Ivy school education. Is it worth it?

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rhornback
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Ivy school education. Is it worth it?

Post by rhornback » Sat Apr 07, 2018 8:03 pm

I live in an affluent area with many doctors, lawyers; movers and shakers. Many of their kids are going to ivy league level schools. Understandably their parents are very proud. My son on the other hand is an average student. So maybe I have an axe to grind. But regardless it is an interesting question: when is an Ivy school education worth it? Here is an analysis I did a year or two ago.

A few caveats. If your kids is brilliant and can get merit scholarships than it really does not matter. However, the competition for merit scholarships keeps getting greater while their availability, at least from public, state universities has been going down.

http://time.com/money/best-colleges/rankings/results

I have been playing around with money magazine's recent ranking tool. It is interesting because it provides not just the cost of the college but also the 'early career earnings'. These two numbers allow you to do a ROI of the education: ie what I am going to pay vs what I can expect from future earnings for this payment.

This is something I think parents rarely do. My experience in talking with most parents in the area where I live is they do not do ROI on their children's education. Instead they base the school choice on prestige, where their kid wants to go, or some other heuristic methodologies.

The first analysis I did was regardless of degree offered. This includes the early career earnings for all students at the school.
Based strictly on early career earnings the best school is California Institute of Technology with an early career earnings of $79,800 a year. However, California is a very expensive place to live and price of this education without financial aid is $67,000 or $268,000 assuming you graduate in 4 years.

Moving down the list a few items (strictly based on starting salary) is SUNY Maritime College in Throggs Neck, NY with an early career earnings of $68,200 a year but a cost of $25,700 per year or for a total of $102,800.

So my point is strictly based on ROI based on early career earnings would be going to SUNY Maritime College is a better financial choice. If we add in cost of living (which I did not do for this analysis) I suspect the ROI numbers are even more compelling.

Next I did this analysis for business schools as my son is wanting to pursue a business degree. I am assuming the early earnings * the first 10 years. My experience is that after the first 10 years salary differences for business degrees tend to flatten out.

The best U.S. school for business based on ROI. is...

University of Wisconsin-Platteville

This is largely because the school is $19,700 a year but paying $55,700 a year in wages.

Not what one would expect, is it?

Completing the top 10 are:

Missouri University of Science and Technology
Western Michigan University
SUNY Maritime College
Iowa State University
The California Maritime Academy
University of Wyoming
Massachusetts Maritime Academy
Purdue University-Main Campus
Louisiana Tech University

The median salary for a business major in my analysis is about $46K. There are a large number of business college graduates making in the $45-55K.

So the bottom line is on average (yes I know there are exceptions) spending a lot to get a business degree unless you are going to a top 20 school, is probably not a wise investment. And even with the top 20 schools, you will need to pursue a job at Wall Street, California tech company (Google, Facebook), Consulting Firm (McKinsey, Ernst & Young, Deloitte), or startup to really recoup the costs of your education.

Now some more food for thought specific to where I live in Illinois.

The average early salary for business school graduates from the University of Illinois is $57,700 while University of Chicago has an average early salary of $3K less at $54,700. Yet University of Illinois is $31,400 per year while University of Chicago is $74,000.

University of Chicago is considered one of the 'best' schools in Illinois.

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Re: Ivy school education. Is it worth it?

Post by jmg229 » Sat Apr 07, 2018 8:10 pm

If your metric for "worth it" is ROI, then probably not. If your concept of "worth it" includes other elements, then maybe. For me, the intellectual stimulation, the unique experiences I was able to have and the personal growth that came from them, and the network I left with made it worth it. For a sibling who attended the same school at more or less the same time, it probably wasn't.

To me, college choice has a lot to do with fit and what someone is trying to get out of it. If your key metric is ROI, then probably not. But for others, it may be.

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Re: Ivy school education. Is it worth it?

Post by maddogio » Sat Apr 07, 2018 8:17 pm

These threads are almost impossibly difficult to sort out because folks' situations are so different, and because MRSP and out the door price can differ significantly.

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Re: Ivy school education. Is it worth it?

Post by rhornback » Sat Apr 07, 2018 8:31 pm

I have no problem people studying whatever they want. There are some who feel strongly about a liberal arts education. But I do think that this should be down with your eyes open though in terms of cost: loans, salary, and payback. And if you run the numbers and are OK with them then great.

However, when I hear about the 'burden' of student loans and the 'lack of opportunities' for college graduates I have to wonder: why was this not considered up front. There is so much information available on the internet. How can kids and their parents not know?

I graduated in 1992 with a degree in Information Technology. I unabashedly will tell you that the major reason I got this degree with for financial stability. Now I don't really have that anymore due to globalization. But for a long time I did. It was a great career.

If someone wants to study something else, go ahead. But I still say do the ROI as part of your decision making process.

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Re: Ivy school education. Is it worth it?

Post by nisiprius » Sat Apr 07, 2018 8:34 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
University of Wisconsin-Platteville
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Re: Ivy school education. Is it worth it?

Post by Frank Grimes » Sat Apr 07, 2018 8:40 pm

maddogio wrote:
Sat Apr 07, 2018 8:17 pm
These threads are almost impossibly difficult to sort out because folks' situations are so different, and because MRSP and out the door price can differ significantly.
I'd be surprised if many kids from modest or middle class means getting into Ivy League are paying full sticker price. There's no way they are.

