Does it Matter Which College You Attend?

Suppose you are a high school senior with a lot of foresight and a bottom line outlook. Naturally, you would want to pick a college based on how much its degree will be worth in future earnings. Conveniently, there is a website called PayScale "a market leader in global online compensation data" that recently Grads Kit published a list of median salaries by college. They list both what graduates got right out of school and "mid-career median salary."

The methodology of the survey leaves a lot to be desired. Firstly, it is not a random sample, but based on the data entered by college graduates who signed up with PayScale. That happens to be rather a lot of people, but it is still hard to avoid the assumption that the data is skewed in some way.

Secondly, and maybe more importantly, holders of graduate degrees were excluded. As quoted in the New York Times’ Economix blog, Al Lee, PayScale’s director of quantitative analysis attempted to justify this.

“You’re thinking of buying a college. If that’s all you buy — an undergraduate degree –without having to spend more money and time and effort to get another degree,” Mr. Lee said, “you want to know what the return on that investment is.”

Except that a good reason to choose one school over another might be that it will help you get into a better graduate school so you could make more money later in life.

Quibbles with methodology aside, the results of the survey are approximately what you would expect. Five of the top ten by mid-career median salary are from the Ivy League sports conference. (Seven of the eight Ivies are in the top 30. Poor Columbia shows up at #52.) With few exceptions, the non-Ivies at the top are the usual suspects as well: MIT, Stanford, etc.

Okay, so obviously the prestigious schools make people richer later in life, presumably because they teach valuable things.

Not so fast. All this confirms is the fairly obvious conclusion that there is a correlation between salary later in life and attending a highly ranked college. Correlation is not causality.

Let me throw out a radical alternate hypothesis. There is no difference in the economic worth of curricula from one college to the next. High salaries in mid-career tend to be given to motivated and talented people. Those people were motivated and talented as high school seniors and the most able of them had a habit of attending the most competitive colleges. Later in life, if having a prestigious college on their resume helps them, it is only because it labels them as motivated and talented, not because potential employers think they learned anything there.

As upsetting as this view may be to some, particularly those few who take instruction at top undergraduate programs seriously, there’s not much evidence to the contrary.

And there is evidence in favor. Consider that roughly the same top schools have been the top schools for about as long as people have thought to compare them. Surely, if what the students learned was important then changes and innovation in instruction would have caused a meaningfully different rank order over the past hundred years. And how can it be that top liberal arts schools can refuse to teach such economically valuable subjects as accounting, IT, and medicine, as a matter of principle, and still stay at the top of the salary list?

So in terms of money, does it matter which college you go to? I think it does, but not by nearly as much as is widely believed and not for the reasons usually assumed.

One of the observations to be made from the median salary data is how small the difference between the top schools and not-so-top schools actually is in dollars. The mid-career salary difference between school #1 and #50 is $129K vs. $101K. That’s a real difference, but it is hardly life changing. And those are medians. A given high school senior might expect to do worse than the #1 median if he went there and better than the #50 median if he went to the less prestigious school.  In fact, it is entirely possible that choosing between #1 and #50 will have no long-term economic impact at all.

I will not go so far as to say that it does not matter at all if you go to Dartmouth, which was #1, or Black Hills State University, which came in last at #597. But nobody makes that choice. Within a set of colleges that a particular high school senior is likely to consider, however, it’s not clear that future earning power should even be a factor.

[Photo: Kit]

No Comments

  • By Rob Bennett, July 22, 2009 @ 12:21 pm

    I think it matters because you are likely to make contacts that will take you farther at exclusive colleges.

    Still, the payoff is not a sure thing. Some manage to make good connections without the school experience. And some who go to exclusive schools waste the opportunity to make good connections.

    I think it’s worth paying to go to an exclusive school if money is not much of an issue for you. It increases your odds that the degree will be worth something. But I wouldn’t pay the money for this benefit if paying it was going to cause real hurt.


  • By Jim, July 22, 2009 @ 2:33 pm

    “Correlation is not causality.” Too true.

    There is correlation between high salaries and a lot of things. But theres no proof those things cause high salaries.

    I think its quite possible that employers pay more for status of elite schools. I know my company only targets certain schools for recruitment and won’t even look at the less competitive schools. That skews higher paid jobs towards the higher status schools.

  • By Jim, July 22, 2009 @ 2:45 pm

    Location could also skew results. For example schools in California will have higher salaries than those in Idaho since CA has a higher cost of living.
    Concentration of major might have an impact too. A school that puts out a lot of petroleum engineers would come out higher than a school that graduates a lot of social workers.

  • By Lynn, July 22, 2009 @ 3:39 pm

    Maybe all the survey says is that the people who went to these schools have entered their info on Payscale and that is all…

    Personally, I went to Bucknell, #11 on the list and my brother went to Lehigh, #16 on the list. Its funny because I just emailed this to him and we laughed because we both bring the average down – but then again neither of us have entered our info on that website.

