Yet Another Study Shows Public Colleges Provide Better Value for Post-Graduation Salaries

So the final in my trinity of recent studies that suggest that top students don't necessarily have to pay top dollar for good educational opportunities, I turn to the "payback" study done by SmartMoney magazine.   Like yesterday's study, this one is based on the salaries earned by the graduates of top colleges, which I personally think is a dubious evaluation of the quality of education.  Nonetheless, it is a major consideration of most families looking at college decisions, so it is worth at least noting what these studies are saying.

So the payback scale devised by this study looks at the average salary of graduates divided by the total fees  (tuition and other charges by the college itself) over four years of earning a degree.  So, for example, if the average student paid $25,000 a year for four years at College X, but earned an average salary at graduation of $150,000 a year, that school would have a payback scale of 150% ($150,000/$100,000 total costs).  But if the average student paid $50,000 a year for four years, but earned an average salary of $175,000, that college would have a payback scale of only 87.5% ($175,000/200,000).

Let's acknowledge upfront that the payback scale favors some universities over others.  For one thing, the schools that offer programs in business or science and technology are going to look better than those that are typical "liberal arts" colleges, whose graduates may be going into such field as social work, the arts, non-profit research, or--gasp!--education, whose salaries are typically lower.   The scores also don't take into account average financial aid--which would benefit the Ivy League schools, whose endowments are rich enough to offer healthy aid packages to many students--or typical years to graduate--which would make many public universities look worse, because more of their students take longer to graduate than the presumed four years.  So looking at these figures with somewhat of a grain of salt, what did SmartMoney magazine find?

Based on the payback scale, the highest performing colleges and universities were the top-tier public universities.  According to SmartMoney magazine, the luckiest students are those living in Georgia:  Georgia Institute of Technology was their #1 "payback" school (with a payback ration of 221), and University of Georgia was #4 (payback of 186).  In general, the South and Midwest ruled the top of the payback scale, with the University of California at Berkeley being the only college on either coast breaking into the top 10 (it was #10 with a payback ratio of 146).  

Alas for North Carolinians, no college in the state made the top 50 of the SmartCollege listing.   Our neighboring states did better; South Carolina has Clemson University, which was #6 with a 160% ratio, and Virginia had both the University of Virginia at #16 (117%) and my alma mater, The College of Williams and Mary, at #18 (111%).

It is not until you get to #19 that you find a private school:  the Ivy League university of Princeton, which as a payback scale of 102.  The last 30 universities on the list are dominated by private schools, with the Ivy Leagues generally scoring higher than most of the other top-tier private colleges.

You can read the article to find out the specific details about the average salaries of the three types of schools--public, private, or Ivies--and the comparative relative costs.  But the bottom line is still the same:  going to a very expensive and exclusive university does not guarantee you a higher salaries, particularly when you compare the relative costs of earning your degree.

Now, my point in the three posts is not to bash the Ivy League schools, or private schools in general. But there can be so much pressure about getting into "the right school" or "the best school," and I hope looking at some of this data can help middle schoolers and high schooler feel less anxious about their postsecondary education.

And I do have to admit to a personal bias.  When I was in high school, I applied (and got accepted, at least to some) to Ivy League and elite/expensive private schools, but I ended up choosing The College of William and Mary, which was one of my state schools, and thus a fraction of the cost of the others.  I ended up getting an excellent education at a bargain price.  But since I didn't have thousands of dollars of student loans hanging over my head, I was able to choose jobs that I really enjoyed and that I thought were really valuable--jobs in the non-profit world, and then in education (leading finally to homeschooling, where I get to PAY for the privilege of spending untold hours every day teaching children!).  I've never had a high salary job, but I think I've had plenty of high impact jobs.  Plus, I've always enjoyed and believed in what I did--which is something that is hard to put a price tag on.

