Save Money: It Doesn’t Matter Where You Go To College

college graduation caps

By Mitchell Pauly

The notion that going to a “good” college is a ticket to a brighter future should be taken on a case by case basis, but this isn’t what American society would have you believe. I want you to think about this example, which is all too common: an extremely high academically performing high school senior goes to talk to a guidance counselor, who promptly trumpets that the Ivy League is the only place for her. Her history suggests nothing less than extraordinary achievement; will not going to an Ivy League school change this trend? The question is not if she will fail by not going to an Ivy League, but whether her trend of success will come to an end. Probably not, but if she listens to the counselor (who is flattering her, so it’s probable she will want to eat what she is being fed) she will come to believe meeting her potential hinges on attending an Ivy League. The disservice here is that the high school counselor based her opinions on two forms of selection bias: non-marginal comparisons and conclusions drawn from data that is unrelated.

Marginal Comparisons

Marginal comparisons allow us to compare things apples to apples, not apples to steak tips. In the case of our talented student, the counselor failed to make a marginal comparison because she framed the Ivy League question in an all or nothing manner. That is, in framing her opinion to our student she compared getting an Ivy League education to getting no higher education at all. What would our student do if she chose not to attend an Ivy League? In the counselors world she would be hooking on the street, but in reality she would probably attend a non-Ivy league college. So by not comparing an Ivy League education to that of a non-Ivy League education, the counselor failed to make a marginal comparison. This is probably the largest error people make throughout the college process, and not just in regards to the Ivy League. When I was applying to college I was convinced that if I didn’t attend a brand-name school I would end up sharing a van down by the river with Matt Foley.

Selection Bias

Selection bias, for those unacquainted with statistics, is an inherent error or lack of focus in the data used for a statistical analysis, thus calling into question the conclusions drawn from the analysis. Selection bias is common because it’s in many cases hard to avoid completely. This in and of itself is not the problem, it’s more of a fact of statistics; it’s when faulty conclusions start being championed as absolute fact that selection bias becomes a real issue.

For example, a study composed only of white teenaged girls will not be a statistically valid study on the popularity of Jack Johnson. Since the data that is widely available and published on higher education is rife with selection bias, we cannot completely blame the high school counselor for framing his Ivy League opinion in the way he did. To see this more clearly, let’s think for a moment about the typical information available for colleges, in publication like the U.S News and World Report College Rankings:

Acceptance Rate: This tells you the percent of students accepted out of the application pool. The bias within this is that this measure doesn’t really tell you anything about the quality of education at this institution, but rather shows more about how popular the school is in the application process. One might be tempted to draw the conclusion that this shows how competitive it is to be accepted into a school, but this too is a stretch. I could get every crack addict in New York to apply to Quincy College, they would all be rejected, and suddenly Quincy College will seem a more selective institution.

SAT/ACT Scores: This chunk of data tells you a lot about the abilities of its students, and not very much about the quality of education at the college. The fact that this is used in a weighted measure that ranks colleges against one another blows my mind. I guess the implication is that students who attain higher SAT/ACT scores can handle more intense classes, which is probably true, but this tells you nothing about whether there are in fact intense classes to be found, and if there are if prospective students will be able to take them.

Percentage of Faculty Who are Full Time: This is a metric meant to infer how much attention a professor will pay to their students, in that the full-time professor devotes more attention to their students. This metric is as easy to manipulate as a gullible third-grader. A school can simply hire a lot of full-time professors, put them to work on managing their departments, gaining notoriety within their area of expertise through speaking engagements and paper publishing, and have grad school students teach as many classes as possible. This is why the students of the universities that rank highest in this metric still report feelings of neglect towards their professors.

I could go on, but the purpose of this article is not to point out the inherent stupidity and meaningless nature of the U.S News and World Report College Rankings. I am making a larger point: since rankings such as these are the basis of much of society’s college related opinions, and the data is rife with selection bias, then the majority of the opinions we hear are as useful as Paris Hilton on trivia night.

Alan Krueger’s Bias Free Study

One study on college that did manage to completely eliminate selection bias from the equation was the one conducted by Alan Krueger, a Princeton economics professor. To control for the selection bias present in the varying academic abilities between students at prestigious institutions and their lesser counterparts, he looked at high performing students that were accepted into both highly exclusive schools and ones less so. Some went to the Harvard’s of the world while others attended state schools or the middle of the pack private schools. The results showed that regardless of the student’s choice, they all tended to earn about the same salary twenty years into their careers. If that doesn’t blow up the U.S News and World Report College Rankings I don’t know what does.

The college admission process is stressful enough to begin with without adding to the mix meaningless, biased data and opinions. From the lack of marginal comparisons by those we trust most to guide us through the process to the application of unrelated data to conclusions society bases its opinions on, the deck can at times feel stacked against us. Not so. Tune out the cacophony of biased opinions, the “rankings”, and other drivel and focus on history: if you have a track record of success, you will likely continue to have one. With that in mind, please, ignore your high school guidance counselor.

Mitchell Pauly writes funny and informative personal finance articles at Snark Finance. You can also join his Facbook Page or follow him on twitter at @Snarkfinance

(Photo courtesy of j.o.h.n. walker)

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2 Responses to Save Money: It Doesn’t Matter Where You Go To College

  1. My Wealth Desire says:

    For me it depends on the student or individual capabilities, there no such thing as assurance that if you go to the Ivy League he/she will be successful or earn higher than others. Most of the wealthy people become financially successful because of the action he applied to reach his/her goal.

  2. EEinNJ says:

    In my past experience working for a major healthcare products company, it DOES matter what school you went to. The Ivy league grads went to the front office and more managerial jobs, even as new hires. If you went to a state school, you’d be a staffer in an operations type job. Longer term, having a master’s degree, especially an MBA from a name-brand school like Wharton, was an advantage in getting a promotion. In a large corporation that can attract top talent, your educational pedigree is a way to differentiate yourself.

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