Is university prestige and brand really important?

Next to a house, college education is the next big investment a family will probably ever make. That’s why, before they break that college trust fund, parents and their soon-to-be college-going kid should do some serious research, number crunching and soul searching for we are about to present you with some data that reveals some pretty startling conclusions.

A recent study shows why families could end up burdened with unnecessary debt if they don’t do their homework – and get it right. We’re saying this based on the assumption that all parents want to send their children to the best possible colleges in the hope that their investment will pay off down the line. In real terms, they are keeping their eye on ‘expected earnings’. The belief that the more prestigious the college, the greater the earnings a few years down the line.

Well, we have news for you – it does not always pay to aim for the best. This stunning revelation was the result of a study that found that the prestige or ranking of a university or college matters only for some majors, not others.

The researchers – Eric Eide, Professor of Economics at Brigham Young University, and Michael Hilmer, Professor of Economics at San Diego State University – found that the reputation of a college directly impacted the expected earnings of Business and Social Science majors and had no bearing whatsoever on the expected earnings of STEM (Science, Technology, Engineering, Mathematics) majors.

The study, whose results were published in the Wall Street Journal in January 2016, looked at 7,300 college graduates, 10 years after graduation, and took into account factors that could influence post-graduation earnings such as family income, ethnicity, gender, marital status, SAT scores, post-graduate degree and age at graduation.

The results were unambiguous. The biggest earnings differences was for Business majors: graduates from elite institutions were earning 12 per cent more than their counterparts from mid-level colleges and 18 per cent more than grads from less-selective colleges. Similarly, Social Science graduates from prestigious colleges were earning 11 per cent more than their mid-level counterparts and 14 per cent more than those from less-selective schools.

For Education majors, the differences were 6 per cent and 9 per cent, respectively. In Humanities, graduates from selective schools were earning 11 per cent more than those from less-selective ones but there was nothing to separate them from graduates from mid-level schools.

But wait up. Here’s an eye-opener that contradicts the long-held belief that success and happiness are based on the college you attend and how much money you make. As unlikely as it may seem, this shocking insight comes from no less than the ones who wrote the book on market surveys and opinion polls, Gallup.

Teaming up with Purdue University, they released the inaugural ‘Great Jobs And Great Lives’ Gallup-Purdue Index in 2014, which found that the type and prestige of the college you attend and even the major you choose have little to do with your overall ‘success and well-being’ after graduation. On the contrary, what matters more is the overall ‘educational experience’ you have in college and the ‘emotional connections’ you make there.

Now the really shocking part. The index did not use expected earnings as a yardstick of success. Instead, it measured five factors that shape one’s overall ‘success and well-being’ – a feeling of purpose, a sense of community, financial stability, social support and physical health. After surveying 29,000 adults with a bachelor’s degree or higher, it found that only 11 per cent of college graduates are thriving in all five elements, and more than 1 in 6 are not thriving in any. In addition, 39 per cent of respondents were found to be ‘engaged’ in their jobs, while 49 per cent were not, and 12 per cent were actively disengaged.

For those who dismiss the report as just so much poppycock – what on earth is ‘workplace engagement’? – it reminds us that the world has changed many times over since numbers were used to count our blessings. It seems, people are looking for something more.

In its Introduction, the Gallup-Purdue report states: For years, the value of a college degree has been determined not by the most important outcomes of a college education, but by the easiest outcomes to measure, namely, job and graduate school placement rates and alumni salaries (usually only from their first job out of college). While these metrics have some merit, they do not provide a holistic view of college graduates’ lives. These outcomes do not reflect the missions of higher education institutions, and they do not reflect the myriad reasons why students go to college.”

The following year, Gallup and Purdue gave us something else to think about, this time, thankfully, a more quantifiable truth. Their 2015 report revealed that half of American college graduates do not think their education was worth the cost.

According to their 2015 index, only 38 per cent of alumni that graduated between 2006 and 2015 thought they had a financially valuable college education. According to the report, one of the main causes of the decline in the ‘cost-worth assumption’ is the alarming rise in tuition in recent years.

The report revealed that only 26 per cent of students strongly agreed that going to a private, for-profit university was worth the cost, compared to 47 per cent of those who attended private, non-profit universities and 50 per cent of who attended research universities.

Last year, New York Times columnist Frank Bruni presented even more evidence that… well, his book is titled Where You Go Is Not Who You’ll Be: An Antidote To The College Admissions Mania. In his book, Bruni points out that parents and students often mistakenly associate the prestige of a college with validation of the student’s worth.

Sadly, the money spent and heartache experienced in attempting to break into the Top 10 or Top 50 colleges in the country is a colossal waste. For instance, in his book, Bruni noted that the CEOs of the 10 biggest companies in the Fortune 500 list largely attended state schools for their undergraduate degrees.

