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Is An Expensive Private College Education Worth the Money? There's No Telling!

An opinion piece by John F. Wasik published yesterday at Bloomberg.com argues that the high tuition cost of Harvard and other high-priced colleges isn’t worth the money.  Clearly, an elite, private education is a lot of money.  But the argument that it’s a waste of money is impossible to refute.  It’s equally futile to argue that a high priced degree definitely is worth the money.  There are no hard facts upon which to hang this argument.

Wasik admits as much, lamenting that there is very little research to indicate how much you could expect to earn after gaining a degree from this, that , or the other college.  If we could predict our earning potential after graduation, wouldn’t it be a lot easier to pick a college?  We’d simply develop a completely new rankings system to replace US News & World Report–one that listed the highest average salary. Educational return-on-investment (ROI) would be a simple mathematical calculation.  Right?

Wrong.

Even if we had such information, educational ROI would not be predictive for an individual student.  An average is an average, after all, and how could we predict that Susie would earn above the average and that Sam would earn below that average?  (Unless, of course, Susie were from Lake Wobegone…where all the children are above average…).

The fact is that aggregate data is unhelpful in providing clear guidance to individual high school graduates.  Would you buy a Harvard degree if you were destined to earn below the salary average for that institution?  What crystal ball will tell us where we will end up five, ten, or twenty-five years after graduation?

The reason for the dearth of the sort of solid research for which Wasik pines is that it cannot be done.  Solid, scientific, and predictive research requires double blind experiments with variables that can be controlled.  When it comes to educational ROI, such controlled experiments would be impossible.

Why?  Because human beings are darned complex, and too many uncontrollable variables enter the equation.   What are the variables that have an impact on one’s financial success in life (other than the name of the university on one’s diploma)?  Let’s start a list.

** Educational background prior to entering college (e.g., Philips Exeter vs PS 142)
** Socio-economic status prior to entering college (e.g., New England blueblood vs. first generation Sudanese)
** Grades earned in college (e.g., a studious 3.5 GPA or a slacker 2.4)
** Major in college (e.g., engineering vs. education)
** Location a person chooses to live in after college (e.g., Santa Barbara vs. Omaha)
** The type of profession one seeks (e.g., teacher vs. neurosurgeon)
** Other skills a student develops beyond the major (e.g., the philosophy major who also studies organic chemistry)
** Jobs or internships the student might have had during college (e.g., dishing ice cream on Cape Cod vs. doing an accounting gig with PriceWaterhouseCoopers)
** Absence or presence of well-connected family members (e.g., a mom who CEO of Acme Technology and raised gobs of dough for a presidential campaign vs. a dad who drives a cab in Brooklyn)

Get the picture?  Controlling for all these variables so that we could develop a scientific study that gave us meaningful comparisons to help us predict educational ROI for a particular student is virtually impossible.  No wonder Wasik can’t find any research:  no aspiring academic with an understanding of research methodology would take this on.

But the biggest problem is that we can never compare a single kid who had two lives…one in which he went to a high-priced college and one in which he went to a community college and later transferred to the state school.

Or the student who majored in business in his first life and then majored in English in his second.

Or the student who earned good grades in his first life, and then floated by with a C-average in his second.

Now, if we could clone people and set the clones off in two different directions that would be really cool.  And conclusive.  We could see which genetically identical person earned the most after having attended this school or the other.  As long as those genetically identical individuals had lived identical lives in the same household to the age of 18 (if, however, the clones were “separated at birth,” we’d see our research devolve into the nature vs. nurture morass).

The fact is, folks, that we all want to be able to scientifically tote up the numbers to come up with a predictive return on our educational investment.

Can’t be done.

So we’re left with a silly, vapid argument between those who say “spend the money” and those who say “save your money.”  Both are right.  Both are wrong.  The argument gets us nowhere.

Still, might there be some fundamental principles we can consider in making the decision about whether to spend tons of money on a college education?  Let’s see if we can’t come up with some.

1.  How big an investment is the price tag, relative to current family income?   Some can easily afford a quarter of a million dollars for an education.  Some cannot.  So if you have the money, it’s worth it.  If you don’t have it, it’s not worth it.  (Remember Aesop’s fable of the “Fox and the Grapes”?).  Hmmm…this is not a very satisfying fundamental principle.  Next!

2.  Will you have to go into debt to finance this expensive degree?  The bigger the debt burden, the less likely the return on the investment will cancel out that debt. Then again, it depends on what you end up doing after that degree.  If you’re a brain surgeon or a successful venture capitalist, then who cares?  You’ll be able to pay off that debt in the blink of an eye.  But if you become a teacher or  an unsuccessful venture capitalist, then clearly the investment wasn’t worth it.  But notice: you can’t know whether the investment was worth it until AFTER you have a successful–or unsuccessful careeer!  This is getting frustrating,  isn’t it?

3.  Speaking of which, your professional aspirations do play a role.  If you plan to be a kindergarten teacher or a taxi driver, then spending a quarter of a million bucks for an education isn’t worth it.  However, if you want to be a brain surgeon, you have no choice but to go to college…and then go into debt for medical school.  But here’s a contrarian thought:  do you have to go to college to be a successful business executive?  Not necessarily, of course (we all know the story of Bill Gates, for whom Harvard “wasn’t worth it”).  To go a step further, do you really have to go to college at all to make a lot of money?  I have a cousin who went to school to learn how to do auto body work.  He can now buy and sell me several times over, sends his kids to elite private schools, drives a brand new Mercedes, and has a vacation home in Vermont.  Where did I go wrong….?

4.  Wasik and those who make similar arguments rightly point out that savvy shoppers for educational services should do some price comparisons.  But they don’t point out (either because they forget–or don’t fully understand) that very few students pay the actual tuition sticker price.  You see, because of the way financial aid (both merit based and need based) is allocated, each individual pays a different price for that education–especially at the colleges with heftty price tags.  So here again we have another variable for which we much provide some scientific control in our research:  we need to compare students who paid full price , or students who received a full scholarship.  Or half a scholarship.  Or something.  (Oh my:  not another variable for which we need a control!)

5.  There are aspects of an education that do not boil down to dollars and cents.  For some, education is not merely about preparing for a profession. For some, it’s also about intellectual inquiry–pushing your capacities to the limit.  For some, there is a spiritual element to education that transcends a “market price.”  This is all well and good:  but it certainly doesn’t get us any closer to calculating our educational ROI.  To do a calculation, we need numbers, and these folks who find an intrinsic value in education just aren’t numbers people.

The fact is that the argument as to whether or not an expensive private education is “worth it” simply cannot be won.  The argument isn’t really an argument:  it all boils down to one’s personal values and preferences.  Can people who go to state universities have satisfying, successful careers?  You bet.  Can Ivy League graduates end up earning less than $20k per year for the past 25 years?  You bet (I have a Dartmouth friend who is a respected ornithologist who lives in the Amazon and has never made more than $20k in a year: was his Ivy League investment “worth it”?).

So in the absence of research, we need a crystal ball.  Or we need good, solid, personalized advice from someone who can help a family identify their priorities.  Perhaps a professional guidance counselor who can help a student explore his or her academic strengths and weaknesses.  Who can discuss “educational philosophy” with a family to find out whether the educational priority is on “getting a job” or on “leading the examined life.”  What it all amounts to is “different strokes for different folks.”  My job is not to win an argument.  My job is to figure out which stroke you’re swimming, and help keep you moving in your chosen direction.

Mark Montgomery
Educational Consultant








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