Who needs a job when you have a private school degree? If you are rich enough to attend private school, then you may be so rich you don't really have to work for a living. That, or you can just work for your parents.
Pick any private school. The cost is about $220,000 in tuition only over four years. These figures don't surprise anybody anymore given the ever rising application volume to storied institutions such as Harvard, Yale, and Princeton. That said, there have to be some who believe $220,000 for a private school is a hard pill to swallow over an excellent public school for just $60,000.
With an estimate 17% of people aged 20 through 24 unemployed, swallowing a bowling ball may be easier than finding a desirable job post graduation.
Let's say you are one of the unlucky few who can't find a job after a $200,000 education. Does it really matter? Let's think about why it doesn't really matter from the eyes of several recent graduates.
Who Needs A Job When You Have A Private School Degree
Jimmy graduates from Columbia this year with a degree in History, European History to be precise. Despite his best efforts to land a summer internship last year, none were available, so he decided to go Euro-railing with his buddies for three months.
What a blast, as he traversed the continent and collected bottle caps and coasters from every bar he patroned. The total cost of his trip, including airfare, food and lodging was a mere $10,000, just 1/5th what his parents pay for 9 months of school! What a bargain he reasons.
Everything is a bargain to Jimmy because he doesn't have to pay for anything. He was happy to attend a SUNY school for a fraction of the price, but his parents pushed him to attend Columbia. In return, they would pay for everything, so long as he promised to just do well. The pressure Jimmy faced was immense. How could he live up to his parent's expectations? He knew he couldn't.
Doing Something With A Private School Degree
With Jimmy's fancy Columbia degree, he reasons that he's held up his end of the bargain. He didn't drop out and instead flourished with a 3.7 GPA and a cum laude designation on his diploma. Yet, with no job waiting for him at the end of the rainbow, is all for not? Not so says Jimmy. The diploma is worth it, and if people don't want to hire him, it's their problem and not his.
You see, Jimmy's parents are multi-millionaires who live in a $6 million dollar house in Greenwich, Connecticut. His father is the CFO of a Fortune 500 company and his mother has never worked a day in her life. In fact, the nanny who raised Jimmy since birth is still living with his parents even though they are empty nesters. Someone has to clean up the 5 bedrooms and run errands.
Like Jimmy's mother, he never needs to work either because his trust fund can easily support him for the rest of his life. Jimmy is not unique, because all of his friends at Columbia are wealthy.
Just by graduating, Jimmy and his friends legitimize themselves to the world. To think about starting at the bottom of any corporate is beneath them, when they are the sons and daughters of business leaders. Hence, who needs a job?
Related: What If You Go To Harvard And End Up A Nobody?
The Woman Who Pays Her Way Through School
Now lets compare Jimmy with Allison, who paid her way through Columbia. She too, could have decided to attend a school 1/5th the price, but she did not. Instead, she chose Columbia out of the belief she would get a superior education, and land a dream job in marketing.
With over $100,000 in student loans, Allison is suffocating from debt, and her repayment starts 6 months after graduation. Allison has no job offer either, and has decided to wait tables until she does.
Allison doesn't want your pity, so don't give her any. She made the choice to spend $200,000 on education even though her middle class parents, who earn a combined $80,000 a year couldn't afford to offer much help. Only a small few get to attend such an elite university, and for that, she feels proud to have the opportunity. Some day, she will see the benefits of her Columbia degree, just not now.
Unless the right job offer comes a long, Allison is happy waiting tables. She won't settle, even though it may seem like she already is. If a year goes by without finding her perfect job, she'll just go to graduate school for another $50,000 a year.
Allison knows she's smarter than most people and has a tremendous amount of pride. Don't pity Allison for not finding work, because she's content with her own choices.
The Superstar College Graduate
Sandeep stands above Jimmy and Allison for his brilliance. He won the National Spelling Bee at age 9, finished multi-variable calculus by the 10th grade, and is on the US national juniors squash team. Sandeep has a full ride to Columbia and like Jimmy, doesn't have to spend a dime.
Despite Sandeep's achievements before and during college, he too, cannot find a job as a strategy consultant. Sandeep doesn't care, because he had a grand old time playing squash, experiencing the NYC night life, and learning something new on the side.
Besides, what's $220,000 when none of it came out of his, or his family's pockets? Absolutely nothing. As far as Sandeep is concerned, his dream job hasn't found him yet.
Mentally, Sandeep figures that he can take the next four years off since he worked so hard during the past four years. Maybe he'll go explore the world and live on a shoe-string budget.
Maybe he'll try to become a squash pro in Europe. The uncertainty of his future excites him, especially since he's armed with a free Ivy league degree!
Private School Kids Are Hooked Up
People who go to private schools aren't stupid, nor are they irrational. Even under the most difficult scenario where one has to pay their way such as Allison, she doesn't want your pity. They knew what they were getting themselves into, and took a risk with their finances in order to experience “the best” education in the world.
The reason why $50,000 a year tuition exists is because enough people believe it's worth it. If not, tuition prices would adjust accordingly. Hence, there's really no need for mass media schadenfreude gleefully reporting that private school kids aren't finding jobs.
There's no need for concern either. The only people making noise about a tuition bubble are parents who probably can't afford $55,000 a year, but who believe their kids deserve the best, whatever that is!
Related:
Why Do Smart Kids Make Dumb Decisions About Private School
Is Private Grade School K-12 Worth It?
Would You Give Up $1,000,000 To Go To Private School?
How To Get Into An Elite Preschool Or Private Grade School
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Great post! I look at a lot of blogs every single day, and I have to say that yours beats them all. Please continue, I don’t wish for you to stop. Best Regards … Nikki Kotow
I enjoyed reading these anecdotes about three people coming from three very different backgrounds.
That said, I disagree with the following: “The reason why $50,000 a year tuition exists is because enough people believe it’s worth it.”
