My job as a financial advisor is to guide my clients into making sound investment decisions. Not only do I help them with where to invest their money in their retirement accounts but I am also asked to help them plan and save for their children’s future college education. Many of my clients are in a position to pay for most if not all of their children’s expenses for college, but sometimes that becomes a difficult decision when their kids are really intelligent and can get accepted to the most prestigious universities in the country. When this happens my clients often ask for my opinion on whether it is worth the extra money to send their child out of state to one of these top-ranked universities.
One argument for trying to attend a top-ranked university is that the learning experience will be better. But is that really the case? There have been over 1800 peer-reviewed research studies on this topic and the consensus is that there is little evidence that attending one of these top schools increases student learning. Think about it. Do they really teach the fundamentals of math or science any differently? Now you may have smaller classes or smarter professors at some of the top schools, but the material is the same. What does make a difference in learning? In the book, Academically Adrift, which consolidated dozens of studies on this subject, the answer is pretty simple. The key is the amount of time spent studying. That’s right, the more time you spend studying, the more you will learn.
The other reason that most parents want to send their kids to top-tier colleges is the belief that a degree from a top school will guarantee their child will have a higher starting salary when they graduate. This question is very specific to which institution and field of study your child chooses to pursue. Luckily the Department of Education now publishes a database of this information which you can find here.
In the long run, we all want our children to grow into happy adults with jobs that are fulfilling. Most people assume that having a degree from a prestigious university will help in that endeavor. However, studies have found that the most important factor is whether your child enjoyed their college experience. How well will they fit in? Will they join clubs, sororities, or fraternities, work on campus, or volunteer in the community?
There is an often-cited study produced by Gallup-Purdue by Julie Ray and Stephanie Marken that attempted to measure 30,000 people’s engagement at work and well-being after college graduation. What they found was that a person’s happiness in the workplace had very little to do with where they went to college. By far the most important factor was their experience in college. If they had a professor that cared about them and encouraged them to follow their dreams, an internship that allowed them to apply what they were learning in the real world, and they were involved in extracurricular activities they turned out to be much happier well-adjusted adults.
After looking at these studies my conclusion is that if you can manage to attend a prestigious university and if you can do it without incurring a large debt, then it can be a good financial decision. If attending a highly-ranked university is going to cause a major financial burden, there are plenty of other schools with a lower price tag that may be a better fit for your child’s personality and areas of interest. In the long run, if your child has good study habits and works hard, they will be successful at whatever they choose to pursue.
Larry Van Quathem, CFP®
Senior Financial Advisor