The brand of a nationally recognized Ivy League school will make a kid attractive to a wide range of employers pretty much anywhere. That demand for your talent might be harder to come by at SUNY Maritime or UW Platteville if you're not able to land a job with the one or two big employers that are likely goosing their stats.

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Re: Ivy school education. Is it worth it?

Post by PhilosophyAndrew » Sat Apr 07, 2018 8:42 pm

Quantifying the ROI as you do only goes so far. Some additional questions I would consider:

(1) What are the most important benefits of higher education that this analysis excludes?

(2) How important are these benefits in peoples’ lives? (Or, if that is too grandiose, how important might they be for your own children, given their individual interests, needs, and personalities?)

(3) To what extent, if at all, do the Ivy League schools do a better job than other schools at providing these additional benefits?

My own sense is that the Ivy Leagues market themselves so effectively that some less sophisticated consumers of higher education become dazzled by the schools’ brands and ignore opportunities that may be better fits for their individual children.

That said, I think that attending a well-resourced school with excellent faculty and classmates increases some benefits of higher education. For example, this privileged environment can do a better job than average helping students to learn how to learn in a sophisticated way that can make the rest of their lives richer (in non-financial senses mainly, but also fiancially because that sophisticated ability to learn and grow can be a powerful force pushing career advancement).

So, I think the Ivy League in particular may be over-regarded in the public estimation, but there is something correct in thinking that attending elite institutions of higher learning can have significant lifelong financial and non-financial benefits.

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Re: Ivy school education. Is it worth it?

Post by nisiprius » Sat Apr 07, 2018 8:46 pm

It is much more important that to study something that really grabs you... or discover something that really grabs you... or find that professor who just strikes a spark... than any statistics on ROI can possibly capture.

The elephant in the room is social prestige. Social prestige exists. Sometimes it matters. Often it doesn't. If you want a career in firms that care about such things, then, of course, schools with social prestige are worth more than schools without it. I think I got one of my jobs because the firm's owner had gone to MIT, and like to hire MIT graduates. And I think I got slightly sidetracked at that firm because I was the only one of the fourteen MIT graduates who didn't wear an MIT class ring.
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Re: Ivy school education. Is it worth it?

Post by GCD » Sat Apr 07, 2018 8:49 pm

ROI is a valid consideration. However, it may be worth digging deep into the methodology used by that site. I admit to not having done so. My cursory look showed the income figures were average salaries at the 5 year mark. What is the long range ROI vs 5 year ROI?

How does the likelihood of a student going to grad or professional school affect that? What are the percentages of grads that go on to more education and how does that affect the numbers? I think some of the underlying sources for their numbers are self-reported.

Blah Blah Blah.

Nothing wrong with including ROI in your decision. Just make sure you dig deep enough to satisfy yourself that what you are using means what you think it does.

I have all kinds of anecdotes to throw out about the Ivy Leaguers I have known, but I'm not sure it would prove anything.
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Re: Ivy school education. Is it worth it?

Post by jhfenton » Sat Apr 07, 2018 8:50 pm

It's not the worth of the Ivy League schools or another top 15 school or the top engineering schools that I question, it's the second and third tier private liberal arts colleges. I just don't see the ROI.

In my case, Harvard was quite cheap, because my parents didn't have a high income. For my kids, Harvard would be very expensive.

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Re: Ivy school education. Is it worth it?

Post by golfCaddy » Sat Apr 07, 2018 9:02 pm

You have to dig into the methodology and data source. How is salary treated for students in law/med/grad school? Does having a high percentage of students in professional or graduate school lower the salary average? If the salary comes from Payscale, is the sample biased by who chooses to report their salary into Payscale?

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Re: Ivy school education. Is it worth it?

Post by windaar » Sat Apr 07, 2018 9:05 pm

Elite schools do not cause success, they are sorting mechanisms that admit kids who will be successful going anywhere. Research has proven this. Google Krueger and Berg Dale for the studies. An ambitious, curious, and hard-working student can get just as far by going to State U as to Yale. Where did your own doctor, lawyer, Mayor, Senator, and Congressman go to undergrad?

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Re: Ivy school education. Is it worth it?

Post by travelnut11 » Sat Apr 07, 2018 9:14 pm

UW-Platteville is largely an engineering school which is probably why the ROI is high just in case people were wondering.
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Re: Ivy school education. Is it worth it?

Post by BUBear29 » Sat Apr 07, 2018 9:26 pm

In my experience, one has to determine several things: 1) what is my course of study (business, sciences, engineering, etc), 2) Do I plan to go to graduate school? 2a) if yes, geographic location is not necessarily a factor but school choice might be depending on type and level of graduate school 2b) if no, geographic location becomes very important for a major like business as usually companies recruit in their local cities/state for employees. If your kid wants to live in a certain area then they should attend school near that area where there are good schools that fill the employment need. 3) What type of job do I want when I get out of school? If for a large company (large oil company, large banks, accounting firms, etc) then school choice does become very important as these companies generally target specific, well-known, high ranking schools.

I could go on but as you can see there are many many factors. For my job (work for large bank) I went to a well-known, high ranking private business school in my state and my job out of b school was $55k base a year but within 4 years I was making over $100k base.

That said, there can be a negative effect on going to an Ivy, as some people tend to think people that attend those universities may not fit the culture of a workplace filled with non ivy league students.

I vote nonivy, well known, high ranking public or private university (depending on your budget) located close to large employment center, if your kid intends to study business. In Texas for example, that would be schools like UT, A&M, Baylor, SMU, etc. Also, I highly suggest accounting major.