The main reason tuition is so high at both private and public universities in the US is because of government intervention. A college education in the 1950s, adjusted for inflation, was affordable to almost everyone without having to get into debt. Obviously, there was and still is a demand for a college education, but when the government was not making financial aid and other grants available to students, tuition was a hell of a lot lower. It makes sense given that colleges and other graduate schools have continually raised their tuition even as the number of colleges and universities has increased in number, and the resulting competition should have kept tuition down. While I am always wary that “correlation does not equal causation,” when you give a large number of people, high school graduates, access to what amounts to a free loan, you increase the number of people who can afford college, and you drive up demand. Rising demand drives higher prices, in this case, tuition. We have too many people who are college-educated, too few working in the skilled trades, and I believe (someone plz correct me if I’m wrong here) the most indebted college graduates on the planet.
Given this scenario, the gut reaction of most people is to clamor for more government funding, when this is exactly what caused the problem in the first place. Most people look at our system and conclude that private education does not work, is inefficient, and much too costly. Actually, private education works just fine. Nobody was complaining 50-60 years ago when it was affordable. It is a disgrace that Allison is forced to wait tables while being buried under 100k in debt. She deserves better. At the same time, I admire her work ethic and commitment, but she will unfortunately be forced to search for a job that pays better than waiting tables if she doesn’t want to spend the next decade or more paying off her debt.
Whether any given school and major is “worth it” depends on what you want to do with yourself and on how well the lottery of life treats you.
Expensive private schools are necessary if you want to make it to the top of a big company. The titans of industry and other big wigs out there just don’t waste their time with average folks, even average folks with a string of honors and awards. Got a 4.0 from State U, no one cares. Got Harvard or Yale on your resume, then you a chance at being taken seriously.
On the other hand, if you just want to be a nurse at Local Hospital then where you go doesn’t matter very much, so long as the program doesn’t have a reputation for producing crap.
No matter what degree you get or where you get it from, you might emerge at the other side of your education realizing that you made a giant mistake and hate the whole field. And given the incredible disconnect between didactic learning and actual doing, this isn’t a rare occurrence. In this case, you’ve just wasted a ton of time and money. Even with a full ride, you’ll never get your time back.
If you graduate during the great recession, then life pretty much just hates you. Getting that degree from Columbia should have been a great plan. And it would have been if the economy hadn’t tanked, millions of people weren’t laid off, and every company spazzed out and went on a hiring freeze.
And finally there is the burden of wading through all the conflicting advice on education and careers. Do what you love? What if you don’t know what you love? What if what you love isn’t really marketable? Do what makes money? What the thought of doing a given high paying job makes you want to slit your writs? Do what your parents want? Go into a field that is really popular right now?
Is there really any way to know if your decision was right outside of hindsight?
I think it depends on your major and what you want out of it. When I went to Parsons School of Design I got a great education. Most of the profs were in the visual arts and expected hard work and good final products. The classes were small. Students stimulated each other’s creativity. I got my first job working for a prof who needed someone for the summer. Upon graduation however it was a different matter. No one cared where you went to school, what your GPA was, whether you had merit scholarships, or how many times you made the student show. What mattered was the portfolio.
Do I think it was a waste then. No. There’s something more to an education than the bottom line. My personal world was opened up in ways it would never have been at some community college near home. Perhaps the skill set would have been identical, but if you pour yourself into something for those years, I think you should get something for your soul out of it. Not just some paycheck.
BTW I worked my way through, received scholarships, and got no help from my folks. Maybe that’s partially why the experience was so sweet. If you don’t feel the cost of it (whether your folks pay or not), that’s what it’s worth. For me it was like being submerged in everything I loved.
Olivia – That is such an awesome line “it was like being submerged in everything I loved”! I’m very glad you didn’t think it was a waste of time, and it is very honorable you paid your way through! Good on ya!
Oh Sam,
I forgot to mention. State school isn’t that much cheaper than a private school. My brother’s education at UC San Diego (our home state) is costing me $29,000/year with room and board. We won’t talk about the extra costs that he’s getting my parents to pay unknown to me. We have an appt to sit down and monitor all his expenses starting June 9th.
.-= Kim | Money and Risk´s last blog ..Your Home is not an Investment or Retirement Asset Pt 1 =-.
I never wanted to go to Harvard and I still don’t want to go … but I want my kids to get in, even though I think Harvard doesn’t sound like a guarantee of success, wealth or personal satisfaction for my Chinese American kids nor does it sound like fun in terms of the culture. When they get in, I want them to go but what if my kids are exactly like me in personality and want to do something creative, I would still make them go even though I don’t think they will necessarily get the equivalent of a 120k starting salary in corporate consulting like Chelsea Clinton did straight out of undergrad.
I think that another certain type of American will more likely get on the guest list before my own kids despite their Ivy League degrees. I think kids should go to the best i.e. top-ranked school they were accepted to and if it deeply sucks, they can transfer to a liberal arts school or discipline of their choice after two years but I bet they won’t because it’s about figuring out and accepting that life isn’t fair and that if you get to go, you go. It’s about being grateful for your opportunities. Having said that, I figure pre-college education is actually closer to a million dollars for going to top private schools as early as possible not just a good high school. I think kids who test well should always get in to a good uni regardless of their lack of a privileged background because the college is a marker of accomplishment and of quality and effort of the student. I wish there was room for everyone who deserved a place at a top school. Ben Franklin was a self-made mad who dropped out of school at an early age. How much would Ben Franklin pay to go to college? In hindsight, I wouldn’t pay anything but for my kids, I would pay all I had.
Yup, as an Asian American I’m with you Cleo. Asians LOVE the brand name schools and are willing to sacrifice a great deal to fund tuition. Yes, the price is high and the education is not necessarily better, however, there are intangible benefits. The network of friends that has been mentioned, and don’t forget, the confidence from having won a place amongst a very competitive crowd. Regarding finding employment, it is most definitely beneficial in Asia to have a brand name degree.
Thanks for your thoughts. I think you’ve touched upon a lot of things I wanted to highlight.
The “Alisons” of the world will be fine, since they are smart, hungry, and have non-rich parents which allow them grants to cover much of their tuition, although room and board is still expensive.
There is no problem with super high tuition for non tier 1 private schools. Nobody is forcing someone to pay $45,000/yr in tuition to go to Boston University for example. People are willing to pay huge gobs of money for non tier 1 private schools and that’s why they exist ,otherwise tuition would fall.
