In 2002, economists Stacy Dale and Alan Krueger conducted a study showing that students who were accepted into elite colleges but attended less-selective ones ended up earning just as much money as students who attended elite colleges. That study was one of the motivating factors behind my decision to attend an affordable, in-state public college.

Now, the two economists have updated the study with new data, more detail -- and the results are even more compelling. In the abstract, they report: "When we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero."

And, unlike in the earlier study, they didn't find that tuition or a Barron's ranking had a statistically significant impact on earnings.

In the past, Krueger speculated that by attending a less-selective college, students of high aptitude possibly graduated with higher class ranks and emerged as campus stars.

For some students, the study showed that attending a school with a "better" student body actually correlated with reduced income. Economist Robin Hanson notes that the study "shows that attending a college with higher SAT scores clearly lowered the wages of women 17-26 years after starting college (in 1976) -- a school with a 100-point higher average SAT score reduced earnings by about 6-7%. . . . One obvious explanation is that women at more elite colleges married richer classmate men, and so felt less need to earn money themselves."

It's fascinating stuff, and required reading for anyone considering shelling out a six-figure sum for a fancy diploma.

One important note though, from a financial perspective: Because the most elite schools in the country generally have huge endowments and very generous financial aid, few students emerge from those schools with significant debt loads. Where you get into trouble with debt is the second- and third-tier schools (like that financial aid outhouse New York University).

And for students considering those schools, this research raises an obvious question: If you're unlikely to benefit financially from attending Princeton, who in their right mind would borrow $50,000 to go to NYU?

Zac Bissonnette's Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents was called the "best and most troubling book ever about the college admissions process" by The Washington Post.

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I am a high school Ecoonomics teacher in Miami, Florida and wanted to thank you for writing the book, "Debt Free U". I bought 30 of your books and allowed my students to check out the books and all of them said it was excellent and definitely influenced their college decision.

I also had all 300 students listen to your podcast interview with the Consumerism Commentary from Sept 2010 and all came away understanding taht should not be naive about the incentives of others. As a matter of fact I had a big poster made of the quote from Barry Pinkow and I reference it often as we discuss many economic and personal finance issues.

I know that your a big fan of Dave Ramsey and heard your interview with him on his radio and by chance I happen to be using his Foundations in Personal Finance High School Curriculum which is the best in the nation for teaching personal fiance to students.

Thanks again for writing the book and know that you are changing lives by exposing the truth about college.


February 25 2011 at 7:09 AM Report abuse rate up rate down Reply
1 reply to nolanrcnolan's comment

That is awesome that you purchased those books and did that! I find it amazing how little 12 grade students know about money, finance and especially the consequences of debt.

February 26 2011 at 1:00 PM Report abuse rate up rate down Reply

I fear we are increasing living in a society where intellectual excellence may be a handicap . As one person said ," the biggest frustration of the intelligent is what comes easy for them is impossible for the less intelligent to understand . We also forget that whatever it means by defintion 50 % of the population is of below average intelligence . Just look at the current trend . Politicians run on the promise of imporving education and when elected just cut educational costs as much as they can to pay for things like football stadiums and farm subsidies .

February 24 2011 at 1:58 PM Report abuse rate up rate down Reply

It's not about what you know but who you know is the business world.

February 23 2011 at 12:01 PM Report abuse +1 rate up rate down Reply