The burden of funding a college education has become a concern that doesn’t discriminate among families of college-bound kids, regardless of income.
According to the 2012 Sallie Mae “How America Pays for College” study, families with an annual income exceeding $100,000 have taken a significant step away from flipping the bill for college, opting instead to fund the cost using loans and financial aid.
The study found that three years ago, 62% of high income earners paid their children’s tuition; that number is just over 50% today. Across income brackets, 69% of families included in the study also said they have eliminated college choices because of cost, despite a belief that earning a degree is “the path to earning more money.”
From a return on investment standpoint, however, a key question remains: Does a student who attends a more expensive college realize more bang for their tuition bucks, in the long-term?
According to U.S. News’ Top 400 Worlds’ Best Universities list, there are 13 American schools comprising the top 20 schools in the world: Among them, Harvard University, Massachusetts Technology Institute (MIT), Yale University, University of Chicago, and University of Pennsylvania.
Though schools were ranked on criteria like student to faculty ratio and a number of times professors from the school are cited as academic experts and thought leaders, the most lauded schools also come with an exceptional price tag of about $60,000 a year, once room and board, and general student living expenses, are factored into the equation. Is the higher upfront price tag of a college education a guarantee of a higher income down the road? It’s a complex question. Here’s why.
What might have been?
Though scientists have tried to quantify whether a higher college education price tag is justified over the years, they’re often left with inconclusive results, simply because there are so many “what if” factors to consider.
While data can certainly match one year of tuition to one year’s salary, it’s challenging to associate the cost and value of key intangibles like happiness with a career after attending a pricey school and the impact such satisfaction — or lack thereof — has on long-term professional performance.
It’s also tough to gauge the extent that holding a prestigious degree has on the ultimate ability to impress corporate leadership and peers, compared to how he or she would have performed if a graduate of a less visible school.
One of the most commonly cited college value studies made by researchers at RAND organization and Brigham Young University failed to determine whether an expensive college education really is worth the cost.
The one solid takeaway from the study was that attending an elite school “increases the probability of attending graduate school, and more specifically, increases the likelihood of attending graduate school at a major research institution.” But continuing education is no guarantee toward success, and in fact, investing in a graduate level education boosts the ROI challenge even further.
The power of a network
In business, opportunity often comes down not to what you know, but who you know. There’s no denying that powerful connections run rampant among elite schools: Eight past presidents of the United States are graduates of Harvard University, and it’s been 28 years since a non-Harvard-or-Yale graduate has been elected president, according to CNN.
The level of hands-on mentoring among professors may justify an upper hand for some of the more pricey schools. For example, at Harvard University, nearly 80% of classes have fewer than 20 students, according to U.S. News. Compare that to class sizes at public universities in Ohio, for example, where just 45% of students have lab style classes with fewer than 20 students.
With the increasing demand for online education options for a college education, the “inner circle” that many students pay upwards of $150,000 to be a part of at top schools could erode.
In May 2012, an online-classroom venture called edX was launched by MIT and Harvard. Beginning this fall, it will deliver seven free courses from Harvard, MIT and University of California to anyone with Internet access.
Upon successful completion of a course, online learners are issued a (free) certificate of completion by either HarvardX, MITx, or BerkeleyX. Whether this move will change the meaning of the Ivy League network, or provide more access to it by students from less prestigious colleges, remains to be seen.
Perhaps the most important factor of whether investing in a college education proves worthwhile is choosing a major that is relevant to employers, and that students have real-world experience.
According to the Sallie Mae study, visual, performing and liberal arts majors borrow the most money to cover costs for a college education. A study by Millennial Branding indicated that majors involving engineering, computer information systems, science, technology and math are in the highest demand by employers.
The same study also indicated that 91% of employers think that students should have one to two internships before graduating, and that 65% value a referral from a previous boss or professor.
While attending a top school provides unparalleled access to recruiters and potential employers, a student’s ability to make a positive professional impression has as much to do with charisma and comfort communicating with executives of all levels, as it does intellect, or for that matter — a pricey degree.