Challenging Conventional Wisdom
To many higher education analysts, paying for an education at an elite private university has long represented a good investment. Research has seemed to support the idea that graduates of the 'best' schools fare better in the job market and enjoy higher earning power than their peers. For example, an oft-cited study by RAND Corporation, Cornell University and Brigham Young University suggests that graduates from the most selective colleges make up to 40% more than individuals earning a degree at the least selective public universities.
Some economists, however, have raised issues with the methodology of this study. According to The New York Times, analysts from Princeton and the Andrew W. Mellon Foundation examined the same data and found that students with similar class rank and SAT scores who attend less selective schools (by choice or after being rejected by a top college) earn about the same as graduates from elite schools. Other experts have suggested that it's simply impossible to determine whether students' ultimate success is primarily the result of school selection, innate ability or hard work. Many suggest it's likely a combination of these factors.
Families Rethinking College Decisions
Amidst an economic downturn, more students and families are thinking twice about taking on exorbitant college costs - a potentially bad sign for elite universities. Parents and young people are increasingly cost-conscious overall, and some individuals who run a cost-benefit analysis don't believe the perceived advantages of the top colleges merit their high tuition rates. More people are looking to lower-cost, less-selective public universities that still provide an excellent education.
Examining college tuition, room and board rates and other fees, it becomes immediately clear why many students are considering public institutions over elite private institutions. Tuition continues to rise, and although it was not a large increase, public schools' tuition costs rose 2.9% between 2012 and 2013, while private school tuition rose 3.8%. According to The Wall Street Journal, when looking at the 2013-2014 school year, after all financial aid was considered, students at private schools still pay an average of $23,290 for tuition, room and board. At public schools, students pay an average of $12,620.
The decline in financial aid is leading to increased student loan debt, topping $1 trillion in total, that is impossible to ignore. Faced with the decision between more debt or a less prestigious school, many students are opting for the cheaper education route.
Elites Still in High Demand
While some students are looking past prestigious private institutions, many families do decide that the cost of a top-caliber school is worth it. For these families, perceptions of greater pay, better connections and higher grad school acceptance rates continue to be convincing factors that prestigious schools are worth the high sticker price.
A little known fact is that for those high-achieving, low-income students, private elite schools might be the cheapest option. According to The New York Times in 2013, at schools such as Harvard, parents earning less than $65,000 a year are not required to contribute any money towards their students' education. Parents who make $65,000 to $150,000 often only pay about 10% of their income.
Even for those who may question the value added by attending exclusive private universities, a legacy aspect - such as a parent being an alumnus - may introduce a subjective factor that's hard to quantify monetarily. And for those who are able to attend elite institutions largely on scholarship, gaining a world-class education at a fraction of what it typically costs is often the best decision.
Click here for five questions you can ask yourself when selecting a college.