Many families believe that graduates who can put Princeton or Yale on their resume will fare significantly better financially than smart students who end up earning their degrees from elsewhere.
In a famous study, two economists tackled this question about a decade ago and concluded that Ivy League graduates did not enjoy an earnings advantage monopoly. The same economists—Alan Krueger at Princeton and Stacy Dale at Mathematica Policy Research— revisited the question with even more compelling data that led them earlier this year to draw even stronger conclusion.
Updating a Landmark Study on the Ivies
To appreciate the researchers’ latest findings, you need to understand why the original study, which has been cited repeatedly over the years, caused such a commotion. In the first study, the economists noted that students who graduated from elite schools like Swarthmore College and University of Pennsylvania earned higher salaries than students from less selective schools. This conclusion was no different from conventional wisdom.
Here, however, is what was explosive: Dale and Krueger concluded that students, who were accepted into elite schools, but went to less selective institutions, earned salaries just as high as Ivy League grads. For instance, if a teenager gained entry to Harvard, but ended up attending Penn State, his or her salary prospects would be the same.
A Stunning Conclusion
In the pair’s 2011 study, the findings were even more amazing. Applicants, who shared similar high SAT scores with Ivy League applicants could have been rejected from the elite schools that they applied to and yet they still enjoyed similar average salaries as the graduates from elite schools. In the study, the better predictor of earnings was the average SAT scores of the most selective school a teenager applied to and not the typical scores of the institution the student attended.
The researchers originally looked at students who started college in 1976, and in the new study they revisited what happened to these graduates. With the passing time, the salary advantage for the now middle-aged graduates, who attended elite schools, as well as those who gained admission, but passed on the chance, remained. The new study also looked at students who entered college in 1989.
In an E-mail exchange with Krueger and Dale, the researchers made this observation:
“The consistency of our findings across nearly 30 years and for two cohorts makes the findings more compelling. In contrast, our earlier study was based on the earnings of students during a single year for those who attended colleges during the 1970s.”
Students Who Do Best in Ivy League Schools
As with the earlier study, there were some students who did fare better financially if they attended elite colleges and universities. The students who fell into this category were Latino, black, and low-income students, as well as those whose parents did not graduate from college.
In an E-mail, the researchers explained these exceptions:
“While most students who apply to selective colleges may be able to rely on their families and friends to provide job-networking opportunities, networking opportunities that become available from attending a selective college may be particularly valuable for black and Hispanic students and for students who come from families with a lower level of parental education.”
When I asked Dale and Krueger whether the latest research would quell the pervasive belief that the Ivy League schools represent the ticket to a prosperous life, they responded: “It certainly might make some parents and students less anxious about the admissions process.”
Let’s hope so.
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I do tax returns so I know what everybody makes and where they went to school. The Ivy League and elite graduates tend to get laid off often. The employers do not keep them. These people all make high salaries, but they keep losing their jobs.
The non-elite graduates tend to do well and stay with their employers. I’ve seen people from 4th tier schools earn over a $1million/year.
On the school tours, the students should see if they would really want to hang out with the elite students. Are they stressed out? Over competitive?
It is much more important to be happy. Forget about the name brands.
On the school tours, always visit the career centers. Do a lot of employers recruit there? Do they want graduates of this school? Do the right employers recruit there?
Would you please (someday) address the same question for those students and parents for whom attending college is not primarily about earning potential and high salaries, but rather more about learning how to learn, and/or about becoming a good citizen in a democracy, away from one’s parents and as a (mostly) free human being for possibly the first time, in a community of peers?
PS: I am a recent subscriber to your email list and was referred to this 2011 article from your email of 15 October 2017, about ‘aiming to attend Ivy League universities’ – so if you have already written about this, would you mind please posting that link in your next newsletter? thx.
I think the reality is that many employers are more reserved hiring recent graduates from the highly selective schools simply because those student often tend not to work as well in collaborative environments. I’ve seen this from employers I’ve had.