Hence, the only people who care or complain about a “tuition bubble” are delusional kids or parents who think they deserve to go, but can’t afford it or simply aren’t hard working or smart enough. And I’m telling them, there are tons of excellent public schools to go to and nobody deserves to go anywhere unless they are recruited.
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
@Paul
Take a read of this article. Uses Michigan and Harvard in what you were talking about.
.-= admin´s last blog ..Is Becoming A Millionaire The Rule Rather Than The Exception? =-.
Sam,
I agree with your examples, but what about a 4th category of person (I think this is were MOST tier 4 law schools and/or B-List Business Schoolers fall into)?
They don’t have the pride of Allison, they were sold a guaranteed job at a high rate and now are pissed and alright with bitching and moaning? I agree people make their own choices, and I try not to judge but when someone has 150K in loans and can only get a job for 40K, but they were told not to worry about it…its hard NOT to feel bad and ask, “Why did you do it?”
I went to a tier 4 law school but love my job, loved my education and loved my experiences, but I know plenty of kids with 100K+ Loans and filled with anger and frustration because of how the system is set up.
.-= Evan´s last blog ..Can a Reality Show about a Pawn Shop Can Teach You about Life and Making Money? =-.
The 4th category of person is a bad place to be. Put it this way, and no offense to Boston University, but why would you go to BU for $50,000 a year all in, when you can go to MIT or Harvard for $50,000? You do because you can’t get into the tier 1 schools AND your parents can pay for it. Hence, it’s no big deal at all.
My point from the examples above is that people aren’t stupid. They know what they are getting themselves into. If they think paying $50,000/year to go to Boston Univ. is a good decision, then even if they can only get a job for $40K/year, who cares? They don’t care, why should we.
What’s a “Tier 4” law school? I thought there were only 3 tiers? Are you saying your friends with 100K in loans from law school were delusional before going in? Who spends 3 years of their life and $100-150K on school without knowing what they are getting themselves into? I don’t get it. Help me understand.
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
Yeah, my boyfriend is an attorney – he makes $90K a year or so but upon graduation had $100K in student loan debt (a lot of it private with crappier interest rates since Stafford loans have a yearly distribution cap) and $50K in credit card debt. He actually has a harder time financially than I do, and HATES his job.
.-= Honey´s last blog ..How Likely Are You To Get Divorced? =-.
I only attended public institutions and didn’t pay a cent for undergrad (national merit scholar), but between my MA and my PhD I owe $100K in student loans (I am 30). I only make $40K per year but have no trouble making my student loan payments. They are around $500/month. It’s not that onerous.
.-= Honey´s last blog ..How Likely Are You To Get Divorced? =-.
I’m glad you have no problems making your student loan payments. $100K seems like a lot, but hey, at least you have your PhD! Imagine owing $100K and only having your undergrad degree!
.-= admin´s last blog ..Germany’s Missed Opportunity To Save Greece & Themselves =-.
Great post (as always, ofcourse), Sam! As a super-subsidized Canadian university graduate (we pay about $5000 max per year and certain members of the student body of University of British Columbia wrote a letter to United Nations saying that education is a human right and we should not be charged $5000 a year for tuition) , I cannot fathom having myself or my parents fork up that much for school! Graduating with over 150K debt it just…not cool. In order to pay that debt off quickly, you’d really have to be raking in over 100K a year and that’s just not realistic for a new graduate.
.-= youngandthrifty´s last blog ..youngandthrifty Personal Life Update =-.
You guys are lucky up there in Canada! Is McGill only $5,000/year also? Heard that’s a great school eh? University of Toronto too yeah?
.-= admin´s last blog ..Germany’s Missed Opportunity To Save Greece & Themselves =-.
My position on education can pretty much be summarized by a quote from Good Will Hunting:
“Will: See, the sad thing about a guy like you is in 50 years you’re gonna staht doin some thinkin on your own and you’re gonna come up with the fact that there are two certaintees in life. One, don’t do that. And Two, you dropped a hundred and fifty grand on a fuckin education you coulda got for a dollah fifty in late chahges at the public library ”
That pretty much sums it up from my point of view. That said, I have PhD, graduated summa cum laude, and worked for a few years in the system post graduate. What you’re really paying for is a union card/invitation. Once you got your foot in the door, the degree becomes irrelevant. Inside the research system we didn’t care where people did their undergraduate. We cared about their brain power/capacity. Ivy league did not automatically imply brains. Sometimes it meant nothing (when their parents worked) and other times it just meant they were really good at going to school and getting grades than it implied creativity and persistence. Brand name undergraduate degrees is more important in the business world which in many vocations are very similar to being good at going to school. Here it essentially supports an effective oligarchy, e.g. employers from a specific school will tend to hire graduates from that specific school. In the long run, by which I mean beyond 5 years post graduation, employers care more about profit than prestige. At that point I really wouldn’t want to have spent them farting around traveling. Also, at that point dragging around a six figure debt that is nigh impossible to bankrupt oneself from is like a decade long anchor. People with that kind of debt seriously need a job.
.-= Early Retirement Extreme´s last blog ..The value of reviewing bad books =-.
Jacob, given that you got your PhD, do you think were tricked by the system since you retired only a few years after you got your PhD? Wouldn’t it be better to have just read books from the library, and worked from high school or post college instead of spend an extra 4 years getting your PhD?
It really is like getting a union card / membership into a club. But once you’re in, you can do what you want to maximize or minimize your returns.
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
Yeah, I would say I was sold a bag of goods so to speak. Reality did not really
live up to the sales pitch so to speak. With the internet, it has become a lot
easier to “dig up dirt” on certain careers. This was not the case 10 years ago.
When you talk to people in person, they have too many vested interests to
disclose the truth to people (students) they don’t really know or care
about anyway. They are much more inclined to follow the general rule that
if they can’t say anything nice they’re not going to say anything at all; or
they are trying to give you the good points only.
