quality of education, I would suggest that good small liberal arts colleges like Carleton and Wesleyan (or possibly Washington and Lee, closer to you) are the best mainly because students get more direct attention from faculty. As you know, at a place like UVa, intro and intermediate classes tend to be large, and the faculty are more focused on their own research and grad students. I’m not sure what class sizes are like at Ivies, but I suspect they’re similar to state research universities in terms of faculty priorities not being on undergraduate education.

    That said, in terms of outcomes, I’m not sure it makes a huge difference. I certainly know very smart, successful people who were educated at large, not very prestigious state schools. And UVa does have the benefit of having a really good reputation (which means its not immune to snobbery - at one of the shops across from grounds [not "campus"] your daughter can pick up a window sticker that says “The University”).

    Some of the other commenters seem concerned about paying for grad school, but I’m not sure I’d worry about it - an academic grad program (PhD) should give funding, and a professional degree can be s a good financial investment which you might reasonably expect her to finance herself.

  14. comment number 14 by: Jennifer

    I graduated from college a decade ago and continue to agonize over this, especially as I start to save for my kids’ (a toddler and an infant) education. (My husband is still paying off his education … BFA … no parental help at all … sigh.)

    I went to a highly selective, uber-nerdy (aka not good a career outside a PhD) non-Ivy on the west coast for undergrad (no merit scholarships granted there) and a top 10 MBA program in the Midwest, just recently. I am supremely lucky in that I actually have no debt at all as my grandfather paid for tuition #1 and housing bubble paid for tuition #2. But still, that is $200k (!) my family could have used for other things.

    My feeling is that I want my own kids to attend a solid state school for in-state tuition because I am not convinced that the ROI was worth it for my undergrad, much as I adore my alma mater. Kids who have parents who can help them navigate the high school to post college career I think would do just fine skipping the pricey undergrad. That was not the case for me, but it will be for my kids. I think that is more valuable than loading up on college debt right out of the gate.

    (But for graduate school, unfortunately, I think the tuition was probably worth it.)

    Huge debts at a tender age is an awful burden. I just don’t think my life is significantly better for the pricey tuition. (Ditto for wedding expenses ;)

  15. comment number 15 by: Arne

    A research assistantship paid my tuition at MIT, so it was worth more than I paid, but I have not kept in touch with my classmates. If your daughter is abitious and likely to make contacts, it will be worth more than if it is just a place to learn.

  16. comment number 16 by: UJ

    Congratulations to Allie to be in such an enviable position. Obviously a bright young woman with very bright parents! From my perspective in the Midwest, an Ivy league degree carries a lot of weight and can open doors unknown to others. While a great education can be achieved at many great public and private universities - IMO the difference is the network one has once graduated. Harvard grads tend to take care of Harvard grads — especially in private equity.

    Despite all of this - an argument for affordability is that in the end - it comes down to the person and how they apply themselves. One can achieve greatness if they are so dedicated to do so.

    PS: I am biased to a final four b-ball school. Allie could visit her Aunt and Uncle on weekends and for sure, she would eat well :). Go Green!

  17. comment number 17 by: Lissette C. Bernal

    Congratulations to Allie on her acceptances as well as the rest of the family since you all had a contributing role in her current success.

    I went to BU for undergrad degree in international relations (a generous merit scholarship that paid for most of it) and Columbia-SIPA for my master’s degree ($0 assistance).

    For me, the key consideration is what the student does to make the most of the personal growth & learning opportunities offered by their undergrad institution, regardless of whether it is an Ivy or not. So a state school is a good choice - especially one like UVA!

    In terms of grad school, I would agree that while the academic progams offered arel important, it really is about the networking that happens with fellow students, alumni and faculty.

    Finally, IMHO, I think the timing of these two is key. I would recommend a several years of employment in b/w - for the additional grounding it provides. In grad school seminars, it was always obvious who had a been working, had traveled, and had a broader frame of reference and who had just graduated the spring before. Of course, there is also the reasonable and practical aspect of saving up $$$ to pay for grad school.

    Best of luck to you in this process…

  18. comment number 18 by: Matthew

    Congratulations to you and your daughter!

    I attended a private school that ranks in amongst the Ivies (the Ivy League is just an athletic conference, after all), and I do think that the experience was worth it, but I’m not interested in debating its value (it seems to be that people who went to top-tier schools think doing so is worthwhile, and those who didn’t, disagree— what a surprise).

    I do have a piece of practical advice, though: bargain. Your daughter is a National Merit Scholar (as I was), and is probably a wonderful candidate in many respects. As a result, she has other options, and thus some bargaining power. My father wrote an appeal letter to my eventual pick saying, essentially, that I’d attend if they offered more grant aid. It was pretty straightforward: “I simply cannot give you a National Merit Scholar…” It saved us tens of thousands of dollars.

