I have been reading the best book I've ever read on preparing financially for college. The book is Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents and I'll be sharing a bit of it over the next several days. Today I want to share some of the book's thoughts on one advantage of attending a "lesser" college:
Krueger's study also found, not surprisingly, that students who are accepted to more selective colleges but attend less selective ones tend to graduate with higher GPAs than comparable students who attend more selective colleges. Krueger writes, "The improvement in class rank for students who choose to attend a less-selective college may help explain why those students do not appear to incur lower earnings; employers (and graduate schools) may value their higher class rank by enough to offset any effect of attending a less-selective college on earnings."
Krueger points out rather obviously that "a student who goes to Penn State instead of the University of Pennsylvania is more likely to end up near the top of the class. Employers and graduate schools may not adequately adjust for the competition." Krueger's research found that students who graduate seven percentile ranks higher in their class earn about 3.5 percent higher earnings, "which may largely offset any advantage of attending an elite college on earnings."
The book goes on to suggest that instead of going to "the best college you can get into" that students might be better served by attending a good (though lower ranking) school where they can excel. It's not a bad argument when you look at the facts -- especially when they note (as I've stated in other posts on this book) that the #1 factor to whether or not a student is successful at college (based on ultimate career results) is the student himself. In other words, if Joe is a go-getter, he'll have a great career whether he goes to Penn State or the University of Pennsylvania. So why not go to the one that costs significantly less if the total return is the same?
A couple extra comments:
- Note that we're talking about the difference between a "good" school and a "great" one. It's not like Penn State is some lame school that anyone can get into. It's still a very good university.
- I myself am a product of the less-selective school plan. I went to an obscure undergraduate college, but I finished in the top few percent of my class (plus had tons of high-profile extracurricular activities) and it was good enough to get me into a "good" graduate school (not a top-tier, but certainly a good one -- top 25 for those really interested.) I finished near the top of my class again, got a job with a name-brand company when I graduated, and the rest is history. ;-)
How about you? Anyone else out there attend "only" a "good" school and come out better for it?
I went to a college that accepted alot of different people. Quite a few I was not sure about. Our starting out class was 220. More than half dropped the first year. Graduating was 15 from the original. It was easy getting accepted. Hard graduating with a degree. Some people who I thought would drop out didn't and some who I thought would stick with it dropped out.
Posted by: Matt | October 18, 2010 at 08:11 AM
If you want to live in a certain area of the country I believe school location is very important especially in smaller cities.
I when to one of the top undergraduate engineering schools in the nation but after graduation, that didn't help with recruiting where I wanted to live. I got a job 8 hours away and after a couple of years moved back "home". Most everyone I work with now, graduated from a "good" local school with much less debt and better local contacts.
On the other hand I know classmates that headed for the west coast after graduation and have done very well for themselves.
Posted by: Kris | October 18, 2010 at 09:58 AM
I think the number of on-campus interviews matters most.
Posted by: bb | October 18, 2010 at 10:05 AM
University of MAINE @ Machias (UMM), business program. Picked up a double major in Recreation Management and finished in four years w/ 3.36 GPA, Cum Laude, w/ one semester of varsity sports, lots of extra cirricular activities. My SAT scores weren't good enough to get into regular state U 4 year biz program. The "obscure" school, high class standing and extra cirricular load all stood to reason for my selection to USAF Officer Training School 3 years later while I also made OUT VERY good in those 3 years of corporate life after undergrad school and before before joining the USAF to attend OTS and then it helped w/acceptance directly into "public" grad school for my MBA in '86-'88, Golden Gate Univ of SF, CA(!)....UMM had only about 255 full-time students and maybe 1K part-time and the business program was only abvout 1-15% of student population. Almost 30 years later it's similar stature and small size STILL make for a great education!
Posted by: jeffinwesternwa | October 18, 2010 at 01:02 PM
Probably been said before, but mediocre college=good job doesn't always hold true in some situations. Finance is an obvious one. Good luck getting a Wall Street job from a college in middle America where those sorts of firms don't typically recruit. Not impossible as I'm sure someone will exhibit an example of someone who did, but I would contend that it would be very difficult. I don't know but I suspect that getting into a "top" MBA program would be similar and based on undergraduate name recognition at least to some degree. Correct me if I'm wrong. Medicine is similar with top schools having top undergrads overrepresented among their students. Medicine isn't as exclusive as Wall Street but if you're interested in a highly competitive and big-earning specialty you will need all the help you can get which includes a top med school pedigree.
However, for advertising/marketing/engineering/regional markets/etc. for the most part I think you're absolutely right.
Posted by: FCM | October 18, 2010 at 01:15 PM
This is what I did. I purposefully shot for the 'good' school level as I knew the top tier would be more work than I wanted to put in and I'd end up with mediocre grades or washing out. Worked out fine for me.
I think it depends on the person and situation.
If you are extremely bright and work very hard then the 'best' school may be the better choice. So if you can get good grades at a 'best' school then go for it. High grades at Harvard or MIT would trump anything.
But for the rest of us normal people the 'good' school is probably the best choice.
You don't want to bite off more than you can chew. I know one guy who went to Caltech and washed out after a year or so. If he'd gone to a 'good' school then he would have done fine.
Posted by: jim | October 18, 2010 at 01:48 PM
GPA is not always the best indicator either. One student is living off his parents dollar and has all his free time at college available to spend studying versus the other student who is working 2 jobs while going to school and studies when they have the chance.
Posted by: frodo | October 18, 2010 at 08:32 PM
A couple things here:
The statement "a student who goes to Penn State instead of the University of Pennsylvania is more likely to end up near the top of the class" makes no logical sense. I don't have the statistics in front of me, but I believe that Penn State has a much larger student population than Penn. Therefore it is harder to end up near the top of your class at Penn State, based upon sheer number of students!
Second the statement "So why not go to the one that costs significantly less if the total return is the same?" assumes that the selective school is more expensive than the no-selective school. As I have stated in previous posts on this subject, that is not true either. Ivies are among the most generous when it comes to financial aid.
Third, there is no way to prove or disprove the statement "Anyone else out there attend "only" a "good" school and come out better for it?". How does anyone know they would have been better or worse going to a good vs great school? It is possible that FMF might have come out better by going to Harvard, but we will never know because he didn't.
Posted by: MBTN | October 18, 2010 at 08:43 PM
College only goes so far. A year after you start your first professional job, your employer will know if you are a performer or not. We have this guy at work who always brags about how he went to MIT. When I started, he already had 10 years of employment. I passed his pay grade in a few years. Now he works under me.
Posted by: bobsmith | October 18, 2010 at 08:49 PM