But these numbers don’t take into account the filtering that happens for who attends those colleges in the first place. Sure, people who go to T-25 colleges have good salaries, but can we say attending that college is the reason for the high salaries? Or is it because the types of kids who can get accepted and able to attend these T-25 schools are also the types of people (motivated, success driven, smart, affluent families) who do well in the workforce and would earn higher salaries no matter where they went to college? Of course kids who were driven enough in high school to get into an ivy league school are still driven to succeed after college. Was the ivy league school really responsible for it?
To get a better picture of how an individual college really affects salaries, we would need to compare those who graduated from the college with those who were accepted to the same college but attended a different college.
Bottom line: don’t expect salaries to be automatically higher just because you attend a certain school. And certainly don’t go into a lot of debt because some ROI number makes you think it will pay off in the future.
Most companies pay a certain salary - period end of story. There are often geographical differences etc.
And yea, higher caliber kids, no matter where they go will do better. Caliber is not just stat based but also persistence or sales ability based - selling yourself. Too many rely on the career centers - not themselves.
I do think there are certain schools that do provide access to certain jobs that others don’t provide - but that’s not for every kid.
You make good points which everyone should keep in mind.
OTOH, take a look at the Payscale and Wall Street Journal (which also heavily uses ROI in their rankings). Their top 20 schools are not simply a relisting of the Ivies, public Ivies, and Ivy+ schools as is the case with other rankings like USNWR.
University of Chicago, for example, an Ivy+, ranks #75 on the Wall Street Journal list, right behind Bryant, and Ivy League Dartmouth is at #57. Meanwhile, Babson is #2 and Bentley is #11.
Same trend can be found on the Payscale list where Colorado School of Mines comes in at #7 and Cal Maritime at #11. Ivy Leaguers Brown (#60) and Dartmouth (#56) don’t even break the top 50 and are sitting behind South Dakota School of Mines and NJIT respectively.
These lists are not simply about the best schools skimming off the cream and then looking good after those stars command high salaries post graduation.
It would be great to see WSJ break it down by majors. I think the anomalies can be explained by the types of majors at those schools. Babson and Bentley are heavily business focused which naturally translate into higher salaries. Brown isn’t exactly known for high salary majors like engineering and business the way NJIT and CS of Mines are known for engineering and high tech.
What you’re asking for was done in the Dale-Krueger study " Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables"
This paper uses information on the set of colleges at which students were accepted and rejected to remove the effect of unobserved characteristics that influence college admission. Specifically, we match students in the newly colleted (sic) College and Beyond (C&B) Data Set who were admitted to and rejected from a similar set of institutions, and estimate fixed effects models.
It also has to do with where the colleges are at, and where they find jobs. Higher starting salaries on east/west coast schools are skewed. $100k in California doesn’t mean the same thing as $100k in Texas. The “higher starting salary” is a fallacy because it assumes money is worth exactly the same in every state, which is absurdly false.
It was also done in the recent Chetty study. Their conclusions were:
"We find that students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended less selective colleges. "
“. The point estimate for the Ivy-Plus colleges (pooled together to preserve confidentiality) implies that attending an Ivy-Plus college instead of the average highly selective public flagship (whose VA is normalized to 0) increases a student’s predicted chance of reaching the top 1% by approximately 4pp, similar to the estimate obtained from our waitlist admissions design.
…
When we replicate this analysis using predicted mean income ranks instead of the probability of reaching the top 1%, we find much smaller differences between Ivy-Plus colleges and other institutions (Figure 14c). The estimates on mean ranks obtained from the matriculation design are very similar to those obtained from the waitlist design. We also find small, statistically insignificant effects of Ivy-Plus attendance on log earnings (Appendix Table 7), reconciling our findings with those of Dale et al. (2014)”
The general pattern is that future earnings are primarily determined by the individual student, not the college name. There are some special case exceptions for certain situations, but the dominant factor overall is individual student differences including differences in majors, post college career plans, ambition/motivation, academic ability, and connections. If you try to do an ROI analysis that ignores individual student differences and instead assumes a student who attends college x suddenly becomes the average student at college x, then the results are near meaningless.
The denominator of ROI is cost of attendance. It’s also important to consider individual student differences for this variable. Not everyone pays sticker price. At many ivy+ colleges, the majority of students do not pay sticker price. A good portion of students have expected cost of to parents of $0. Whether the family pays $0 or $350k influences ROI.
I agree. It’s all about the majors. I think that these ROI lists highlight that fact and show that you don’t have to go to a T20 to make a very good living if that’s what your goal is.
There was actually a study a year or two ago that specifically accounted for this. It was extensively discussed here so you can just search the forum rather than rehashing. I don’t recall all the details, but among other things they looked at the outcomes for students were were accepted at T20’s but then still went to a state college vs those who went to T20s, with the theory that those who were admitted but chose not to attend had the same pre-existing potential as those who went. What they may not have had was the same underlying economic advantages which impacted their decision to attend state instead.
I’m going from memory so could be wrong, but if I recall correctly the study concluded that there was a bit of a T20 outcome advantage for grad schools and the very top of the career ladder, but not much of one for most of the career ladder.
And I appreciate this but the reality is those engaged in ROI are choosing schools based on what they perceive as income potential, etc as the parent on the SCU thread is doing.
You have to consider family wealth as well. I went to a selective LAC at a time when the student body was extraordinarily wealthy. Many of the students graduated, went to NYC or DC for a year or two and then went home and ran the family company.
Nothing wrong with that but it would throw the ROI numbers off.
Most people ignore some realities that impact ROI. What’s the ROI on a class your kid has to drop for a W because the professor explains that he’s heading for a D? What’s the ROI on that Organic chem class your kid failed and then needs a ninth or tenth semester to pivot from a premed plan to something else? What’s the ROI on a post bacc because the 8 semesters you paid to get a BS won’t get your kid into med school???
Folks on CC engage in a lot of magical thinking when it comes to ROI. We see so many threads from kids “I want to transfer for a better social life but I’ll have to repeat a semester and my aid will go away. How do I explain this to my parents?” Or “if I can’t bring up my GPA in the next two weeks I’m going to be asked to withdraw for a semester…any study tips for a mechanical engineer who fell a little behind?”
So many W’s. So many transfers. What happens to the math then???
I think if your kids graduated with majors that they loved and that served them well, if they made friends, established relationships, were involved etc….then that is an outstanding ROI…imo.
Bentley and Babson are both known for business programs. But if your goal is business/finance, who in their right mind would choose Bentley or Babson over a UChicago Economics degree?
That in a nutshell is the entire problem with the WSJ analysis. It doesn’t control for anything.
And furthermore, many students choose UChicago because they are interested in (low ROI) PhD programs, whereas I expect that few students at Bentley or Babson do.
I think that’s true but on the flip side many HS student aren’t interested in studying economics for any number of (understandable) reasons. Chicago is also very much a fit school, and I don’t see much overlap with applicants to Babson (which is also a fit school but for a totally different student type.)