There is also a switch a bait going on in research. I suppose not unlike
ads for the military. You are being told that you can make a difference, cure
cancer, etc. Most TV programming (and most professors) will talk about
brilliant ideas. They won’t really talk about how research is far less about
thinking up revolutionary ideas–in fact it is much more about trying to
sell short term projects to grant committees where anything revolutionary is
strongly discouraged.
What is happening is that you have professors at the top. Each professor
trains 10 people where one will eventually replace him. These people
compete for low wages both relative to the hourly effort and relative to their
education. If you make it to pro, you’re pretty well off. If you talk to the
profs, they will tell you that life is great. It’s a bit of a pyramid scheme.
I’ll also say, the work is great as long as you’re inherently interested in the
work for its own sake. Really great. The benefits and the career path in itself
plain sucks though.
.-= Early Retirement Extreme´s last blog ..The value of reviewing bad books =-.
Actually, I should elaborate a bit on the process. Academic success essentially
progresses in steps and suffers severely from the Peter Principle.
1) Undergraduate gets promoted based on GPA.
2) Graduate gets promoted based on brilliance.
3) Postdoc gets promoted based on networking.
4) Professor gets promoted based on salesmanship.
[It may interest those that pay megadollars for private universities that the
professors have NOT been hired for their teaching ability, at all, but
rather for their research publication record. It is well-known, at least
in the business, that an ability to both teach and research well is
a rare talent indeed. Of course it is also known that going to college
is not about education as much as it is about the “degree”.]
Now, I did not enjoy networking at all and I could see where it was leading, that is, into
salesmanship(*). It would be fair to say my highest level of incompetence was
networking — I have relied on “brilliance” far more than networking; something
that repeats in my blogging career. Hence I got out at step 3. It was somewhat of
a surprise to colleagues, ex-bosses, and supervisors. Unfortunately, there is
no room in the career ladder to stay at a given points. It’s up or out.
My parallel realization was that I was making much more of a difference with my
blog in the real world than I ever was publishing papers in academic
journals. It still boggles my mind that the alexa ranking of my blog exceeds
that of my former employer, which was a lab with 8000 employees.
(*) This is basically because much of the salary is paid by “soft money” which
comes from grants unlike “hard money” which comes from the university itself.
Funny thing… I bet if you ask a grad student to explain the difference
between soft money and hard money they won’t have a clue unless they
are really well informed.
.-= Early Retirement Extreme´s last blog ..The value of reviewing bad books =-.
Sounds like quite a bureaucratic process! I guess in the research space, grants due drive so much of everything.
It is what it is though. You have to sell yourself internally as much as selling yourself externally to climb. At the end of the day, it’s just about developing relationships and helping those who you like and respect. Up or out indeed.
Been great sailing weather recently yeah?
Cheers, Sam
.-= admin´s last blog ..Germany’s Missed Opportunity To Save Greece & Themselves =-.
Jacob hit it on the dot with the progression in academics. I do disagree that there are some good teachers who are professors out there. I was dragged kicking and screaming into appreciating and learning things that I thought useless. I learned a great deal aout how to think and analyze from those teachers.
.-= Kim | Money and Risk´s last blog ..Ballgowns and Baby Bottles – Supporting Our Troops =-.
Great discussion Sam,
I went to a private college and can share at least my perspective. I was aiming for premed and a particular specialty at the time. This meant that I wanted to attend only certain med schools. I did my research and determined which college had the most acceptance at those med school.
I did have my choice of attending Harvard and Yale but ended up at a Seven Sister. The perils of being in an old fashioned family. It was either an all women’s college or the entire family moved along with the business. The cost at the time was $27M a year. Currently, the base cost is $49,800/yr. I had to work full time and 2 part time jobs to pay my way while I was attending. I had chosen to be emancipated.
Looking back, I would make the same choice again but would have made better use of my time there. I had classes that were 20-2 people. I worked with full professors. (The downside, you can’t skip class without being noticed and definitely cannot turn in subpar work.) I was able to do research that were co presented at conferences.
The experience was far different from my attendance at Cal State Fullerton and UC Irvine. I can still call up my MIT, Harvard and Wellesley professors today and get together for dinner. The personal relationships that I developed gave me recommendation letters that were sincere and not rote.
The culture and small class size at the school gave me self confidence that allowed me to mature as a business person. I would not be who I am today if I had attended the state schools. The classes were large and I was anonymous. I can still recall the math professor who asked me and the other two women to leave because we were women and he didn’t think we were capable of understanding calculus. I was a shy, quiet teenager and would have been beaten down into my place.
The value for some people to attend brand name school is the alumnae network. During the dot com boom, many HBS alums got mid range 6 figure jobs from their classmates and an easy ride for almost a decade. I know quite a few USC alums who have jobs that are far beyond their capabilities but they are there because they went to USC. However, the name isn’t an automatic guarantee. You have to work, build, and nurture the relationships just like you do in the real world. If you don’t, then that name means diddly squat and there is no value.
However, there is a caveat. The school’s sphere of influence tends to be geographically based. My network was extremely strong in the NE but when I relocated to CA, I did not have as strong a net. Whereas USC is pervasive in CA but rarely heard of in Boston or NY.
Some private schools tend to have a stronger infrastructure for alums. I know that I am always there to lend a hand to any young alums who calls for help and the schools work very hard to loop in the alums. The schools reach out to me quarterly every year since I graduated.
My husband went to several state schools and he has to pay to even get any connection to his alum groups. He hasn’t talked to a single alum or his schools for decades. My brothers went to UCI and had the same experience as my husband. You graduate and that’s the last you hear from the school other than an ask for money.
I believe that it doesn’t matter what school you attend as long as you maximize all the opportunities. How high someone goes is completely dependent on how hard they work and how hungry they are along with a bunch of other factors.
.-= Kim | Money and Risk´s last blog ..Renewing My Faith in America =-.
Hi Kim – What great insight you provide!
Do you mind clarifying this point? You said the cost for the business and the family to relocate is “$27M” a year. Does that mean $27 million? And if so, did your parents not pay for your education out of principle?
Hilary Clinton’s school is a fine institution and I hear you on the confidence and self esteem issues. How much do you think it’s the school vs. just going to a smaller University/College compared to an enormous factory-type school?
