Not really what I’m saying. I’m saying I’m willing to acknowledge that I’m overpaying for the product I’m buying. That doesn’t mean I don’t buy it. The fact that I choose to buy it doesn’t make it “worth it.” I could provide examples of food, wine, clothes and other things, but you’re already bored enough by now. If I choose to splurge on them because that’s what they cost, it is what it is. But you can’t convince me that a Laphroiag 21, awesome as it is, is 6 times better than the 10. I’ll still buy it, and I’ll enjoy it, but that doesn’t mean it’s “worth it.” <Ok, so that was one example>
I’m saying it’s ok to acknowledge that we’re overpaying at those levels, not “Don’t do it.”
Not true. We sent our kids to public school through grade 12…then paid for pricey private colleges for both. It didn’t feel painful at all…because this was always our plan for paying for college. Both parents were full time professionals…and one income paid for college. My former job now pays in excess of $100,000 a year…so, paying out of my current earnings would not be an issue. And DHs income is way higher also. So…no pain…but a careful plan to make this work (other debts were all paid off before college started for our kids).
So in some cases, the decision as to whether something was “worth it“ was decided before applications were sent. In our case we didn’t do that. We let them decide where they wanted to apply what felt like the best fit for them and applied. In our mind, it was all “worth it“ so whether they wanted to go to Williams or Berkeley or Wisconsin it would have been their choice and we would have let them apply to all of them.
We certainly have an opinion on the matter as to what is worth what, because we are paying. But it doesn’t mean there are large differences in opinion between what the kids thought and what the parents thought.
DH and I discussed this over dinner. I also ran the numbers as to cost of inflation/what the schools would cost in today’s dollars. Of the two schools our kids attended, One school’s tuition now has clearly exceeded the cost of inflation over the years between their attendance and now. The other one was overpriced then (the one that fortunately our kid had the scholarship too) and remains ridiculously expensive now. Would we pay current prices if we had to now? I asked my husband and he might flinch a bit, but we promised the kids is that we would pay their undergrad at wherever they chose and we would still honor that. Different strokes for different folks.
The reason it is worth it for many is because of optionality. An elite college provides easier access to certain career options, and some students can take advantage of it. And that’s a separate issue from the strength of the peer group, which is also important to many.
In my son’s company, about 70% of the new hires for his role come from HPSM, with the rest from various places at the level of Berkeley, Columbia, UChicago or UPenn. We could have endless discussions about whether the firm is hiring effectively or missing out on talent elsewhere, but this how they recruit, and it works for them. Other companies in this industry may take a slightly more expansive approach, but a significant fraction of hires are still from HPSM.
My daughter’s industry mostly hires from the Ivy+ colleges, plus equivalents like Williams and Amherst. Yes, there was a hire from Alabama in her internship year, but that’s more the exception that proves the rule.
But if you think this optionality only applies to certain high paying careers, consider journalism. Of the reporters at the New York Times, about 32% were from Ivy+ colleges (see link below). Now, that means a majority of reporters are not from Ivy+ colleges, meaning motivated students can get a job there from just about anywhere. But I think it’s telling that Ivy+ colleges that collectively have less than 1% of the nation’s college population have 32% of these highly sought after journalism jobs. And that Mizzou, often considered the best journalism school, has fewer grads working at the Times than every Ivy+ college besides MIT and Dartmouth.
Honestly, if this had been our choice I wouldn’t have thought twice about it. Buy a new car or invest in a child’s education/spend more to give them a great 4 years‘ experience /whatever rationale you use for college fees - to me that’s a no brainer. Your new car dies eventually, your kids will have their education for life. I do know of people who preferred to buy {whatever} and send their kids to a cheaper school - and like I have been saying all along, your money your choice - but it’s not a choice I’d ever personally make. (To put this into further context: I just value experience over things. When I first started working, overseas travel was really expensive where we lived. I caught the bus for 2 years and while all the other junior employees were paying off their cars, I was saving up for an air ticket/trip costs. I had a brilliant 6 week European/US vacation, and I have never regretted that trade off. I doubt my colleagues still occasionally fondly look at photos of the cars they drove then)
I’m 100% aligned with this, and very similar to jym’s subsequent posts. I started my older kid’s college savings account the month she was born. To put this in context, this was top of mind because I had only been able to go to college because of a scholarship - I started in the middle of a deep recession in my home country and my dad could barely make rent at the time - and I wanted my kid to have choices. I realize not everyone has the luxury of money to squirrel away or to do so that soon, but that was the position that education had put me in, and we have also been extremely fortunate with the markets. And like jym, there are some things I will be frugal about and others that I will happily spend on. I don’t know what people assume about us being full pay and I don’t really care, but I don’t regret a cent I’ve spent on the kid’s education. (Our kids did go to excellent publics here, but where we lived before they were in privates, D19 till 7th and C26 till 1st.)