So all I'm saying is--there is a lot to consider when choosing what college to attend.  Don't feel that a fancy name alone is the yellow road that will bring you to your dreams.

Study Casts Doubt on the Ability of Highly Competitive Universities to Raise Salaries

On the heels of my post yesterday about a study that showed that high achieving students end up with similar test scores whether they get into the most competitive high schools or not, a study this year by researchers at Princeton University discovered a similar phenomenon in regards to the most exclusive universities.  In this 2011 study, they found that most high achieving high school students who applied to the most elite colleges, but ended up going to a less competitive school (whether because they weren't accepted or chose a different school), earned the same average salaries as their peers that graduated from the exclusive colleges (Ivy League-level schools).

This study is particularly interesting because it was a repeat of a study that the same economists published about 10 years ago.  That study revealed the same thing--applicants to top tier universities who attended less elite colleges generally obtained comparable salaries to the graduates of the most exclusive schools.  In the first study, however, the salaries were self-reported, which left room for some, padding, shall we say.  But in this follow-up research, not only were many more people included, with the time span now reaching to careers of people in their 40s and 50s, but the data on salaries was taken from more objective sources, such as Social Security information.  Still, the results were the same; there was no boost in income for graduates of top colleges compared to other students with comparable test scores and such who didn't attend those types of schools.

So, the bottom line is:  Big name colleges are not required to earn the big bucks.  If you have the grades and test scores, along with personal qualities like self-confidence and persistence that are related to applying to these types of schools, of a viable candidate for admission, ON THE AVERAGE, you will earn as much even if you attend a less prestigious college.  Depending on how much you have to pay for the big name schools, in fact, you may be better off turning them down (if accepted) and pursuing an education at a less costly alternative.

There are some BIG caveats to this conclusion, however.  Graduating from a highly competitive/Ivy League type university DID significantly increase the incomes of minority students (black and Latino), students from low income families, and those whose parents did not attend college.  It appears that the elite colleges do provide those types of students with skills, habits, or networks that do advance their professional chances at gaining a larger salary.

But for white middle or upper income students, the debt they might occur to attend the most exclusive schools is not likely to translate to significantly higher salaries.

Of course, we hope that earning a lot of money is not the sole criteria by which we judge our universities.  Income upon graduation is an even worse stand-in for educational quality than standardized tests are.  However, there can be questions about the educational value of the highly elite schools.  In many of them, the focus is really on graduate education, so that a majority of undergraduate classes are taught by graduate students, who may have only a shallow command of either teaching techniques or the subject area (and sometimes, even of the English language itself!).

This is all to say that students don't need to feel that their lives will be ruined if they don't get into their desired Ivy League schools.  There are a lot more factors involved in finding the right school than simply the prestige of its name.

Research Study Shows Merit Pay for Teachers Doesn't Work

A study of what I view as one of the biggest issues in education reform announced its findings this week, and I don't the results have gotten nearly the attention they deserve.   (And if my opinions aren't sufficient for you this is important enough to read, also know that the study focused on middle school teachers.)

The National Center for Performance Incentives at Vanderbilt has just completed what they say is the first rigorous scientific study on the concept of merit pay--that is, paying teachers more or giving them bonuses if their class results on standardized tests rises.  This study followed 300 5th-8th grade math teachers for two years.  Half of the teachers were offered bonuses of different levels, up to $15,000 per year, for improvements on the Tennessee standardized exam on math that is used as part of the federal No Child Left Behind Initiative.  As with many such studies, the research had some good news and the bad news (depending on how you look at it). 

So here is my interpretation of the study:

The Bad News:  Merit pay didn't work.  Even offering an extra $15,000 didn't result in higher test scores--and this was in Tennessee, which is ranked 34th in the country in terms of teacher compensation by the American Federation of Teachers, with an average teacher salary in 2007 of $43,815 (compared to a national average of $51,009 or a high of $63,640 in California).  That is to say, offering a bonus of one third of their salaries didn't make a difference in student scores.