It’s hard to compare Harvard, Wellesley, MIT with a UCI or Cal State…. but I don’t think as hard if you throw in a UVA or UC Berkeley.
I seriously have a problem paying $50,000/year after tax ($80,000 gross) on education. Just doesn’t seem right.
Hey Sam,
Tuition and board alone was $27,000/yr. Sorry, used to using M for thousands and MM for millions. My parents would have paid but they wanted Berkeley. I chose the East Coast which was against their wishes. We ended up negotiating on which school I attended. I was a difficult child and went my own way. They did cover some of my costs such as a car, insurance, etc..
I think that the size of the school and class is more important than the name. Small classes makes a huge difference in quality of learning as well as developing relationships. At MIT, the classes were so large for undergraduates that some classes were taught by grad students. I made sure to only take classes from professors.
What is important in brand name school at the time was admission to competitive med or law school. Academics is very cutthroat. It’s all about who you know and who sponsor or mentor you for internships and programs. Since I was premed, what the schools gave me access to was cutting edge research and facilities. I did research as an undergraduate that went mainstream about 15 years later.
I agree with you about the cost when it comes to education for a general degree but I think that whether Ivy League or not, small class size and intimate setting is going to be expensive. I had a student/teacher ratio of 100/1. When you add that to facilities and salary expenses, that is a lot of costs to spread among 2,000 students.
.-= Kim | Money and Risk´s last blog ..Ballgowns and Baby Bottles – Supporting Our Troops =-.
Gotcha. Hmmm, that’s hard to pass on Berkeley and it’s $5,000/yr tuition… especially since it’s a great school. That said, classes are large in undergrad, and your experience would have required more hustle, which isn’t necessarily a bad thing.
Unless I had gobs of money in the bank, and I knew my kids weren’t going to suffer grade wise working part-time to pay for tuition, I’d approve of of private school. I just think there are just so many GREAT public schools to choose from, that the price differential is ludicrous.
.-= admin´s last blog ..Is Becoming A Millionaire The Rule Rather Than The Exception? =-.
I can care less for someone’s pedigree even though I went to a private school and a great public school for advance degrees. I think most employers are the same way. Isn’t that what really counts?
.-= Roshawn @ Watson Inc´s last blog ..Savings Down, Spending Up but What Does it Mean? =-.
Guess it depends on whether your employer has a bunch of prestigious school alumni grads and also how reputable your private and public schools are.
To get in, pedigree often matters. After that, it’s about what you do.
Just pasted from Time:
Surprisingly, Ivy League graduates do not dominate the top fifty Fortune 500 Companies. When measuring CEO undergraduate education, the University of Texas system has just as much representation as Harvard: a total of 3 CEOs. What does this mean for students? An elite career doesn�t always stem from an elite education.
https://www.time.com/time/nation/article/0,8599,1227055,00.htm
It’s an interesting tidbit. I discussed this with my students a few days ago, and the general response was, “Of course, those other kids going to state schools are going to be hungrier. And if they’re just as smart, they’ll eventually do really well.”
From the mouths of babes.
.-= Andrew Hallam´s last blog ..Mariusz Skonieczny — Why Are We So Clueless About the Stockmarket? =-.
U of Wisconsin as well. Interesting article. The “eventually” is the key… if you want to retire by 40 or 50, well…… guess one might have to work a little bit longer for their smarts to shine through.
Entertaining caricatures! Real life is a little more subtle, of course.
My son went to an expensive private college. His dad, a corporate lawyer, could afford the tuition, and so the fact that he could have gone to any of Arizona’s three public universities tuition-free because I worked for one of them was mooted.
Now, some years after the collapse of the dot-com boom, the loss of a very good job in San Francisco, and a year of futilely searching for a new job there, he’s back in Arizona, where he works in a cube answering phones for an insurance company. He rightly considers the job to be a dead end and truly hates it, but there’s a depression on. Let’s face it, when 10 percent of the population is still officially recognized as unemployed and at least that many are grossly underemployed or have simply given up looking for work, it’s no mere “recession.” And there’s no end of it in sight. He’d like to get an MBA but is afraid to quit the job, for fear that he’ll walk out of graduate school in two years into a job market that’s no better than it is today. He figures he may be better off to keep the miserable job than to take a risk and end up unemployed and unemployable.
His roommate and the roommate’s girlfriend graduated over a year ago from Thunderbird School of International Management, a highly regarded business school. Roommate’s family is wealthy and so he paid the tuition in cash. RG financed her tuition and now has $2,400-a-month loan payments. Neither of them has a job. RG finally got work harvesting marijuana in northern California; unclear how one makes student loan payments with under-the-table cash.
Thunderbird is renowned for its active and effective job recruitment for its graduates. When the two young people went to the school’s annual job recruitment fair, HR reps from the corporations that attended told them they were not hiring. They said they had contracted to attend the event, but to a person none of them had jobs to offer.
What you get from a private school education, besides the elite atmosphere and a prestigious-sounding name on your diploma, is future business contacts. To benefit from that, the student needs to have the kind of personality that builds wide networks of acquaintances and later uses those networks to get jobs and build capital. In a word, he or she needs to be a climber. If you’re not that kind of person, you’re probably wasting your time at an elite college.
That said, for the past 15 years I worked for Arizona State University and would absolutely, positively NOT want my son to go to school there. Besides being a gigantic faceless bureaucracy maintaining a vast zoo and given to rapacious practices where students are concerned, low salaries and abuse of faculty and staff have put employee morale in the sub-basement. You don’t want to invest tens of thousands or hundreds of thousands of dollars in “education” at an establishment where faculty are so unhappy that most of them disconnect psychologically from their jobs in order to survive.
If you’re interested in attending a state university, given today’s economic realities, I would strongly suggest you speak privately to at least a half-dozen faculty members in different departments, and while you’re at it, take time to talk with their admin assistants, too. Try to get past the lip service, listen to what they tell you, and assess their level of morale and their commitment to students. And observe the way in which undergraduate students are treated by the administration and by the people on the ground who deal with them day by day.
.-= Funny about Money´s last blog ..DIY Veterinary: The dog-proof hot-spot bandage =-.