This probably doesnt even address your question, but I got on train of thought and couldnt get off.
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Re: Ivy school education. Is it worth it?

Post by Helo80 » Sat Apr 07, 2018 9:30 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
So my point is strictly based on ROI based on early career earnings would be going to SUNY Maritime College is a better financial choice. If we add in cost of living (which I did not do for this analysis) I suspect the ROI numbers are even more compelling.

Next I did this analysis for business schools as my son is wanting to pursue a business degree. I am assuming the early earnings * the first 10 years. My experience is that after the first 10 years salary differences for business degrees tend to flatten out.

I either heard on the radio or read an abstract of a study a few years ago that more or less jives with where your question is going. Hopefully this will be enough info for you to perhaps dig up the research.

In the State School versus Ivy league school, where the ivy league schools shine are liberal arts education and degrees. Ivy leagues tend to attract the best and brightest in those fields, and have the necessary connections for English, Literature, and other such majors to more easily move on to quality graduate programs or private industry. I forget what the difference in salary is, but long-term, it's definitely apparent. Now, you could argue that the average Harvard or Princeton English undergrad is more of a go-getter than State-U English major, but hey, you have to looks at trends and cannot make everything a unique snowflake.

HOWEVER....
For engingeering degrees, the difference is minimal, at best. Basically, 5-10 years into an engineers career, there is minimal difference in an Ivy League versus State U school's total compensation. If memory serves, the Ivy Leaguer had a $5,000 edge.

For business, I would suspect that it falls more in the engineering route. It's good to look at schools with strong business programs, but strong alumni networks are equally as important for your son starting out IMHO. We live in a world where people like familiarity.

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Re: Ivy school education. Is it worth it?

Post by bogglizer » Sat Apr 07, 2018 9:40 pm

Ivy League and other prestige schools are all about the fellow students. First off, a higher class of students leads to higher expectations of performance overall. My experience is that students at Pomona College are on average just brighter than Cal Poly Pomona's. Secondly, those students will go on to become movers and shakers, and college is the place to build a social network. If your kid isn't social or is going into science, then the second point is moot.
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Re: Ivy school education. Is it worth it?

Post by Minty » Sat Apr 07, 2018 9:44 pm

The people who run the world are disproportionately from elite schools. Whether it is causation or correlation hardly matters given the importance of signalling. If it is simply a question of income, perhaps school fanciness matters less; plenty of tradespeople earn more than the President, Senators and Representatives, and Supreme Court Justices (every one of whom, if I recall correctly, attended Harvard or Yale).
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Re: Ivy school education. Is it worth it?

Post by desafinado » Sat Apr 07, 2018 9:48 pm

delete
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Re: Ivy school education. Is it worth it?

Post by HomerJ » Sat Apr 07, 2018 9:49 pm

windaar wrote:
Sat Apr 07, 2018 9:05 pm
Elite schools do not cause success, they are sorting mechanisms that admit kids who will be successful going anywhere. Research has proven this. Google Krueger and Berg Dale for the studies.
This.

Harvard only accepts the top 0.1% high school students. Then they claim Harvard is the reason those kids are successful.

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Re: Ivy school education. Is it worth it?

Post by Grasshopper911 » Sat Apr 07, 2018 9:49 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
... when is an Ivy school education worth it?
I went to a top state school and have been very pleased with my education; however, if my son majors in business I want him to go Ivy League.

You’re not necessarily paying for the education, you are paying for the network. In business this is key - his future friends will come from families who have vast connections in the business world, many owning companies.

Relationships are key, could be a huge advantage out of the gate.

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Re: Ivy school education. Is it worth it?

Post by Northern Flicker » Sat Apr 07, 2018 9:50 pm

Average starting salary for a graduate is a fairly misleading number. A school with 50% of its students in engineering is going to have a higher graduate average salary than a school with a much smaller number of engineering students. What matters is the comparison of outcomes of students in the same field.

Private schools have become so expensive that it is difficult to justify them by ROI. Two-time Nobel Laureate Linus Pauling went to a state university for undergraduate studies. As long as the quality of the education is not substandard, it is what the student does with that education that is most important.
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Re: Ivy school education. Is it worth it?

Post by sambb » Sat Apr 07, 2018 9:55 pm

Ivy league was well worth it for me, would not hesitate. Opened many many doors. More than paid for itself many times over. Was really a fantastic INVESTMENT AND ASSET, not a "cost". YMMV. Could care less about anecdotes of people who do well without it. There are always people who do well. For me, the ivy league education remains an Asset.
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Re: Ivy school education. Is it worth it?

Post by HomerJ » Sat Apr 07, 2018 9:57 pm

bogglizer wrote:
Sat Apr 07, 2018 9:40 pm
Ivy League and other prestige schools are all about the fellow students. First off, a higher class of students leads to higher expectations of performance overall. My experience is that students at Pomona College are on average just brighter than Cal Poly Pomona's.
Sure, if you go to Harvard, everyone you meet will be super smart.

But, even at State U, there's a thousand kids who are super smart, and they do find each other.

Plus, there's the big fish in a small pond scenario. If all 30 people in the class are super-smart, the professor is less likely to pick YOU out of the group for mentoring or an undergrad research position.

But if only 5 people out of 30 in the class are super-smart, your odds are much higher.

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Re: Ivy school education. Is it worth it?

Post by rhornback » Sat Apr 07, 2018 9:58 pm

delete
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Re: Ivy school education. Is it worth it?