  19. comment number 19 by: Underwriterguy

    This point of view may be a little different and may not even apply to your situation. When I was recruiting for entry level positions in a large public company, we looked for major (something that required work, but not just the hard sciences), grades, activities and the amount of self financing (or choice of summer and time off jobs; selling gold got more credit than waitering). State school grads did as well as the more exclusive schools; it is all about the individual.
    From a personal perspective, back when dinosaurs roamed the earth, the Sisters of Mercy gave me a great foundation, high school exposed to to new things and undergrad was more social than educational. I was not aimed at a profession, but had a satisfying career in the private sector, able to retire at 55 and live comfortably. So did my brothers-in-law who have undergrad and masters from the Ivies.
    So…it really makes a difference what one’s ambition is; any school can be worth the expense or a bargain.
    Best of luck on the decision.

  20. comment number 20 by: Bill

    Congrats to her. Have to say I had the same decision when I was in high school — UVa or William & Mary. I chose W&M and it was such a wise decision. I had many friends at UVa and learned the teacher/student ratio, average class size, number of facutly with PhD’s (who actually teach courses, etc.) all tilted clearly in W&M’s favor. It is much more of a “true” college experience in that so many of the students live on campus and, frankly, the overall size just lends itself to a close knit environment. And I have to say as a graduate every single time I am asked where i went to school and reply W&M, without exception “Wow, great school…” And as a VA resident, I have no debt!

  21. comment number 21 by: AMTbuff

    Matthew, that’s a great story about bargaining for more financial aid. However the Ivies had and probably still have a gentlemen’s agreement not to compete with each other on price, meaning that they only allow minor differences in aid packages such as more grant and less loan. They must have some sort of anti-trust exemption for this practice.

  22. comment number 22 by: Mary

    I graduated from Princeton undergrad & have 2 masters (one from top UK university, one from top public uni in US).

    Per Ivy undergrad: there are some career tracks that are IMO are greatly aided by an Ivy degree: namely, Wall Street & Washington DC/public service. Wall St won’t even consider candidates from non-name schools; ditto certain overseas universities (I know I got into Cambridge for grad school largely on the strength of my Princeton undergrad). The alumni networks for the Ivies for Wall St & DC are amazing (like Stanford for Silicon Valley).

    Downsides to Ivy undergrad, in addition to cost: hyper competition in scholastics. I started college planning on a science degree but I simply couldn’t compete in the sciences which were graded on a strict curve. Knowing I had to get a decent GPA to have any chance at jobs & grad school, I switched to social sciences…which was fine, but if I’d gone to a less demanding school, I would have been able to stay wtih the hard sciences/eng which would have served me better in the future, given where my career path ended up (in high tech).

    I admit I had no idea when I was in college, the extent to which my options for majors & other activities would actually be restricted rather than expanded. Being one of a crowd of hyper high performers is a double edged sword.

  23. comment number 23 by: NC Mom

    I, too, am mother to a senior who has just gotten into some great schools, and will hear tomorrow from the 2 Ivies he applied to. Both my husband and I attended Harvard as undergrads, and the best thing about that school–everyone I know would say this–was the collection of amazing students. I was a farm girl back then, and have come full circle, back on the farm. Had some amazing travel and life experiences in between. Don’t know if having Harvard on my resume helped; our goats and chickens sure don’t care. But it’s not about the money; it’s not about prestige; it’s about grabbing life by the tail and living it well, wherever you end up. The other kids at Harvard seemed to have that same philosophy, and I learned *more* from them in class and outside than I did from professors. (And TAs in Harvard’s case. Far too many TAs, and not very good ones.)

    My son has just gotten into UC Berkeley, Boston College, Duke, and UNC-Chapel Hill, a state college where 4 years will be cheaper than 1 year those private and out-of-state schools. But he’s fortunate to have such an array of choices, especially after 13 years of poorly funded, often poorly staffed, NC public schools. He’s ready for a richer learning environment.

    My husband and I are going to let our son make his own decision. (I’d vote for Berkeley!) At this point, he must know that he learns more when he’s surrounded by students who’re there to learn rather than to party or even glue themselves to library chairs.

    If I’d gone to U of Mich., I couldn’t impress my kids by telling them I know the writers for The Simpsons & other TV shows, and that, though he was 2 years younger, I saw Conan O’Brien regularly when I hung out at the Harvard Lampoon. Really: What school can offer something as witty and amazing as the Harvard Lampoon? Might be worth the price of admission right there!

  24. comment number 24 by: Jason J.

    I think an important question is where a lot of high school friends and classmates are going. I assume there will be a good number who go to UVA and W&M. Do you think this would be confining — does she need to branch out? Or would she find it easier to adjust by having friends and acquaintances at her school? In terms of her personality, is she more extroverted/introverted? I tend to think that introverts do well at small liberal-arts schools, but these are only some general considerations.

  25. comment number 25 by: Melissa M

    Diane — If Allie is looking to go to graduate school, especially a Ph.D. program, I would recommend going to a smaller school. If cost is a deterrent, William and Mary is a good deal. With UVA, unless she is an Echols Scholar, she may not have the type of college experience she would have at a smaller, more academically oriented school. UVA is a great place to go if you are interested in climbing the social ladder or doing a JD/MBA/MD. Those are just my observations after attending UVA and a host of other graduate schools.