Funny,
Great insights! Some thoughts:
1) Is ASU THAT bad? Or is it that bad b/c after 15 years of working there, you’ve picked up some very negative things that have weighed down your soul? Perhaps others have had great experience there?
2) ASU and U of Arizona aren’t exactly the best public schools, but they aren’t bad. Perhaps if your son had choices such as UCLA, Berkeley, UCSD, Michigan, Wisconsin, Virginia etc it would be an easier choice to go to public school?
3) Thunderbird’s acceptance rate is over 90%. In other words, they just want your money. I know their in’tl business rep. It’s about contacts.
Because your son’s dad could afford the expensive private school, that’s why it’s totally fine, even if he graduates and has no job, or a less than desirable job.
Cheers, Sam
.-= admin´s last blog ..An Extra Seven Hours A Week =-.
I have worked as a graduate advisor at ASU for the last 2 years and LOVE my job and how I am treated. I attended UA for my PhD and taught there for 6 years – MUCH more frustrating!
.-= Honey´s last blog ..How Likely Are You To Get Divorced? =-.
The point I kept telling my daughter when she was going through the process was: pick the college you’ll be happy at for the next four years.
Why? It doesn’t matter how much you are paying for school if the student is going to be miserable at that campus. They’ll be more likely to fail a class, drop out, take less credit hours, transfer colleges or do other things that will extend the work of a four year degree into the five or six year plan.
And then your family WILL pay a heck of a lot of money because the cost of college is not a flat rate of X amount to graduate. The cost is based on how many credit hours you take to get there (and your living expenses in the meantime.)
.-= Monroe on a Budget´s last blog ..Downriver / Detroit cooking classes for food stamp families =-.
Monroe, do you think it’s easier to tell your child to “go where you’ll be happy” if you have money? What if you as parents can’t afford the $50,000/yr all in cost? Then what? Furthermore, it’s very possible to be happy at a public school
Good point about flat rate, as it is based on credits. Many of my friends graduated in 3.5 yrs and saved a bunch of money (not on their car insurance)!
.-= admin´s last blog ..The White Cloud of Happiness =-.
After reading this post, I consider my cousin and his related situation. He is a bright superstar in his late 20s with an engineering degree from a State school. After a couple of years of engineering work he started receiving promotions like crazy, and now he is in business management at a Fortune 500 company making about $120K per year. He is married with no kids, and his wife makes about $50K per year at a computer job that she does from home and can do from any location in the world. They have a liquid net worth of about $150K, and both come from middle class families.
My cousin was recently accepted into full time MBA programs at Harvard and several other top schools, but instead reluctantly decided to go to the part time MBA program at University of Michigan in order to save money. By going to University of Michigan, he was able to keep his job, and his employer agreed to pay for about 25% of his tuition. If he went to Harvard, he would have had to give up his job, pay for all his own tuition, and relocate to a higher cost of living location. However, when he starts school in the fall, he will have to balance a demanding fulltime job and his studies. Plus, his degree will take him twice as long to complete.
I am sure that he will succeed no matter where he goes to grad school, but I still question if he made the best choice. Some of our relatives (including myself) thought he was crazy for turning down Harvard and that his decision was too shortsighted based on money. A Harvard MBA could lead to all kinds of opportunities, and maybe he is missing out. I guess he feels confident enough in his own abilities that he would rather save the money.
If I were in his situation, I would have gone to Harvard even if I had to go into debt. With his savings, his wife’s income, and income from a decent internship after his first MBA year, he easily could have paid for the Harvard degree without any debt. I’m curious what some other people out there on this board think this about the decision. What would you do if you were in this situation?
Hi Paul, thanks for sharing your thoughts. Interesting situation here. Harvard is probably one of the only schools where their reputation and pool is too hard to ignore. That said, Harvard’s business school is a factory, which isn’t a bad thing giving the massive alumni network.
Two years at Harvard means $100,000 in tuition and fees ($150,000 gross income needed) + $240,000 in gross income lost + 2 years of work experience lost = $390,000+ to go full time! U of Michigan part-time is a great school, and you can write off all your tuition too which the employer doesn’t pay.
So $400,000 in gross income to go to Harvard, or $40,000 in gross income to go to UoM. Makes it seem like going PT is the way to go, ESPECIALLY if he likes his job and doesn’t want to change industries.
If he wants to change fields, then going full-time is the better way to go. Sounds like your cousin will do fine, whichever way. But, he’s definitely NOT crazy, even to pass up Harvard.
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
Like I said earlier, this post is so well written–and that comment only added to the quality. Well done, Sam!
.-= Kevin@OutOfYourRut´s last blog ..Where Do YOU Think the Stock Market is Headed? =-.
Sam,
Thanks for your reply. “Crazy” was too strong of a word choice, and I should have just said that certain relatives thought Harvard might have been a better decision. I realize that University of Michigan is a great school, and I know that the cost difference is huge. Here is my financial analysis.
At $120K per year, he is now making about $10K per month. I assume that he would be without income for the first 9 months (year 1). Then, he would get a 3-month summer internship probably making about $10K per month. Then, he would be without income for the following 9 months (year 2). That would be 18 months without work, or $180K gross…..or about $125K net. ($125K net lost income) + ($100K tuition / books / etc) + ($15K to account for higher cost of living) = $240K cost for Harvard. University of Michigan will cost him about $50K, so that’s a price difference of about $190K. However, he would ideally make higher income immediately after finishing school, and he would finish his Harvard MBA two years sooner if he went that path. We can’t know for sure how much he would make or if he would even make any more with the Harvard MBA instead of the University of Michigan MBA. I personally believe that in the long run that Harvard option would more than pay back the $190K price difference and offer an opportunity for a more fulfilling MBA experience. However, maybe I am naive and place too much value on Harvard.
I just still wonder if he is cutting himself short for the long term potential benefits from the Harvard MBA. If he becomes a CEO one day, $190K could be much less significant than it is to him today. I tried to encourage him to make the “investment” in Harvard, but he did not see the value. Does everyone on this board think that Harvard is overrated? I guess that’s what your post is all about. Obviously my cousin does not think Harvard is worth the expense, and he found a viable less expense alternative. I would be curious to hear opinions of others out there.
