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