Post by bubbadog » Sat Apr 07, 2018 10:03 pm

HomerJ wrote:
Sat Apr 07, 2018 9:49 pm
windaar wrote:
Sat Apr 07, 2018 9:05 pm
Elite schools do not cause success, they are sorting mechanisms that admit kids who will be successful going anywhere. Research has proven this. Google Krueger and Berg Dale for the studies.
This.

Harvard only accepts the top 0.1% high school students. Then they claim Harvard is the reason those kids are successful.
Exactly!

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Re: Ivy school education. Is it worth it?

Post by MoneyMarathon » Sat Apr 07, 2018 10:05 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
Now some more food for thought specific to where I live in Illinois.

The average early salary for business school graduates from the University of Illinois is $57,700 while University of Chicago has an average early salary of $3K less at $54,700. Yet University of Illinois is $31,400 per year while University of Chicago is $74,000.

University of Chicago is considered one of the 'best' schools in Illinois.
I'd just look at it this way:

If your out-of-pocket expenses are going to be huge, then the school has given you a "soft no."

You want to apply to schools where some combination of scholarships / in-state tuition / tax credits / federal grants / work-study can give you the best chances of reducing the actual price you pay to something reasonable. For some people, that's Harvard; for others, University of Chicago; for others, University of Illinois, and all the way down.

What you don't want to do is to get a kid who applies only to schools that are slightly above their weight class, then to get approved to pay for the whole ride, and then to have the kid commit a kind of financial seppuku because they have no idea of the value of money or what the rest of their life is going to be like, but oh boy do they have stars in their eyes about their "top pick on the US news list to which I got into." Make sure that they apply to many places they can afford, and try to help them make a rational decision.

Ideally, you should be paying about $0 for the school itself, or negative (maybe slightly positive, but reasonable). Living expenses are unavoidable, but if you get a negative cost of school, they'll cover some or all of that too.

The choice of major usually can make up for everything - the average Tommy who studies computer science at Podunk U generally does better than Sally who studies Russian lit at Shiny Perfect U, at least when it comes to lifetime earnings.

A problem with "university as a luxury good" is usually that students have no idea how much enjoyment they'll actually get out of it (i.e. they vastly overestimate it), and they will often end up regretting it when they have a ball and chain of debt. Unless you have a rich uncle, it's a dangerous game to play.

(And a very high stakes one! A truly disturbing number of kids age 18-20 both get high debt and drop out of college, for various reasons. Not much of a problem if you're admitted to actual Harvard - you have been vetted as a very consistent workaholic, and there are a lot of resources to help you succeed there - but it is increasingly a problem in mid-tier schools.)

Caveat - of course, yes, there are some people who can pay $200k for undergrad and have it pay off enough to get to breakeven, so they don't have the problem. A lot of students do get into problems, though, with student debt that wasn't rational to take on.

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Re: Ivy school education. Is it worth it?

Post by msk » Sat Apr 07, 2018 10:24 pm

jhfenton wrote:
Sat Apr 07, 2018 8:50 pm
In my case, Harvard was quite cheap, because my parents didn't have a high income. For my kids, Harvard would be very expensive.
LOL! Obviously Harvard did an excellent job of boosting your earning capacity. A generational impact :mrgreen:

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Re: Ivy school education. Is it worth it?

Post by finite_difference » Sat Apr 07, 2018 10:25 pm

I think it depends.

If you get accepted into an Ivy League without any scholarship, I think it would still be worth going if you a) truly want to go and b) are majoring in a field where you can expect to earn back the cost (or if your cost is covered by your parents/grandparents.)

To me, Ivy League sounds like it would be extremely competitive and intense. And the work load is likely considerable. I used to get very turned off in an environment where all everyone cared about was grades. I am not saying that is how Ivy League is, but that was very much the environment of the kids who wanted to get into Ivy League. (At least some of them.)

I think it’s more about how your personality fits in with the environment (Ivy League or state school, or small private school, or liberal arts school, etc.) Whatever environment you think will fit best and have the most positive impact on you for your type of personality. And sometimes that is hard to impossible to know upfront, but at least you can try to get a feel for the vibe.
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Re: Ivy school education. Is it worth it?

Post by ClevrChico » Sat Apr 07, 2018 10:43 pm

I'd love to have the network that an Ivy school would bring.

But, if you're talking ROI for the average/typical student, the best ROI would probably be to get an associates degree at a community college. Land a paid internship during a summer and then get hired on full-time. From there, complete your bachelor's on your employer's dime. Total out of pocket for a STEM degree is around $15k with this method. We just hired someone FT on that path. It's possibly the most boglehead approach, and one way to hack college tuition.
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Re: Ivy school education. Is it worth it?

Post by bottlecap » Sat Apr 07, 2018 10:52 pm

it depends on the kid.

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Re: Ivy school education. Is it worth it?

Post by NYnative » Sat Apr 07, 2018 11:01 pm

Simple answer for me is - if someone else is paying for it or you have a free ride, then yes, go Ivy. If your parents or you have to mortgage your future, then no, go someplace you can afford. I did my undergraduate work at the City College of NY when it was free. Grad work at GWU paid for by the GI Bill and post grad at the Kennedy School at Harvard paid by my employer. Essentially, my education from kindergarten on was free. And, prior to retirement, I worked with many colleagues from Ivy league schools who were at the same level as I was or under my direction. It's what you do with your education that's far more important than where you go to school. $50K, $60K and up per year for an undergrad or even grad degree just isn't worth it unless you can afford it or get other people's money to pay for it.

