Elite colleges don’t boost most graduates’ pay

Graduating from an elite college doesn’t boost most graduates’ pay, concludes a new study by economists Stacy Dale and Alan Krueger. But there’s a big exception for black, Hispanic, low-income and first-generation college students, notes David Leonhardt in the New York Times.

Graduates of elite colleges make more money than graduates of less elite colleges, even controlling for SAT scores and grades. However, the new study added a variable: Where did students apply?

Someone who applies to Duke, Williams or Yale may be signaling that he or she is more confident and ambitious than someone with similar scores and grades who does not apply. Someone who is accepted by a highly selective school may have other skills that their scores didn’t pick up, but that the admissions officers noticed.Once the two economists added these new variables, the earnings difference disappeared. In fact, it went away merely by including the colleges that students had applied to — and not taking into account whether they were accepted. A student with a 1,400 SAT score who went to Penn State but applied to Penn earned as much, on average, as a student with a 1,400 who went to Penn.

The average SAT score at the most selective college students apply to turns out to be a better predictor of their earnings than the average SAT score at the college they attended, Krueger told Leonhardt. However, “attending a more selective school increased earnings significantly” for disadvantaged students.

Perhaps they benefit from professional connections they would not otherwise have. Perhaps they acquire habits or skills that middle-class and affluent students have already acquired in high school or at home.

It’s not clear how the research applies to unselective colleges, Leonhardt notes. He wonders “what happens to students who try to save money by first attending community college, with plans to transfer later, even though they were admitted to a four-year college.”

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Comments

  1. Michael E. Lopez says:

    Perhaps they acquire habits or skills that middle-class and affluent students have already acquired in high school or at home.

    It’s this. I know, because I was there.

  2. The disadvantaged students tend to benefit more from the social connections of an Ivy caliber school because they are much less likely to form them otherwise. I grew up in an affluent suburb and even before I went off to college, I already had a lot of useful connections. Whereas my DH, who grew up in a working class/lower middle class neighborhood, didn’t. My parents’ friends and my friends’ parents were overwhelmingly highly educated white collar professionals. DH’s parents’ friends and his friends’ parents were primarily blue collar tradesmen or low-level civil service employees (teachers, cops, etc.) Nice folks, but not going to be a whole lot of help in networking except in those fields.

  3. Overcoming Bias (http://www.overcomingbias.com/2011/02/elite-college-fems-earn-less.html) had some interesting observations:

    “Men who attend the most competitive colleges [according to Barron's 1982 ratings] earn 23 percent more than men who attend very competitive colleges, other variables in the equation being equal. …

    …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%!”

  4. Money quote:

    The average SAT score at the most selective college students apply to turns out to be a better predictor of their earnings than the average SAT score at the college they attended

    In other words, colleges are not adding anything like the value they purport to do.

    However, “attending a more selective school increased earnings significantly” for disadvantaged students.

    Possibly explained by the looser requirements for admission compared to graduation.  A diversity admission who graduates is presumably as good as the others; the ones who drop or fail out don’t get the credential.

  5. Very interesting topic you brought forth here. What I gather from it is that if a student has a high SAT score there is really no need to spend big bucks on going to an elite school. The study seems to say that in the end, the student will end up earning the same as their peers who did go to such a school. That all really moves the focus away from the college to early, more formative years of education in hopes of achieving a higher SAT score for later years. All of this doesn’t bode well for the high price, prestigious schools perhaps, but from the student’s viewpoint surely brings a lower debt ratio upon graduation.