Is Studying at a Renowned Institution Worth Your While?
By Sneha Koshy
A post-secondary education is more than a means to an end; it is an investment for the future. The decision of where to pursue further education is not made quickly or lightly, with myriad factors being taken into consideration. Chief amongst these are tuition and reputation, usually with one serving as an opportunity cost for the other. Most students who prioritize reputation assume a direct correlation between prestige and employability, although the strength of this effect could vary depending on the chosen industry. Thus, there are factors other than a reputable alma mater that may benefit students in their job search.
To completely write off the benefits of a prestigious education would be misguided, since various sources have noted a correlation in specific sectors, such as the business and tech arenas, between the pedigree of education and career prospects. In general, upper-tier university graduates are seen to have higher earning potential than their counterparts from lower ranked institutions. This was exemplified in a 2015 study by US Department of Education that pegged median annual earnings of an Ivy League graduate at over $70,000, compared to a paltry median income of $34,000 for graduates of other universities.
However, before considering earning potential upon graduation, it is important to delve into the economic inequality found on campuses. Graduates from upper-tier institutions may enjoy a higher earning potential due in part to their financial background and the biases that work to their benefit. Factors such as standardized admission test scores are strongly correlated to students’ financial backgrounds, even more than high school grades, tilting the balance in favour of students from higher-income families. Income mobility reports from the Equality of Opportunity Project reveal many upper-tier universities like Princeton and Yale “admit more students from the top 1 percent of earners than the bottom 60 percent combined”, maintaining the economic divide, rather than narrowing it.
Beyond economic inequality, the disparities in earning potential between fields of study vary. A 2016 study by Eric R. Eide, Michael J. Hilmer, and Mark H. Showalter, professors from Brigham Young University and San Diego State University, identified the most profound difference in earnings between business majors, and surprisingly, least significant between STEM majors. Eide and Hilmer emphasize that peer and alumni networks are crucial for business majors in securing high paying positions, and these networks may be stronger in upper-tiered schools. The investment into a pricier education pays off financially in these cases, whereas with STEM majors, the starting income disparity can be as little as $1,000 for engineers. At this rate, it would take more than 150 years to compensate for a tuition difference of over $167,000.
The value of a reputed alma mater in the tech industry is debated: some praise the meritocratic system of tech companies and others speak of the courtship process used by these companies to entice students from reputed universities to join them. Believers in the innate meritocratic nature of the tech industry cite the successes of Steve Jobs and Larry Ellison, both “outsiders who climb[ed] to the top in Silicon Valley”. However, this seems to be an exception to the rule in light of other success stories such as those of Kevin Systrom (Instagram co-founder), Evan Spiegel (Snapchat co-founder), Larry Page and Sergey Brin (Google co-founders), Jerry Yang and David Filo (Yahoo co-founders), all Stanford alumni. Although investors are drawn by lucrative ideas, they do give credence to the person behind the pitch, which according to venture capitalist Ben Horowitz inevitably means “insist[ing] that the entrepreneur ha[ve] a certain level of qualification or reputation”. Although there is a chance of finding genius anywhere, according to MIT and Stanford graduate Dr. Philip Guo, tech investors and employers both tend to search for the individuals with the ideas and smarts to back them in reputed universities, like Stanford, where talent is concentrated. This has led to headhunting measures that verge on the extreme: There have been numerous accounts of tech companies wooing potential employees away from competitors with the use of unusual fringe benefits like private concerts, on-site hair stylists, housekeeping allowances, and most lucrative of all, stock grants usually starting at $100,000.
Another factor to consider is the individual strength of the program, rather than the university on a holistic level. Alexander C. McCormick, a former admissions officer at Dartmouth College, often noticed greater variability within universities than between them. Although universities are ranked both at the program and institution level, specific programs may enjoy better faculty, location-specific program specialties, notable research and the like. This would suggest that overall university reputation should not be the main factor when choosing where to study. Moreover, when considering each student, it is important to account for personal characteristics like ambition, which is unquestionably not exclusive to graduates of reputed universities. A firm believer in this school of thought is former Starbucks CEO Howard Schultz, a graduate of Northern Michigan University. Although not from a particularly well-known institution, Schultz attributes his success to placing himself in unfamiliar territory, which helped him develop “confidence and self-understanding”, invaluable soft skills that are not exclusive to institutions of great repute.
Is studying at a renowned institution worth your while?
It depends, which is why prospective university students should be wary of placing undue importance on school reputation. It is crucial to weigh the expected return against the sizeable financial investment that a well-known institution requires. Additionally, other factors such as the individual characteristics of the program and the students themselves are vital components of career success.