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Re: Ivy school education. Is it worth it?

Post by market timer » Sat Apr 07, 2018 11:06 pm

Early career earnings is not the metric I'd use to evaluate a college. For better or worse, there is a class system in the US based largely on education. Many desirable jobs are off-limits for people who did not attend elite colleges or grad schools. Many desirable spouses are effectively off-limits as well without the right social network.

As for the original question, I did not realize U. Chicago was now up to $74K/year. It's certainly an elite school, but I'd have a hard time as a parent spending that much. I would feel that I'd upheld my end of the bargain as a parent by sending my kids to U. Illinois at $31K/year. With top grades and test scores, a U. Illinois grad should have similar options to an MIT or Stanford grad.

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Re: Ivy school education. Is it worth it?

Post by rhornback » Sat Apr 07, 2018 11:18 pm

MoneyMarathon wrote:
Sat Apr 07, 2018 10:05 pm
A problem with "university as a luxury good" is usually that students have no idea how much enjoyment they'll actually get out of it (i.e. they vastly overestimate it), and they will often end up regretting it when they have a ball and chain of debt. Unless you have a rich uncle, it's a dangerous game to play.

(And a very high stakes one! A truly disturbing number of kids age 18-20 both get high debt and drop out of college, for various reasons. Not much of a problem if you're admitted to actual Harvard - you have been vetted as a very consistent workaholic, and there are a lot of resources to help you succeed there - but it is increasingly a problem in mid-tier schools.)

Caveat - of course, yes, there are some people who can pay $200k for undergrad and have it pay off enough to get to breakeven, so they don't have the problem. A lot of students do get into problems, though, with student debt that wasn't rational to take on.
I want to role play about the young person who studied very hard to get into an high impact school. Lets say Stanford. They worked super hard in high school and then worked super hard in college. Their family were upper middle class so they got some tuition assistance but not a huge amount. This student studies very hard at Stanford and ends up with 150K in debt when they graduate.

Luckily there are good job opportunities for them in the Silicon Valley Area. They work at Google, Apple, or Tesla.

However

1. The cost of living is very high in these areas
2. The tax rate is very high in these areas
3. The cost of housing
4. The average age of workers at Google, Apple, and Tesa are 30, 31, & 30

I am referencing the data from this article dated Sept 2017 http://www.businessinsider.com/median-t ... art-2017-8

So I am wondering where the payoff is for all this hard work. It seems to me the result is still a lot more hard work. Great if you are a workaholic or feel the need to make your mark on the world. Maybe not so great for someone who wants a balanced life including a wife and kids.

And it seems to me when they push for work-life balance, you may no longer be able to work at companies such as Google, Apple, or Tesa because that is not the expectation of those who work there. I am basing this assumption on the average age.

I could make the same argument about Harvard, Yale, Dartmoth but the difference would be Wall Street and the costs of living on Manhattan or Boston. But it seems to me this is a similar story.

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market timer
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Re: Ivy school education. Is it worth it?

Post by market timer » Sat Apr 07, 2018 11:34 pm

rhornback wrote:
Sat Apr 07, 2018 11:18 pm
So I am wondering where the payoff is for all this hard work. It seems to me the result is still a lot more hard work.
In your example of the Stanford grad working in tech, the payoff comes fairly quickly. Someone who is, let's say, age 30, who started working in one of the big tech companies out of college 8 years ago, is probably earning on average over $300K/year right now and is a millionaire. That's my guess of the median outcome at age 30 for a Stanford grad who has been in tech since 2010.
Last edited by market timer on Sat Apr 07, 2018 11:36 pm, edited 1 time in total.

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Re: Ivy school education. Is it worth it?

Post by Big Dog » Sat Apr 07, 2018 11:35 pm

I'd be surprised if many kids from modest or middle class means getting into Ivy League are paying full sticker price. There's no way they are.
Indeed. heck, even some high income earners get a discount at Harvard and Yale. (up to $180k)

My S attended one of the Ancient Eights for less than the cost of our instate public.

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Re: Ivy school education. Is it worth it?

Post by Big Dog » Sat Apr 07, 2018 11:39 pm

I want to role play about the young person who studied very hard to get into an high impact school. Lets say Stanford. They worked super hard in high school and then worked super hard in college. Their family were upper middle class so they got some tuition assistance but not a huge amount. This student studies very hard at Stanford and ends up with 150K in debt when they graduate.
Sure, role play all you want, but don't make up straw men to do it. There is absolutely no way a student can borrow that kinda dough from Stanford (or Harvard or Dartmouth or...), so ending up with $150k in debt is impossible. (Sure, the parents may borrow money, but they would only borrow that kinda cash IFF they were considered a top 5%'er but chose not to cash in illiquid assets to pay for thier kid's education.)
Last edited by Big Dog on Sat Apr 07, 2018 11:39 pm, edited 1 time in total.

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Re: Ivy school education. Is it worth it?

Post by stochastic » Sat Apr 07, 2018 11:39 pm

I teach at an Ivy and before that taught at a top flagship state university so let me give you my impression of the differences. Students here at the Ivy get a lot more attention, smaller classes for one but also much more opportunities for research projects and then students who are struggling get more support here and there are advisers to keep them moving towards graduating. The university has lots of funding for students to travel abroad for internships or research projects or sometimes just classes.

