Is Paying $100,000 for College Really Worth It?

Parents Forum
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This is part of the conversation my S24 is having with the MD/PhDs mentoring him in his current research position. Like, would he need post-bacc research experience before applying to MSTPs, and would it make more sense given his interests to just do the PhD part? Apparently the answer to both questions is a lot of “it depends”.

Obviously the point in this context is not to try to decide for him what to do, but I was trying to illustrate the possible implications of college costs for post-college flexibility. Like, the basic deal is apparently doing the MSTP route adds around 2 years on average to the PhD timeline (this is assuming the same sort of PhD either way) and those 2 years are fully funded with stipend.

The point I intended to illustrate was that while this may superficially seem like a “good deal” for an MD (only two years and “free”!), of course that is way too simplistic, at a minimum you have to consider the extra years for the total program as opportunity costs (either way, whether it is the “extra” years for the PhD or “extra” years for the MD). If you are already planning a glide year or two, then post-bacc research might not add to that opportunity cost, but if it did add any such years, then you would have to account for that too.

None of which is insurmountable if this is really what you want, but I think this points to some gradations of “full pay”.

Like there is a version of full pay where the student still has a decent amount of debt coming out of college, and is on their own from there. On the opposite end, there is a version of full pay where the student has no debt, and the parents are also planning to help out with house downpayments, cars, pay for joint vacations, maybe help out with making early Roth contributions, and so on (there is no real limit to this, of course). And variations in between.

If you are more in the latter sort of situation, then the full pay for college kid may still feel free to do something like a MSTP–of course assuming they can get admitted and that is actually what they want to do, and the vast majority of kids would not even want to. But this is just an illustration one of many different things that could have a similar logic.

However, the first sort of full pay kid may not feel so free to consider such things.

And I think sometimes in those cases, the kid may in practice have to be the one to put their foot down about what really makes sense for them. Like, I have conversed with some kids online who once they got admitted to a “prestigious” private college that would require them to take on personal debt (either formally or in a parents expected to be paid some back sense), felt a lot of pressure from their parents to actually take that offer rather than go to an in-state public or take a merit offer that could let them graduate from college debt free. And I think those kids absolutely should be very cautious about assuming the more “prestigious” and more expensive college is actually worth it to them, even if their parents believe it is.

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Apples and oranges. I’m describing the connections to get into a hedge fund or other Wall Street money making machine, because it’s owned by your college friend’s father. You’re describing someone who creates a tech startup that gets sold. The first happens largely because of social connections; the second, yes, was guided by the two profs but could definitely have happened at schools other than MIT - many state flagship U’s have such people. Taking your argument further, people can be wildly successful without ever going to college, and some are. What I’m pointing out is that for certain students who want certain things, it may be worth paying 100K/yr to be in the wealthy social pool that one finds at the top schools.

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Good Wall Street hedge funds don’t hire friends’ kids. Unless they are a small outfit, and are founder run — and even here you may get a look or a summer internship, but not a full time position.

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Not hedge funds, but my D’s experience in investment banking shows ample hiring of friends’ kids. She is involved in recruiting.

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Again, apples to oranges. The simple fact is that there is a high concentration of wealth at certain elite schools - social contacts with the children of the wealthy can lead to opportunities that one would not easily find at schools without a high concentration of children of the wealthy and powerful.

Of course, there are exceptions. Many students who wind up at a highly selective school with a high concentration of children of wealthy families, do not make those connections, or do not wind up going into careers where those connections matter. And there’s always the possibility of making such a connection at one’s in-state flagship, which is usually the least expensive “good school” option for those who do not qualify for fin aid, or the middle of the road expense option of a “public Ivy”, such as UNC, UCB, UCLA, U Mich, etc.

One cannot deny that there are certain non-academic opportunities that students can access at the most selective private schools, vs less expensive options.