The Good News:  The reasons teacher reported that scores didn't rise was they were already doing all they could possible do.  Or, to look at it from the other side, even without monetary rewards for student achievement, teachers are already giving everything they have to support their students.

I think this is an incredibly important piece of news that deserves more attention.

This is not to say that some teachers might not be able to do a better job.  But if those teachers don't know how to teach well, just offering money is not going to suddenly make them better teachers.  They need other things--mentoring, more training, more staff support, or whatever.  And for all those good teachers out there--which I believe is the majority--it just shows that they aren't motivated by money.  They are teachers because they care, they enjoy it, they know they are making a difference in children's lives, and all sorts of things like this.

This study should not be used to justify inadequate pay for teachers.  Most teachers I know don't think they get enough money for the important role they play in our society--and I agree.  But they aren't looking for higher salaries because then they will be "more motivated" to serve their children, because they won't be--they are already highly motivated.  They want more pay as recognition for the critical work they do, not as a carrot to get them to "care more."

So I think this study is a terrific commendation of teachers and how much they work and give and care, regardless of their compensation.  And to me, it is another great example of why trying to apply typical industrial or business practices to education doesn't work.  Our schools are not like car dealerships or assembly line plants or stock brokerages; different rules, different dynamics apply there.

Finally, on a local note--I hope the Wake County School Board (the one that is talking about bringing in a "business leader" to run the school system) considers the implications of this study as they decide about the new Superintendent for this 158 school, nearly 140,000 school system (2009-2010 figures).

Is Going to College an Economic Mistake?

Another provocative article in the Washington Post last week argues that sending children to college is not a good economic investment.  "Some say bypassing a higher education is smarter than paying for a degree" by Sarah Kaufman suggests that soaring tuition prices are reducing the economic benefits of a college degree.  According to the statistics in the article, the differential in annual salaries between high school graduates and those with a bachelor's degree has narrowed, as has the difference in unemployment rates, particularly now that college graduate unemployment is at an all-time high.  Also, as the article points out, the average college degree earnings hide huge discrepancies between disciplines; the high wages of business majors or accountants look good compared to high school graduates, but those graduating with degrees in anthropology, social work, or preschool education may not be any higher than the compensation for high school graduates.

Compounding the problem, according to these financial advisers, is the burden of debt many young graduates have from their student loans.  Paying off that debt causes many to postpone major steps in their lives:  buying a house, having a family, opening their own business.  Many can't pay and end up defaulting; this not only ruins their credit (and thus, perhaps, their chance to rent an apartment or arrange a car loan), but may prevent them from getting some jobs (or have the government garnish their wages if they do get the job).

What do these experts say parents should do instead?  Invest that money in their children's future.  The $200,000 (minimum) it costs for four years at a highly-competitive private college would, if invested in T bill with 5% interest over 50 years, grow to nearly $3 million by the children's retirement age.  For those with not-such-deep pockets, at least one adviser says to give your children $10,000 to open their own business.  This, he argues, will teach them more life lessons than any college course, and will make them more motivated in whatever college education they do pursue.

Of course, as the article itself admits, there are non-monetary benefits to attending colleges.  It is for the intrinsic value of the college experience that I would want my son to go, not for the guarantee of a job with a big paycheck.  But it is an interesting perspective to keep in mind.  Even in middle school, it is easy to start getting caught up in college-mania, worrying about doing the right test-prep to get high enough scores and taking enough AP classes to ensure our children get into that "perfect" school, whatever it is--Harvard?  MIT?  Stanford?  St. John's?  University of Chicago?  Whatever.  If the voice in your head ever says, "But I'll ruin my children's lives if I don't prepare them well enough to get into (substitute educational Nirvana here)," this article provides some good food for thought.

And regardless of what I think about the article, I just have to ask:  Is there really any bachelor's degree program that is worth a quarter of a million dollars?