On the career front, a lot of wall street banks do a lot of recruiting here so if you want a job at Goldman Sachs it's probably substantially easier here (although still fiercely competitive). That's true too of consulting and other 'elite' financial companies. My impression is that those differences weren't as significant for silicon valley jobs. I know the students I've taught here much better because there are fewer of them and I do more individual research projects with them and so I write much more detailed letters and I think that's translated into more getting into top PhD programs. So I do think there are some real advantages but the cost of attendance is about double.

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Re: Ivy school education. Is it worth it?

Post by Big Dog » Sat Apr 07, 2018 11:47 pm

went to a top state school and have been very pleased with my education; however, if my son majors in business I want him to go Ivy League.
That narrows it down to just two (Penn and Cornell), as those are the only Ivies that offer undergrad business.

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Re: Ivy school education. Is it worth it?

Post by MoneyMarathon » Sat Apr 07, 2018 11:49 pm

rhornback wrote:
Sat Apr 07, 2018 11:18 pm
This student studies very hard at Stanford and ends up with 150K in debt when they graduate.
Stanford is a good school, and it gives you a lot of flexibility, but 150k would not be the cheapest way into the doors of Megacorp, if ROI is the only goal. When I graduated with less than 20k of student loans from a much less remarkable school, I was also snapped up by one of the big tech companies.
rhornback wrote:
Sat Apr 07, 2018 11:18 pm
And it seems to me when they push for work-life balance, you may no longer be able to work at companies such as Google, Apple, or Tesa because that is not the expectation of those who work there. I am basing this assumption on the average age.
Google and Apple offer 9-5 type jobs (don't know for Tesla, maybe not given its slow death spiral). People can work there as long as they want. They can also take lots of time off for parental leave, among other benefits that allow a pretty good work-life balance, especially compared to similarly compensated alternatives. The companies aren't trying to squeeze the last drop of work out of each employee. They're trying to compete for the best and brightest, part of which is being nice to them, given how many they need to employ. I know this isn't common knowledge, but let's just say I have insider information.

If someone enjoys writing code and is really good at it, come and get some, the water's fine. :moneybag

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Re: Ivy school education. Is it worth it?

Post by beyou » Sat Apr 07, 2018 11:57 pm

Have one in an Ivy now, and another in a similar caliber tech school. They are lucky to have parents who believe education is more than just a pure financial decision, and able to pay so it’s an option.

Both turned down very inexpensive choices with full and partial scholarships to local state schools, for discounted but much more expensive privates. Don’t regret having spent the money. Senior just got accepted to an Ivy grad program. Soph just got two internship offers in two different industries. Speaking to a recent stem grad from a less prestgious school, he was so amazed a soph got two career relevant internships, whereas he worked at summer camp after soph year. One of my soph’s internships came to his campus to recruit, and employers do not have the resources to go to every school. Both my kids had recruiters from Google,etc.

And beyond career/roi related issues, both met very smart friends with whom they will exchange ideas now, and network for many years in the future. For high intellect kids, sometimes they are only happy with stimulation from like minded people. Both kids getting plenty of opportunity in that regard.

Does not mean one can’t get a good education at a public school that leads to a great career, but for some people the cost is worth it. Older of my kids tried the merit scholarship at a public and was miserable, then transferred where he met good friends and is much more challenged. Younger started at the best school he could get admission, had better experience from day 1, helping get those internships at the age of 19.

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Re: Ivy school education. Is it worth it?

Post by EnjoyIt » Sun Apr 08, 2018 9:23 am

nisiprius wrote:
Sat Apr 07, 2018 8:46 pm
It is much more important that to study something that really grabs you... or discover something that really grabs you... or find that professor who just strikes a spark... than any statistics on ROI can possibly capture.
Photography grabs many people but the odds of having a career that makes any money is extremely low. There must be some ROI in the consideration.
nisiprius wrote:
Sat Apr 07, 2018 8:46 pm
The elephant in the room is social prestige. Social prestige exists. Sometimes it matters. Often it doesn't. If you want a career in firms that care about such things, then, of course, schools with social prestige are worth more than schools without it. I think I got one of my jobs because the firm's owner had gone to MIT, and like to hire MIT graduates. And I think I got slightly sidetracked at that firm because I was the only one of the fourteen MIT graduates who didn't wear an MIT class ring.
I think you hit the nail on the head here. If the career path is going towards big business then a top business school will help dramatically. If the career path goal is big IT, then a top IT school will help. Anything else is a waste of money. This is even more true when the student is taking on the burden of debt. Barring the business/IT pathway, it is much better to come out of a decent state school with little to no debt vs a fancy IV league school with $250k in debt.

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Re: Ivy school education. Is it worth it?

Post by jhfenton » Sun Apr 08, 2018 9:30 am

MoneyMarathon wrote:
Sat Apr 07, 2018 10:05 pm
If your out-of-pocket expenses are going to be huge, then the school has given you a "soft no."
Or your family makes a lot of money. Harvard, and I believe all of the Ivy League, offers need-blind admissions and 100% need-based financial aid. There are no Harvard College undergraduate academic scholarships. (You can, of course, receive outside scholarships, but I remember in my case that they offset outside my NM and other independent scholarships 50/50 against the grant/loan portions of the university aid offer.)
msk wrote:
Sat Apr 07, 2018 10:24 pm
jhfenton wrote:
Sat Apr 07, 2018 8:50 pm
In my case, Harvard was quite cheap, because my parents didn't have a high income. For my kids, Harvard would be very expensive.
LOL! Obviously Harvard did an excellent job of boosting your earning capacity. A generational impact :mrgreen:
It was definitely a good financial deal for me. :beer I also went to Duke Law School, and my wife is a CPA. We don't make as much as we probably should, but we do fine. In contrast, my father was a minister, and my mother was a bookkeeper. My father had a college degree (Middle Tennessee State) and some seminary. My mother went back and finished college with an accounting degree while I was in college. We were comfortable, but not rolling in dough.