Paul
Paul, it’s comments like yours which creates a mad rush to pay mad prices for private school tuition. This is the beauty of capital markets, and why if Harvard raised their tuition to $100,000/year, there would still be people knocking down the door. In fact, it makes me think what a great business education is, and why the Apollo Group CEO from University of Phoenix fame owns a $60 million mansion here in SF!
I was hoping Alison’s example would encourage people to think beyond the blind desire to go to an expensive private school. Nobody knows the future, but I think there is TOO much emphasis on going to the most prestigious university. Once you get into a Top 25 school, it’s mostly up to the individual.
University of Wisconsin has a ton of Fortune 500 CEOs for example.
My other key point of the post is “Does it really matter”? Why are we imposing our will on others? The answer is we are probably just trying to help, but I donno. The best is to just weigh the pros and cons and let them decide, especially when it comes to forking out hundreds of thousands of dollars of his own money.
Cheers
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
Sam,
I enjoy your blog very much, and you have very compelling / thought provoking arguments. This particular topic really hit home for me, and I have to chime in again.
I realize that $190K is an enormous premium, and I know that my cousin (let’s call him Marcus) might do just as well professionally with the University of Michigan MBA.
However, according to Businessweek, the median career pay for University of Michigan MBAs is $2,525,280 while the median career pay for Harvard MBAs is $3,889,880. This is a difference of $1,364,600 or 54% higher.
I realize that there are a lot of hidden factors that might skew numbers….including the geography and industry which could be very significant. However, 54% is a massive difference.
Forbes has a comparison showing how Harvard grads make 39% more than University of Michigan grads.
https://www.forbes.com/lists/2009/95/best-business-schools-09_Best-Business-Schools_SalaryPostMBA.html
Wouldn’t his type of data suggest that Marcus’ $190K premium could be a good investment? In your opinion, when could it actually make sense to attend Harvard Business School (and pay for it yourself without a scholarship or corporate sponsorship) instead of another part time program?
Hi Paul, you’re welcome to chime in as much as you want!
Interesting info on median career pay. If that’s the case on the $1.3 million difference, then by all means, go for Harvard and full-time, if Marcus is willing to work the number of years it takes to make that difference and go in the particular field that the studies highlight.
Another interesting question is, since he’s made the decision already, what is your goal as it regards to Marcus?
I went to a Top-25 school, but it wasn’t Harvard:)
Personally, I would have gone to Harvard if presented the opportunity. It would have been worth it in the long run, in my opinion. There are some things that can’t be exactly quantified up front, but when you look at the long-term value and estimate an NPV of both options, I think Harvard would be the better move. And I say that with the realization of loss of income, and tuition that wouldn’t be paid otherwise. Also, I say that with the realization that U of Michigan has a fantastic, highly ranked MBA program.
Great options either way, can’t say he went wrong doing what he did in my opinion. While I would have chosen Harvard, either way will lead to great career and business benefits.
Paul asked “In your opinion, when could it actually make sense to attend Harvard Business School instead of another part time program?”
My intuition tells me that if Marcus strongly feels that going to Harvard is very (100%) important to him. for any reason, he then should go.
Guess it depends what # in the Top 25 you went to. If I went to other Top 5 b-schools, I’d be happy there. If I went to the schools at the bottom of the Top 25, I’d probably go to Harvard as well if we’re talking full time.
But, FT vs. PT at Michigan………. I’d say 55% leaning towards Michigan.
Interesting that I wrote about the same subject today for a reader having a very similar dilemma.
Better schools are worth the cost, if you can make it work. There are tons of opportunity to meet all sorts of people, and while great people come out of every school, there are more upper class people attending the premium schools.
Of course, upper class doesn’t mean a better class, but they do tend to have a better network for jobs. If the student can take full advantage of the opportunity, I believe a premium school is worth it if the finances support it (aka first and third student). For the second one, it’s a huge bet but I don’t too many who are that driven will down right fail (after all, we haven’t read in any papers yet about these tragic stories).
.-= MoneyNing´s last blog ..Is a Better School Worth the Extra Cost? – Money Mailbox =-.
Hey David, I guess it’s a Catch 22, and you don’t know how good the school will be for your career/life until you give it a try. The point from these three examples is that they all made rational choices and are fine with it. Eventually, with enough desire and hustle they’ll succeed.
Personally, I’d save the money and go to the best public school possible unless the private school (has to be a good one) gives me or my children a scholarship equivalent to the cost of the public school.
Good luck to your reader! If they can afford it, go! If they can’t, don’t. It’s not a right.
.-= admin´s last blog ..The White Cloud of Happiness =-.
Everyday Tips and Kevin said it very well, except that I personally believe Allison will do well and land a dream job eventually. She seems to have the motivation to pursue her dreams.
When we moved back to the States, our son chose to go to a very good “state” college. It was a brilliant choice! He didn’t want to financially burdon us was one of the reasons he chose that school. But he also believed that he would be happy and learned whatever he needed in that school.
My husband and I have been blessed with the way he turned out – intelligent, responsible and cheerful!
Sounds like you have a very thoughtful son! I’m impressed he had the financial foresight and courtesy to choose a state school because he didn’t want to financially burden you guys. Hopefully he felt the state school was a great choice as well.
When I was 17-18 years old, I got in a lot of trouble and was quite mischievous. It’s hard to think clearly at that age about your future. For a 17-18 year old to already start thinking deeply about personal finances, and have full conviction in thyself at that age is impressive.
Thanks for sharing your story!
.-= admin´s last blog ..The White Cloud of Happiness =-.
Hi,
A lot of what schools provide is a stepping stone for the work place and the business world. No matter what specialties you have, at the top of the ladder, business awaits you. You don’t need to go to a private school to start a successful business. Not everyone is cut out for leadership and business decision though.
It’s what you make of it and how you use what you learned that will identify if it was worth it.
My 2 cents.
Cheers.
I went to a small christian private college and I do not think it was worth what I paid. Besides meeting the people I met, I feel that I could have gotten the same, or perhaps slightly less/better education at some other school for literally HALF the cost.
