Whether you're a parent wanting the best for their children or a student hoping to launch a dream career after college, you've likely spent a lot of time thinking about choosing the right college. Even though tuition is getting more and more expensive (consistently exceeding the rate of inflation), a college education still provides the best chance for employment in "the real world." College grads are much more likely to have jobs and earn more money than those without degrees.
Given that, you might expect that the more exclusive and prestigious the college you attend, the better your chances for increased success. But given the enormous and growing burden of student loan debt on recent grads, it's reasonable to ask: Are private colleges really worth their expensive tuition?
What You Pay for at Private Colleges
There are no blanket rules for colleges, but in general, higher-priced private colleges offer benefits that public schools don't provide.
Class sizes are usually smaller, which means students receive more personal attention. This can make a big difference for students who are highly engaged -- and even more so for students who might struggle without enough one-on-one time with professors and advisers.
Instructors at private colleges spend less time on research, which gives them more time for students. Fewer courses are taught by grad students. And the campus community as a whole is often more close-knit, with lots of support for current students, new graduates and alumni.
But all this is not to say these value-added aspects can't be found at public (or less expensive) schools. Parents and students should examine potential universities individually.
What to Consider When Choosing a School
Your degree is a tool you will use after graduation to launch you into a career (hopefully in a field you want), so it's tempting to think that the better the reputation of the university that degree came from, the better your chances are of securing your dream job.
This is not the most important rule. It's much more important that you consider the degree you want and then choose a school that specializes in that field or offers a degree program that's recognized as excellent in that particular industry.
If you want a more general degree -- such as teaching, marketing or English -- it might make more sense for your career -- and your personal finances -- to choose a public university known for having excellent professors in that department.
Digging Down to the Good Stuff: Potential Earnings and ROI
Finding a school that provides a good fit for you and your future career is important -- but we can't ignore the money. Is there any truth in the belief that a private school's prestige and education leads to a better return on investment? In other words, do private schools set up graduates for higher future earnings? Again, much depends on the degree you want. You need to align your college choice with your career goals.
If you want to pursue engineering, for example, the three schools ranked for highest return on investment are all public universities. Payscale.com takes almost 3,000 words to explain its methodology, but the key is this: "The investment is the cost of college as determined by the actual cost of attending college. The return (gain) is the additional expected future income stream received for being a college graduate." While private engineering schools do offer positive ROI, many lag a few percentage behind their public counterparts. The same goes for research schools. Of the top 10 schools that provide the highest ROI, number one and number two were public universities. (The state school ranked with the absolute highest ROI? Georgia Tech.)
On the other hand, private business school and private liberal arts colleges are most likely to provide the highest ROI in their respective specialties. And none of the private schools listed in Payscale's data showed negative returns. The lowest reported was around 3 percent and showed up in the category that collectively had the lowest ROIs: art schools.
If a private university is something you can afford, your future career is unlikely to be hurt by your prestigious education. But it's not the sole determining factor in your earnings potential after graduation.
You Determine the Value of Your Experiences and Education
Students have a lot of say in the value they receive from their education, no matter what school they graduated from. This is good news, because it means you don't have to pony up hundreds of thousands of dollars to succeed after college. But it also means that it's your responsibility as a student to make the most of any college education. You have the power to make decisions to increase the return on your financial investment.
Show up to class ready to learn something that increases your marketable skills and abilities. Volunteer in groups or clubs on campus to broaden your experience. Manage free time wisely, and use some of it to intern or work a paying part-time job in your career.
As a financial planner, I've worked with millennials across the country who are stressed out about their high student loan debts, and who wish they'd gone to less expensive colleges. I have yet to speak to one who said they wished they'd gone to a more expensive college -- regardless of prestige-- and graduated with more student loan debt.
The bottom line: A private, expensive education isn't required for success. What you do with the education you earned -- wherever you earned it from -- is a crucial factor in determining how well you do in life after college.
Sophia Bera is a virtual financial planner for millennials and the founder of Gen Y Planning. She is location independent but calls Minneapolis her home. Do you want to be better with your money than 90% of your friends? Then sign up for the Gen Y Planning newsletter for this awesome guide - FREE!