I agree with this but I also think ultimately…if you’re paying for it, you do think that on some level it’s worth it.
I think I’ve said several times now that I don’t. And that the mere buying of a product establishes its price, but is not an endorsement of its value. Not sure how many different ways I can say it.
I don’t see how you can “agree” with the argument and yet disagree with it. That I can comfortably overpay for something says more about whether I care to have that thing than what I percieve it’s value to be. Taking this to its logical extreme would imply that for a person of infinite means, everything is worth it, because they can have any and everything. I reject that premise.
How do you price that option? I don’t know how Black-Scholes can be applied, but am open to learning.
And again, former Capital Markets guy and Management Consultant, respectfully, the “You need to go to the $100K schools to get a job in Banking or Consulting” is the classic selling your own trade strawman.
Maybe about 10% of stem kids at a top school hit 7 digit incomes in 5 years. At least. Possibly other non stem majors that go into banking also do this well — not sure. These are not the outliers by the way. I am not sure what black scholes you want to do with this
I am not a scotch drinker so I had to look up that brand that you mentioned. But related to that, a friend’s husband happened to like Balvenie or Macallan in the sherry oak cask. We somehow were out of scotch when he was over, so when I went shopping, I thought the Macallan was a bit pricey (couldn’t find Balvenie) so I bought something that I was told at the store was an excellent scotch at a great value (no recollection what it was). I brought it home and DH said nope- if we are having friend over, he told us what he likes so I should buy it. So I gave the bottle that I’d bought away to a neighbor. (funny side story- I mentioned the bottle I gave away to our friend who likes Balvenie- he decided to try the inexpensive one and he liked it!! Oh well). OK, so back I go to the liquor store (aka Costco) and get the Macallan in the sherry oak cask (best price was at Costco, but still IMO only “worth it” to me b/c the friend likes it.) Well, sad end to that story- that friend passed away and we have an unopened bottle of Macallan in the sherry oak cask.
My point- it was only “worth it” b/c the late friend liked it, and my DH wanted a nice and known brand of scotch in the house to serve, should we ever have a scotch drinker over (we are wine and bourbon drinkers).
Oh- forgot to mention above that we keep cars for a long time. We buy new but keep them a long time. My current car is 8 yrs old. Previous car was 13 years old when we sold it to a friend whose son drove it (and it’s still going strong). Not sure if that’s considered a “sacrifice” but we dislike the new car shopping and are happy to avoid it. Usually one of our s’s would get the hand me down car .
If you’re looking at it purely from a financial point of view, you could look at the distribution of incomes. I estimate that nearly 10% of MIT’s 22 year old graduates are starting with top 1% incomes (salary plus bonus). And this is separate from the students creating or joining startups hoping for a payoff later, and a large fraction are choosing graduate school. At other elite colleges, there is a smaller fraction that starts off as high, that high, but they have more students in careers like investment banking, where income rapidly accelerates a few years after graduation.
For what it’s worth, rather than an option model, one idea that resonates with me on the value of elite colleges is that it’s like buying lottery tickets. The more “elite” the college, the more lottery tickets you get. So if you attend your most local college, you might think of it as getting one lottery ticket. Your flagship, maybe two. The Ivy+, maybe three. The idea isn’t that you’re guaranteed to hit it big, but that your chance of hitting it big goes up. And also your chance at getting some payout ALSO goes up (like getting 5 numbers out of 6). And, of course, one can continue to quibble about how many lottery tickets an Ivy+ college is worth!
My opinion…if you go to any college, work hard, and choose the right profession, you will be successful. And especially since some of the higher paying professions involve grad or professional schools.
This can be said for anything. You needn’t be born in a first world country. You could have gone to a community college. You needn’t have gone to college even. And if you work hard, you will be successful.
Worth it is so subjective- I went to a fancy NESCAC school- it was a doable stretch for my parents (of course less $ back then.) I loved every minute of it and learned a ton. I made amazing friends I still have to this day. I was a total washout career wise though- did some interesting things in my 20s but became a sahm in my early 30s and haven’t really worked since- so from a financial standpoint not worth it, but would still do it again. Looking around at my peers my college friends have good careers but could have probably gotten there another way (drs, vets, teachers). One of my most financially successful non-college friends didn’t go to college at all- owns her own business. My dh’s most successful friends went to non- prestigious schools and worked hard. So sure, plenty of paths but college is mostly not about career outcomes in my mind so the calculus is more how much do you have to spend and what’s the best fit within that parameter.
Most school employment reports don’t capture this very well. They typically only include base salaries and perhaps some sign on but I’ve not seen a Total Comp distribution on those surveys. If this was available, a lot more people will then understand the outsized right tail outcomes that some school+major combinations disproportionately deliver.