I enjoyed reading all these hypothetical situations. Were they hypothetical? :)
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How much was your small christian private college a year (tuition only) may I ask? And did you get some financial aid or no?
The three people in the article are based off of real life people with different names. I did some investigative journalism here!
Remember, I’m trying to “Pretend Like You Have Arrived So You Can Become” to one day write for some big media organization!
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
By the time I Graduated my college was around $34,000 a year. When I started I think it was about $32,00 a year. Ridiculous I know. If only then I would have realized what that ACTUALLY meant. I did not have a lick of financial aid. I am financially aiding myself right now:)
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Wow, that is quite an impressive figure. What percentage did your parents pay for it? I’m assuming the cost was well over $50,000/yr then including room/board/food etc.
In high school, did you have a choice to go to a public school? If so, did you ever think about the costs of private school and the returns? Or, were you focused solely on the school and the potential experience it may provide?
This post was so well written on so many fronts…
For the kid with the wealthy parents, private school fits with the lifestyle. They won’t have to cut costs, sell the 2nd car or give up vacations to afford it–it’s just another trapping in their lives. It’s likely that the purpose of him going to private school is more about the family’s social orbit/standing than it ever was about finding a job. He can always work for Dad anyway.
For the middle class kid who came out with a $100k debt (aka, unsecured mortgage) and no job it’s a near tragedy! It’s likely that her whole purpose in going was not only to find a job, but a top level one at that. There probably is no Plan B for her, she shot the works on the university degree. Ulike the rich kid or the one who didn’t pay, time won’t be on her side as she struggles to find work.
There’s nothing wrong with the wealthy paying $200k to get their kids a gold plated degree, but it’s when the middle class starts pretending it can afford it–somehow(!)–that it becomes a point of debate. Do we believe more in the school than we do in our own talent?
Personally, I don’t believe a private university degree can serve as a fail safe against a lack of personal qualities. Give me talent and ambition and a state school degree over a private school degree and none of the above.
Now if you have talent, ambition and a private school degree, you’ll probably get where ever you’re going in less time. But then it’s a trade off of time for money, if you don’t have the money, just plan on it taking more time.
BTW, are these real people???
.-= Kevin@OutOfYourRut´s last blog ..Where Do YOU Think the Stock Market is Headed? =-.
“Do we believe more in the school than we do in our own talent?” Great question. We will believe more in our own talents if we have a great resume!
Financially, yes, Alison has an up hill struggle now. That said, at 22, she’s got her whole life to make money. She’s got strong will, and a fierce determination to succeed. If I were a betting man, I’d choose her over the other two in terms of who will grow the most.
When you start with very little, you never forget your roots. You fight and fight until you blow away the competition!
These folks are real people after some investigative journalism, but with names changed. Thanks for your thoughts as always!
.-= admin´s last blog ..The List of Jobs I’d Do For Free Baby! =-.
I read an interesting book suggesting that, taking former Ivy League graduates at age 50 (when most of them will be at their peak earning levels and high levels of net worth) the study group, as an aggregate, didn’t have any more money, nor did they have a higher income than the state school graduates—as long as the state school test group was of the same intellectual capacity, based on HS grades, SAT scores etc. The book concludes that an Ivy League education provides no monetary benefit.
That said, I think the Ivy Leaguers get out of the gate faster. For seven years, I’ve taught at an elite private school in Singapore—and many of our graduates go off to Ivy League schools. From my perspective, the biggest benefits come, perhaps not from the name of their college, but from the social contacts they establish being in a wealthy environment. Contacts established by a “successful” environment seem most influential from my standpoint. My suggestion to rich parents wanting to save some money is this: send your kid to a state college and ditch the Ivy concept, but keep all of your friend’s parents and your parent’s friends close to you. They’re probably bigger assets than the name on your diploma.
As for the cost of elite American colleges, Monevator is right–it’s eye popping from my Canadian perspective as well.
.-= Andrew Hallam´s last blog ..Mariusz Skonieczny — Why Are We So Clueless About the Stockmarket? =-.
Andrew, do you think you might have a biased view since you are a teacher at “an elite private school in Singapore”? The kids going to your school are already rich and well connected. Do they need anything else in life if they just go through the motions? Their connections will take care of them no?
That’s exactly what I am saying Sam. They are well connected, and if they remain so, the school they attend won’t matter. I did find the book Harvard Shmarvard fascinating. One of your readers gave a stat of Ivy League graduate versus non Ivy League graduate salaries. But when taking kids of equal intellectual capacity, there appears to be no advantage for the Ivy leaguers. So….I do think that if there is any Ivy League advantage at all, it’s going to be based on who your friends are (and if you’re a hungry social networker, you might meet those who fit the bill at Harvard and Yale). That said, the book I read suggests that even this might not be the case.
.-= Andrew Hallam´s last blog ..Mariusz Skonieczny — Why Are We So Clueless About the Stockmarket? =-.
I don’t think private vs public makes a meaningful difference at the college level. Sure you might get fancier dorms and better computer labs at a private college, but the quality of education should be more equal assuming you’re comparing schools that are ranked similarly in terms of acceptance rates and stats. I think it can make a much bigger difference at the K-12 range of education. Kids need a lot more hands on teaching than 18-21 year olds. And too many public K-12 schools are suffering from too many cuts, tired and frustrated teachers, and misbehaved kids.
Good point on the need for guidance earlier in life. Hopefully many are already mature when they get to college, but that’s not always the case. I don’t think a private college has any advantage of nurturing maturity over a public college, unless perhaps it’s very very small like a Amherst, Williams, Cal Tech, etc.
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Since I didn’t attend a private school, I can’t say from experience whether it’s worth it over a public school.
Private schools may very well be a little better in terms of quality of education. They may even have better opportunities to network to get a job. But whether public school or private school, after you graduate, it’s all on you to hustle to look for a job.
Jimmy and Sandeep, while intelligent, don’t see the need to hustle. Allison, however, is hustling, doing something that seem’s “beneath her” given her education. My guess is that with here initiative, she’ll be in a good position in the not too distant future.
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