Supporting this anecdotal evidence is a Gallup poll from 2013. When American adults were asked how important they thought a job candidate’s alma mater is to recruiters, 80 per cent said it was either very or somewhat important. But when business leaders were asked the same question – those who actually offer jobs – 54 per cent said it was not very important or not important at all.

In the face of overwhelming evidence that demonstrates that it may not be a good idea to aim for the ‘Top’, after all, think long and hard before you draw up your shortlist of colleges. Educators are emphasising that it is not the college you attend that matters but whether you make the most of the opportunities the institution offers. These include internships, study-abroad programs, being mentored by the right faculty, enrolling with clubs and student groups, etc.

Then, there’s innate, intelligence and raw talent, which usually seeks out enriching opportunities even in non-Ivy League institutions. According to recruiters, talent and skill set score over college credentials, especially in STEM jobs.

There’s no arguing that the workplace is getting more and more complex, which is why balancing a good college degree against strong life skills and experiences beyond academia will give you the edge you’re looking for.

Read these related articles:
Is a Master’s Degree abroad worth it?
Is an Executive MBA (EMBA) worth it or not?
What is the value of a foreign MBA in India?
Best alternatives to MBA | Cheaper & better options
 
References: Gallup-Purdue Report 2014, 1, 2, 3, 4, 5


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Sameer Kamat //
Sameer Kamat

Founder of MBA Crystal Ball. Author of Beyond The MBA Hype & Business Doctors. Here’s more about me. Connect with me on Google+ | Twitter | Facebook | Linkedin

6 Comments

  1. Avtar Dhiman says:

    Hi Sameer

    My academics are :-

    12 TH :- 56%
    BBA :- 68%
    PGDM :- 7 CGPA

    Currently working in Dubai as a Personal Banker. Need advice whether i should continue my job or plan to bag one more MBA degree from abroad.
    i am having a 2.5 year of work experience in the same field. i m little bit confuse now. kindly advice me.

  2. Ramesh Mundra says:

    Hi, My name is Ramesh Mundra I am chartered Accountant by profession, I am working with a reputed NBFC and into Risk and credit function, Total work ex of 15 years, I am looking for executive management programme from reputed institution, Can pls help me on this…Thanking you…Regards

  3. Jimmy says:

    Hi sameer,

    I am an MBA. I worked for over 10 years in operations and then came a point when I was not enjoying my work. When I expressed my concerns to the management, they asked me to choose my.role. I chose marketing since I wanted to learn something new. Now after 1.5 years, I feel I have been sidelined and don’t have a meaty role and very little prospect of growing . I am worried if I did the right thing or not.

  4. Kunal Rajput says:

    Hello Sameer,

    I am 23 years old, a Diploma and B.E. In Electronics engineering and as of now i have shifted to marketing and currently working in a respected corporate for 9 months.
    i am planning to do MBA abroad so i can get that kind of exposure.

    I am a national level athlete n the sport of kettlebell lifting and as of now have won at least 6 medals in the same.

    The problem which concerns me is my engineering record, i have never been a great student in the said course and i have always struggled in it.I even had the misfortune of getting a year drop due to it (in that year i did my Kettlebell certification course). as of now my average in the last year engineering is close to 60%.

    I want to go abroad but i guess my past records might hold me up here.

    just wanted to know that is it possible for me to the MBA from the states or any other good country or do i have to plan something else.

    Thanks in advance,

    Kunal Rajput.

  5. Sameer Kamat says:

    @Avtar: You haven’t said whether you are happy or not with the job, and why you want another one. Read this:
    http://www.mbacrystalball.com/blog/2017/02/15/second-mba-abroad-after-iim-isb/

    @Ramesh: This may help: http://www.mbacrystalball.com/blog/2015/07/13/executive-mba-from-iim/

    @Jimmy: If you think you made the right decision to move into marketing, you can always apply to other companies for a similar role.

    @Kunal: We’ve written about how to manage low academic grades here: http://www.mbacrystalball.com/blog/2015/04/13/managing-low-academic-grades-gpa-mba-applications/

  6. Rupak says:

    Hello Sameer,
    I am a Chartered Accountant currently working with PwC in the assurance department (statutory audit). I have a work experience of about 1.5 years. I have completed my graduation from Mumbai University with decent scores. I understand that holding onto only Harvard or Stanford might not be the way to go since the admission is very difficult. But looking at the current trends, almost a quarter of all MBA admits in top 10-15 B-schools come from consulting background. Moreover, never have I come across a Chartered Accountant or someone from the audit sector in such colleges. Do these colleges, in any way, prefer people from consultancy/ technology background. Also, I very much intend to do my MBA from abroad, but I am targeting the top 15 b-schools. Would like your say on the same.
    Thanks.

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