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Re: Ivy school education. Is it worth it?

Post by desafinado » Sun Apr 08, 2018 10:22 am

My sibling and I are recent graduates (within the last 5 years) of two different ivy league schools.

We had a tremendous set of opportunities available to us. Here are some that we took advantage of:
- Learning new foreign languages and traveling to Africa & South America to use them.
- 2 years of research with advice from top professors in their fields.
- Opportunities to try internships in different fields and industries across the country. Between us, we did internships in Boston, New York, SF, Seattle, rural Alaska, and Appalachia.
- New and challenging coursework from day 1. No remedial calculus or english composition.
- A group of high performing peers across different industries.
- Access to recruiting opportunities that aren't available at other schools (e.g. hedge funds like D. E. Shaw)

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Re: Ivy school education. Is it worth it?

Post by Traveler » Sun Apr 08, 2018 11:42 am

I personally think a lot of the decision depends on the student. I was the valedictorian of my high school class, had a decent but not stellar SAT score and numerous extra-curricular activities. What I didn't have was parents who were "movers and shakers", knew much about university systems (despite my mom having a masters from a local private school), or were in any way involved in business or the community at a leadership level. I also didn't have the academic/counseling support from my high school which admittedly is one of the worst in the state. Additionally, I am an introvert by nature.

I could have very likely been accepted to Stanford and some Ivy schools but I would have been a fish out of water trying to fit in with old money when I'd grown up lower middle class. I attended a state school that basically paid me to attend (full scholarship from the school and numerous independent scholarships, some of which renewed each year). I got decent grades and did a study abroad program. I didn't have fantastic internships relevant to my major, but some of that is my own fault for not pursuing them or being scrappy enough to identify and get them.

Since undergrad I received an MBA from another state school (top 50 program) and earn a good salary in middle management at a Fortune 50 company. I am not the next VP or CEO, I'm not the high potential who will go on to great things in business. But I have a good work/life balance and should be able to retire at 54-55.

There are many times I question whether I sold myself short in life. Maybe I did, maybe I didn't. Maybe the potential I thought I had in my early academic career was simply because I was competing with lower level people so I stood out as great. I've beaten myself up over this at various times throughout my life but at this point I'm satisfied with what I've become. If others scoff, so be it.

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Re: Ivy school education. Is it worth it?

Post by Pajamas » Sun Apr 08, 2018 11:59 am

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
The best U.S. school for business based on ROI. is...

University of Wisconsin-Platteville

This is largely because the school is $19,700 a year but paying $55,700 a year in wages.

Not what one would expect, is it?

Completing the top 10 are:

Missouri University of Science and Technology
Western Michigan University
SUNY Maritime College
Iowa State University
The California Maritime Academy
University of Wyoming
Massachusetts Maritime Academy
Purdue University-Main Campus
Louisiana Tech University
The fact that there are three maritime academies on such a short list makes me question the usefulness of the analysis.

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Re: Ivy school education. Is it worth it?

Post by jayk238 » Sun Apr 08, 2018 12:03 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
I live in an affluent area with many doctors, lawyers; movers and shakers. Many of their kids are going to ivy league level schools. Understandably their parents are very proud. My son on the other hand is an average student. So maybe I have an axe to grind. But regardless it is an interesting question: when is an Ivy school education worth it? Here is an analysis I did a year or two ago.

A few caveats. If your kids is brilliant and can get merit scholarships than it really does not matter. However, the competition for merit scholarships keeps getting greater while their availability, at least from public, state universities has been going down.

http://time.com/money/best-colleges/rankings/results

I have been playing around with money magazine's recent ranking tool. It is interesting because it provides not just the cost of the college but also the 'early career earnings'. These two numbers allow you to do a ROI of the education: ie what I am going to pay vs what I can expect from future earnings for this payment.

This is something I think parents rarely do. My experience in talking with most parents in the area where I live is they do not do ROI on their children's education. Instead they base the school choice on prestige, where their kid wants to go, or some other heuristic methodologies.

The first analysis I did was regardless of degree offered. This includes the early career earnings for all students at the school.
Based strictly on early career earnings the best school is California Institute of Technology with an early career earnings of $79,800 a year. However, California is a very expensive place to live and price of this education without financial aid is $67,000 or $268,000 assuming you graduate in 4 years.

Moving down the list a few items (strictly based on starting salary) is SUNY Maritime College in Throggs Neck, NY with an early career earnings of $68,200 a year but a cost of $25,700 per year or for a total of $102,800.

So my point is strictly based on ROI based on early career earnings would be going to SUNY Maritime College is a better financial choice. If we add in cost of living (which I did not do for this analysis) I suspect the ROI numbers are even more compelling.

Next I did this analysis for business schools as my son is wanting to pursue a business degree. I am assuming the early earnings * the first 10 years. My experience is that after the first 10 years salary differences for business degrees tend to flatten out.

The best U.S. school for business based on ROI. is...

University of Wisconsin-Platteville

This is largely because the school is $19,700 a year but paying $55,700 a year in wages.

Not what one would expect, is it?

