I’m a big believer in public education.  I believe and support the public school system.  However, for my college education I chose a private school, some would even call it an “elite private institution.”  Was it worth it?  Was it worth the 30k a year that it cost? I was on financial aid, so it didn’t really cost my family the list price, more like 15k + 5k in loans a year.  For me personally, I believe it was worth it, but is it worth it for everyone?


The total cost of a private college is 30k vs. 12k for a public institution. That’s a difference of over 18k a year for 4 years. Assuming a return of 8%, that difference turns out to be worth over 295k in 30 years in today’s dollars assuming a 3% inflation rate.  In nominal terms it’s closer to 700 thousand.  While that’s nothing to sneeze at, if we assume that attending elite university adds on average 10% to one’s salary, and assuming a salary of 40k a year that 10% difference is worth 265k assuming that difference is invested over 30 years.  A 15% increase would push that difference to almost 400k.  So if we can increase the post college salary by a little over 10%, it might seem that paying more for an education is financially sound.  But does a expensive education actually produce the requisite salary bump?

“Elite” colleges churn out doctors, lawyers, scientists, bankers, and consultants, to that there is no doubt.   The question is it easier to become a doctor, lawyer, scientist, banker or consultant? This article on MSN purports most of the bias is embedded into the selective nature of these institutions.  Top students tend attend these “elite” universities.  They end up succeeding not because they have received a better education but because they are by nature already ready to succeed.  The degree is merely a reflection of succes rather than the root of success. 

I believe if you want to be doctor, lawyer or a scientist, go to public university and do well.  However if you want to become a consultant or banker then take the path I personally took, go to a school with old brick buildings and some nice shrubbery.  Consulting firms and Investment banks generally only recruit from the “top” college and universities.  For some people getting recruited and getting on the right career track makes a tremendous impact on their career.  It has for me.  I’ve had lucky breaks in the “business” world, but ultimately I’ve only been in position to have those breaks because of where I went to school.  I accept that and understand that.  There isn’t the same strong bias in the academic world making it possible to pursue prestigious graduate degrees from most universities as long as the grades and test scores are good.

The rub of course is that an 18 or 17 year rarely knows for sure what they want to do.  I thought leaving High School, I was going to go into the sciences, and get a phD.  Actually the real truth was worse.  I had no idea what I wanted to do with my life.  I believe that’s true for most seniors in high school.  At the same time,  I didn’t know anybody in high school who wanted to become a consultant or a banker.  Ultimately that’s what I believe a elite institution affords,  additional flexibility for the undecided, and more open doors.    Sometimes that flexibility is worth something, and other times nothing.  In that regard the value of the degree behaves very much like a financial option and options can be quite valuable.