Saturday, February 6, 2016
Why Prestigious Colleges May Not Always Be The Best
First year Philosophy students at Loyola University, ca. 1965. Nearly 85% of them graduated four years later with a Bachelors degree in Philosophy. But the economic environment at the time allowed them to parlay their degree into other areas, unlike today when more pragmatic majors are demanded and 'numbers' are used to drive decisions such as at collegemeasures.org
As student debt mounts into what is rapidly becoming another bubble, now exceeding $1.2 trillion, and more than 7 million debt- laden graduates having already defaulted on college loans, new approaches and remedies have come to the forefront. I noted some of the novel findings in a post nearly two years ago. Much of the background research was done by College Measures - a joint venture of the American Institutes for Research (AIR) and the Matrix Knowledge Group. The study was funded by the Lumina Foundation. The site's objective is to enhance the cost-benefit ratio for college grads by compiling earnings statistics for different degrees in different states and thereby showing which majors are likely to confer the greatest economic benefit.
One surprising insight was that community college grads reaped economic benefits that rivalled and even exceeded those from more expensive 4-year institutions. For example, one report found that for all nine Tennessee four-year public campuses, the average wage for graduates with a bachelor’s degree was $37,567. For graduates of the state’s 13 community colleges, the average wage was $38,948, or more than $1,300 higher than at four-year institutions. There is a wide range between the highest and lowest incomes of those earning bachelors, associates and certificates.
Meanwhile, a related Denver Post piece at the time reported :
“Students who earn associate's degrees in applied sciences earn a median salary of almost $7,000 more than those who get a bachelor's degree from four-year institutions, according to a report issued Wednesday by the state Department of Higher Education.”
These variations, especially in terms of community college benefits vis-à-vis those for more expensive 4-year schools, highlight the crux of the problem of college expense in relation to later benefit. The questions becomes: Why go into severe and massive debt at a 4-year full degree granting institution if one can obtain a quality associate degree and earn as much or more?
But an ancillary question is: Why go into severe and massive debt at a prestigious or elite university like Harvard or Stanford when one can actually come out economically ahead - in less debt and with better pay - on graduating from a public university? The surprising finding - reported in The Wall Street Journal (February 1, p. R1) is that the extent to which one benefits really depends on one's major. A point I also brought up in a post last year.
The Journal looked at about 7,300 college grads ten years after their graduation and divided their major into several categories: business, engineering, social sciences, humanities, education and 'other'. They also cross-referenced three categories for college type: "selective" (covering elite schools), midtier, and "less selective" (covering schools with open enrollment - e.g. like the University of South Florida, my Alma Mater).
As the Journal authors (Eric R. Eide and Michael J. Hilmer) put it:
"What we found startled us. For STEM-related majors, average earnings don't vary much among the college categories. For example, we found no statistically significant differences in average earnings for science majors between selective schools and either midtier or less selective schools."
This is truly amazing and also important. It means, basically, that one will not be significantly better off with earnings in the physics field - for example - graduating from Harvard than the University of South Florida. He or she may actually be worse off graduating from Harvard if one has only minimal financial help (other than loans) to pay back the hefty debt incurred from the purchase of all that name prestige.
As the authors put it (p. R2):
"Our findings are crucial for families to understand because chasing a prestigious STEM degree can leave students burdened with huge amounts of unnecessary debt."
This also conforms to a May, 2011 MONEY magazine investigation which found it is more the name and reputation of the specific department that conferred benefits than the school itself. As the MONEY authors put it:
"Don't assume an Ivy League education is better than one from a public or state university."
MONEY found that 'bang for the buck' included college graduation rates and post-college success rates - which compared favorably to - or exceeded - what one obtained from the hallowed Ivies. Alas, this has still not trickled down into the mainstream media where we still find "Best Colleges" lists spread around with the Ivy Leagues on top - then all the rest. So no wonder students and their parents are neurotically driven to believe the Ivies are the only route to success.
This is something students and their parents will need to seriously consider before stretching their meager resources beyond practical limits and saddling graduates with huge debts just for the sake of a name.
On the other hand, for many high -priced public universities, we shall have to wait for the implementation of Bernie Sanders's' plan (assuming he is elected and I believe he can be) for free public college. European nations do it because they understand having debt-free and capable citizens is a better investment in their futures than endless wars. We can do it too if we have the political will!