Completing the top 10 are:

Missouri University of Science and Technology
Western Michigan University
SUNY Maritime College
Iowa State University
The California Maritime Academy
University of Wyoming
Massachusetts Maritime Academy
Purdue University-Main Campus
Louisiana Tech University

The median salary for a business major in my analysis is about $46K. There are a large number of business college graduates making in the $45-55K.

So the bottom line is on average (yes I know there are exceptions) spending a lot to get a business degree unless you are going to a top 20 school, is probably not a wise investment. And even with the top 20 schools, you will need to pursue a job at Wall Street, California tech company (Google, Facebook), Consulting Firm (McKinsey, Ernst & Young, Deloitte), or startup to really recoup the costs of your education.

Now some more food for thought specific to where I live in Illinois.

The average early salary for business school graduates from the University of Illinois is $57,700 while University of Chicago has an average early salary of $3K less at $54,700. Yet University of Illinois is $31,400 per year while University of Chicago is $74,000.

University of Chicago is considered one of the 'best' schools in Illinois.
Not sure I agree with this assessment. You seem to equate value with income almost entirely- which is understandable but it also forces you to depend on the validity of this comparison and the quality of the assumptions.

1. For one, the average salaries are not all that demonstrative. For example, a guy going into medicine wont make much money in the first 5 years- most will be making 50k or thereabouts. This ranking bases the salaries for those with 5 years or less experience. It makes it hard to imagine that doctors salaries are properly measured here.
2. Going to a good college is almost entirely about signaling. I think you are missing the point here when you dismiss the idea that you 'need to pursue a job' at a variety of top places to recoup the costs- thats the whole point of going to a top college. Simply stating that its only worth it if you go to a top employer - misses the point. If a student can't get a job there then there is a good chance he didnt' belong at a top university in terms of talent. Perhaps if the goal was to work in a passion project - like history etc it makes sense but otherwise most students attend competitive institutions to get a job with the best prospects.

3. Next, and probably most important- those rankings you selected are extraordinarily misguided. These rankings struggle to show the full picture. A truly valuable college is one that affords a student to learn complex subjects with high achieving students who will push one to do better. I think this is probably the most valuable opportunity for a student to learn with others- I would rather have tested with the tougher student body so I could push myself but certainly my education would be worse if i had poorer competition.

4. If you are in Illinois- University of Illinois Urbana would be a great state school. There are other public schools like Penn State and U Pitt main campus that are better but probably more expensive - a better way to look for a school is to identify the best academic institition (in the same vein as U Chicago etc) that your son can get into and is affordable WITHOUT looking at incomes after graduation.
- I think the incomes after graduation are too variable, too weakly correlated to actual income in the future and career prospects ultimately.
- I think some of these schools like Maritime places tells me that indeed the rankings are a bit limited in value

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Re: Ivy school education. Is it worth it?

Post by Badger1754 » Sun Apr 08, 2018 12:39 pm

rhornback wrote:
Sat Apr 07, 2018 8:03 pm
If your kids is brilliant and can get merit scholarships than it really does not matter.
A few thoughts here.
  1. Smart, self-starters will do well wherever and whenever they go. Warren Buffett started out at the University of Nebraska. However, I wouldn’t underestimate the “clustering effect”. Being surrounded by type-A personalities all the time can be motivational if sometimes stressful.
  2. There are also “structural” barriers in certain professions that closely align with school affiliation. For example, white shoe law firms will ONLY recruit at top law schools like Yale, Harvard, Columbia, etc. Likewise, Wall Street and other professional services firms will favor elite MBAs, and recruit at other schools for back office positions, if they recruit there at all. Certain fields, like medicine, can be a bit more brand-agnostic. We can rail (properly so) about the fairness and equity of such a structure, but it exists. Looking around my firm, I can count on two hands the partners who didn’t go to a dozen or so schools.

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Re: Ivy school education. Is it worth it?

Post by Dottie57 » Sun Apr 08, 2018 12:47 pm

P.S. in 1981 I went to a technical school program after college to acquire marketable skills. It was a 9 month programming program. Cost of $4.5 k. First job salary was 14k.
.....

Just retired at salary of 110k plus bonus.


PBS program "This Old House" is pushing for high school grades to go into the trades. It might be worthwhile to look into this type of education. Shortage of workers should bring income up.

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Re: Ivy school education. Is it worth it?

Post by dbr » Sun Apr 08, 2018 12:54 pm

The somewhat contradictory answers in my opinion are:

1. Yes.

2. It isn't necessary.

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Re: Ivy school education. Is it worth it?

Post by Independent » Sun Apr 08, 2018 1:05 pm

windaar wrote:
Sat Apr 07, 2018 9:05 pm
Elite schools do not cause success, they are sorting mechanisms that admit kids who will be successful going anywhere. Research has proven this. Google Krueger and Berg Dale for the studies. An ambitious, curious, and hard-working student can get just as far by going to State U as to Yale. Where did your own doctor, lawyer, Mayor, Senator, and Congressman go to undergrad?
Yep. If I want to compare results, I have to compare students who went to Ivy league schools to other kids who were accepted to Ivies, but decided to go elsewhere.

That's what Krueger/Dale did. They got roughly the same financial results.

It amazes me that after they showed how to do the study, nobody else followed up using the same technique on other comparisons - "second tier" to "third tier" schools, four-year college vs. two year college, etc. Universities are full of econ professors who do research. But, it seems that nobody wants to follow up on this multi-billion dollar question.

My guess is that the student matters a lot more than the school.
Last edited by Independent on Sun Apr 08, 2018 1:15 pm, edited 1 time in total.

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