  26. comment number 26 by: lynnor

    I honestly think going to an Ivy doesn’t really matter. BUT, does she know what she is going to major in? I think it is good to choose a school that is well regarded for the major being considered.

    My sisters went to midwest state Unis because they had what was considered the best program in the country for her chosen field. The same field from an Ivy would carry no more weight and might even be a detraction because they are not highly regarded in the fields.

    I went to a good state U, no debt and got a good education and jobs. A friend of mine went to Brown (no debt because parents paid) and she barely makes enough money to buy food for the month for her family.

    For business type stuff, I think the top B schools are better for training.

    All that being said, as long as she picks a strong program and networks well, she’ll do well after college.

  27. comment number 27 by: JoeM

    Don’t forget how the whole Masters Degree ties in. The link..

    http://roomfordebate.blogs.nytimes.com/2009/06/30/what-is-a-masters-degree-worth/?em

  28. comment number 28 by: economistmom

    Well, Allie was rejected from Harvard (of course, although it was not quite this bad), wait-listed at Brown, and accepted at Princeton (and officially accepted at Dartmouth) today. I’m so proud of her, because Princeton says this class is the most selective ever. She says Princeton is now her most preferred option. Princeton says no student should have to borrow to pay for their Princeton education, and that they award grants and jobs based on what is truly needed. So time to work on demonstrating that need. But I know it will be easier to look needy next year when we have two kids in college and two more coming up the pipeline.

    And then there’s still UVa–much more affordable, and no loans needed. No easy choice here.

    BTW, she wants to major in some sort of math or science. And she will definitely be going to grad school, be it med school or for her Ph.D. in some kind of science.

    What to do, what to do?…. Will keep you all posted on what she/we decide.

  29. comment number 29 by: agnana

    Diane,

    Congratulations to your daughter- mine was also just admitted to Princeton, which was where both my wife and I went. My daughter is also interested in a career in science. We’re in a somewhat different position from you in that we only have one child, have saved up a bunch, and still qualify for significant aid- so going into debt is not an issue for us. I would strongly advise you to go to Princeton’s financial aid estimator and work out a rough cost for what you’ll be expected to spend for the next four years, not just this one, before deciding that UVa or William and Mary is in fact much cheaper.

    My feeling is that Princeton is worth the money if the student is able to take advantage of it. But the advantage isn’t necessarily what one might think. For example, the faculty at UVa or W&M is every bit as good as that at Princeton in many areas and better in some. The key difference is the student body. If your daughter is intellectually voracious and feels held back by her current classmates, it may be worth going to a school where teachers are able to teach at a higher level because the students are willing to work harder. This is the reason I’m willing to pay the premium to have my daughter go to Princeton versus our state university- Rutgers. My feeling is that this is somewhat less true at W&M/UVa.

    Additionally, both of us benefitted hugely from the experience of writing a thesis and working closely with leaders in our respective fields as undergraduates. My first scientific publication was based on a class project I did as a senior. This is more common at Princeton in the sciences than at other schools, in part because of the requirement to do junior and senior independent work. Both of us also benefitted greatly from being broadly educated. One of the most valuable courses to me as a scientist was a course I took in political philosophy because iit really helped me learn about unpacking arguments dispassionately.

    However, this may be a case of where “history is written by the winners.” The woman who posted above and said that she might have been better off at a somewhat less competitive school could well be correct. Even my wife, who was an academic star at Princeton, sometimes wishes she’d been able to try more different things, like music, without feeling that there was such a surfeit of talented people. If my daughter were a little less confident and a little less disciplined, I might well suggest that she pick a place where she could shine more easily.

    Additionally, I recognize that debt is a key issue. My parents were able to pay full freight, and my wife got 70% of her cost covered by scholarship and the rest paid by campus jobs and a generous relative. That freed both of us to do what we really wanted to do afterwards. This is something for you and your daughter to consider. Medicine often involves taking on more debt and science doesn’t pay as well as business. I suspect I’m in the bottom third of my high school class in terms of income- most of them went to decent private colleges and into business-even though I wouldn’t trade places with any of them!

    As someone who actually is involved with graduate admissions, I can vouch that an Ivy League degree matters less than what one does with one’s college. A straight-A student from a good public university can beat out candidates from an Ivy. In fact in past years we’ve ranked candidates from Penn State and UCLA ahead of candidates from Harvard.

    Best of luck! And if you and your daughter are visiting Princeton, feel free to contact me if you’re interested in talking in person.

  30. comment number 30 by: midwest mom

    I read the above posts with much interest as high school junior is just about to apply to college with great credentials. I am conflicted. I have business partners from Harvard, Stanford, Duke, Wash U, and yet I got a doctorate from two midwest public universities, financing my entire education myself. If costs were equal, hands down the Ivy decision would be easy. I truly think it depends on your career path, motivation, and where you want to live when the college phase of life is over. That doesn’t make the decision easier for an undecided major high school student.

  31. comment number 31 by: Harvard grad

    Bill Gates went to Harvard for 2 years before dropping out to start Microsoft. The current Microsoft CEO, Steve Ballmer, went for 4 years. Yes, they take care of their own!