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86

I’ve worked at a bank for many years, although on the public side. I have not seen this happen. Exceptions may exist. I asked a friend who was an executive director at a BB bank to refer my son, and he said he couldn’t get his highly qualified daughter an interview. I asked another friend who was an MD at a BB bank, and she said only 1 of the 4 people she referred in the prior several years got an interview. She referred my son, and he never got an interview. So her count now is 1 out of 5. I don’t know what to say. These are all public side roles. Not IB analyst roles — but the process is likely similar across the bank.

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87

The real connections are peer to peer connections with other high achieving kids that may later collaborate with you in life, or may refer you. Not parental or family wealth connections. I can tell this from our own experience. For example, it is very easy for one of my kids who is currently in the workforce to call any number of people at Anthropic or OpenAI, have a nominal final round interview and land a job. Not because he knows some parent of a wealthy kid. When I say peer quality is important when picking schools, people take offense — I think this is just lack of exposure as to what it means to have those kinds of connections with peers.

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We had a similar experience related to peer to peer connections. S attended an elite private thanks to generous financial aid and felt that his peers in his business fraternity and other connections were vital to helping him understand the application process and timeline within the consulting field. They also worked together together to do practice cases and he felt that was pretty valuable. When the time came to apply for internships, he decided not to ask for a referral from an alum, but he still ended up at an MBB firm. When making college decisions he was strongly considering GA Tech, and he now believes that he wouldn’t have had the same outcome if he had chosen GT. I feel he would have been equally successful and had a great experience, just maybe via a different path.

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My S’s good friend was recently hired for a job due to a peer to peer connection. My S was active and on the leadership team in a quant club at his school. A couple of months ago, a former quant member, who graduated a few years ahead of my S, contacted him if he has possible referrals for a quant trader role. S said yes and shared his friend’s interest and made the connection. Obviously the friend had to go through the rigorous interview process, and he did and now works for the company as of this Monday. Both S and friend went to the state’s flagship U.

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DS is a BB IB analyst who is following the typical path and going to a MM PE fund next month. From his experience, IB hiring runs through alumni and fraternity/sorority (both business and social) connections. As has been mentioned, getting an IB internship or job through a family connection is not common. However, alumni do all they can to recruit from their former schools. DS helped 5-6 sophomores from his school get positions for internships next summer at his BB bank.

For those looking for a job in IB where 50 or so schools make up almost all the hires, there is a case to be made on paying up to attend a target or semi-target institution. We’re from Tennessee. There’s not really much of an undergraduate BB IB path from UT Knoxville, for example.

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And also, it is not as direct as “hire my son!” Or even “give my son an interview”. It’s more that the connection lets their friend/relative know about an opening. The friend/relative applies and the connection coaches them through the hiring process (“don’t mention you might want to go to graduate school”. “This is what they are looking for”).

But also, valued clients of firms will ask that their child be considered for internships, and somehow, jobs are sometimes found for those kids. (This is in most industries, I expect).

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I know of one for sure. Not a current poster here on CC, but a regular in years past. Student ended up at a HYPSM, and got washed out of a STEM major (was premed), whereas at the flagship (or a less elite private) student would have done fine probably. Doesn’t have the sort of personality that benefits from the prep school type social connections that his Ivy afforded. Now struggling to find a job with a humanities major vs. debating whether to take (expensive) premed prep classes and apply to med school knowing that he would probably have to go the (very expensive!) DO route based on his grades.

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At large companies, for new grad hiring, the process is exceptionally systematized. It is not as if there is an opening, and someone is told to apply to that position. Hiring happens at an industrial scale – for example, JPM received 600k resumes last year for an internship. There are no secret slots.

People have lost jobs on giving internships to clients’ kids, especially in places like Asia – not that it doesn’t happen. It happens in geographies like Asia more than in the US.

I am not disagreeing with you that going to a good school is useful. I am disagreeing as to how that usefulness is likely to come about.

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haven’t read all the replies yet.

Is paying $100,000 for college really worth it?

It depends. Depends on what your definition of “worth it” is. For our family, the answer to that question is no. We’re going to end up paying about $100,000 in total for all 4 years, not $100,000 per year. Honestly, there’s no way I’d pay $400,000 total for 4 yr of college. Too expensive.

In my opinion, it’s sort of like making a decision about buying a car. Is paying $100,000 for a car ‘worth it’? Depends on your point of view. For some, a Bentley is an absolute must have and, therefore, is ‘worth it,’ while for others, going with a Ford, Kia, Hyundai, Honda, or Toyota is a great solution and totally meets their needs. Or in our case, used Hondas that we drive until they won’t drive anymore.

Am I upset that some people are really into driving a Bentley? No.

Does it bother me that some people are of the “Ivy League or bust” philosophy? No.

Everybody needs to run their own race. Figure out what you can afford. Don’t bother applying to places you know you can’t afford. Don’t take your kid on tours of colleges you know you can’t afford. Just like if you know that you can’t afford to buy a Bentley, don’t go and test drive one at the car dealership.

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95

The one aspect of the car analogy I don’t like (I do like it as an example that things are just worth different prices to different people) is that a car is a depreciating asset, and an education is an investment. Having said that, and I have argued this elsewhere here, your return on investment from a college education in my mind is far more than just “earns x salary vs y college cost”. And as those other things are subjective, it goes back to the idea that different people value different things.

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Industrial scale is a great way to describe it!

Can a kid get hired at someone’s uncle’s wealth management firm…becoming employee number 9? Absolutely.

Do connections matter at the “big guns”? Not any more. Although the illusion is maintained nonetheless. It is routine to get a resume with a scrawled note from the CEO “personal connection…handle as you see fit”. Or a few senior leaders will write “ nice kid, don’t see a fit but I leave it in your hands”.

A courtesy interview is nothing more than that. And before y’all yell “ just getting an interview is a big deal” I will note that after hundreds of courtesy interviews over the last 35 years I have hired exactly zero of these “back door” folks. Nobody is risking their job by violating a nepotism policy, whether in hiring, vetting a vendor, giving a preferential contract to someone who will then owe you a favor . Juice not worth the squeeze

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In my D’s IB class there was an analyst whose dad was close with the firm’s CEO and other execs. Senior people directly told my D how the analyst got their job. This analyst lasted about a year.

My D, who has been involved in hiring interns and full time positions (which they sometimes do outside of the intern pipeline), regularly receives resumes from senior people within her firm with a little note suggesting she take a look at this applicant. She does not ignore these. Obviously these candidates still need to interview and such, but these internally recommended candidates have a much higher rate of success than non-internally recentered candidates. Many employees are naturally predisposed to doing a ‘solid’ for their boss/other senior leaders. These things happen where my S works too because he was a beneficiary of parental contacts.

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My examples are real-life ones, of people I know. Not all jobs are internships or entry-level ones, or are at investment banks. I’ve written on CC before about how my son got his 2nd job, at a private equity firm, with the help I described (being told of the opportunity, getting coached through the interview process by a college friend’s mother who was a senior executiveat that firm).

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I guess there is more flexibility for lateral moves or non new-grad situations.

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The problem with anecdotes is you only know the outcome with one of the n alternative colleges. There are almost certainly going to be positive unique outcomes associated with attending a particular college that would not occur at other colleges, but you don’t know whether there would have been equally positive or superior outcomes had you attended a different college.

These type of positive anecdotes occur with less selective safety type colleges, just as they occur with Ivy+… type colleges. For example, one of my gifted friends in HS attended a less selective public college at a steep discount. Being less selective, he stood out, which led to unique opportunities. He received a best in class type award within the CS major and was singled out for unique research opportunities with some of his professors. This research experience contributed to choosing to pursue a PhD at CMU. He is currently a high level employee at Google.

This was a good outcome, but there is no way to know if he would have had an equally good outcome had he attended Harvard instead. The outcome would likely have been completely different. For example, with the larger finance presence, perhaps he would have chosen to pursue finance, and Harvard would have given him a leg up on that path in a way that would not have occurred at the other school. Or maybe he would have started at Google directly, rather than pursued a PhD first. Or maybe he would have chosen a different major, or met a spouse, or …?

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