    I agree with Jim that majors have a lot to do with it. An Ivy league liberal arts school like Columbia for example will produce more professors and people majoring in English than MIT which will produce scientists and engineers. Hence the salary difference.

    Another difference definitely has to do with connections with alumni and targeted recruitment at different companies. My husband went to Penn State and was definitely recruited heavily by the company he works for. Ironically, his starting salary 10 years ago was higher than the staring median salary listed and he also makes more than the mid-career salary listed.

  • By Dan, July 22, 2009 @ 5:07 pm


    But is there any proof that graduates stay local? Lots of Chicago MBA grads go work on Wall Street, for example.


    Why do so many think that salary is the be-all, end-all measure of success/payoff? Cost of living has so much more to do with it. $100k might sound like a lot more than $75k, but if that $100k is earned in Manhattan, and that $75k is earned in Wichita, I’d wager that the person in Wichita has a much better standard of living.

  • By Neil, July 22, 2009 @ 6:25 pm

    Dan – “lots” and all are somewhat different. A school in Chicago will have more alumni living in Chicago 20 years later than a school in New York will, so its median wages will reflect that. Not that nobody moves, but the bulk of them won’t.

  • By Frank Curmudgeon, July 22, 2009 @ 8:34 pm

    Rob: Connections are certainly an issue, but I don’t think they’re a big one. Obviously, if you go to any school you will meet people, so saying the connections at Dartmouth are better is saying that other Dartmouth people are in important places in society. And why is that? If they got there because of connections then the whole thing devolves into a Marxist theory of an untalented elite controlling things, which I don’t buy. In any case, it’s not the classroom learning that counts.

    Jim: I don’t think it is crazy or arbitrary for companies to prefer grads from “better” schools. They are empirically more talented on average. The question is why. I think it is because they showed up on campus more talented, not because the colleges in question improved them in any way.

    Lynn: I think the excluding of people with graduate degrees adds huge amounts of noise to the data and explains relatively strange things like Columbia ranking just behind its neighbor Fordham. The easy majority of Ivy undergrads wind up with graduate degrees of some kind. Ranking these schools by the success of the unrepresentative subset of alums who did not get further degrees is not that meaningful.

    Dan: People use simple salary as representing success because that other stuff is hard and involves math. And that makes their brains hurt.

  • By Phil, July 23, 2009 @ 5:47 am

    Ranking the schools by mid-career salary when you have the starting salary seems wrong. The school you are graduating from does affect the starting salaries. Grads from school X may be in more demand than grads from school Y since companies focus recruiting on only a few select schools. But at mid career the person who decides your pay will likely not even know what college you graduated from (unless you proudly display your alumni coffee mug). Your pay at that point generally depends on your field and your performance during the first half of your career.

  • By Paul Kamp, July 23, 2009 @ 10:39 am


    Here is a paper from a UCF business student examining the starting salaries of law school graduates (a much more homogeneous population that the universe of graduates in Payscale’s data). The takeaway point from the author: “Many applicants assume that a well-ranked school and or paying
    high tuition will earn them a better starting salary after they graduate from law school.
    Graduates seeking private sector jobs are correct in relying on these common
    assumptions, but graduates seeking public sector jobs need to be weary.” (from

    I like your point when you said, “I don’t think it is crazy or arbitrary for companies to prefer grads from “better” schools. They are empirically more talented on average.” College choice is a signal to an employer that an applicant most likely has a certain amount of talent. Perhaps, as James Taranto argues (, a degree is a substitute for an IQ test?

  • By Seth, July 23, 2009 @ 11:08 am

    If we’re ever going to control the costs of college then we need more data like this. Parents and their children need to be able to compare the cost of a school versus what you get out of it. It’s sad that right now raising the tuition does more for a school’s reputation and application rate than any other factor.

  • By gpr, July 23, 2009 @ 1:37 pm

    I went to a school that usually gets ranked fairly high for academics, but fairly low for things like money earned. Probably because for every alum that invents the CD player or brings out the iPod, we’ve got at least 12 more that live in a yurt and dumpster dive for political reasons.

  • By paul, July 23, 2009 @ 2:09 pm

    I think you completely missed the actual reason for the correlation. The upper classes/wealthy go to certain schools (both for status and to make/keep connections) and have extra-school connections and skills which give them an inside track on top jobs.

    Did GW Bush become president because he went to Yale? Or was he a high-achiever who won his way into Yale, and the White House? Neither. He got into Yale, and the White House, because he was the son of George Herbert Walker Bush, the grandson of Prescott Bush and Dorothy Walker Bush, and the great-grandson of George Herbert Walker.

  • By Jim, July 23, 2009 @ 2:27 pm

    “I don’t think it is crazy or arbitrary for companies to prefer grads from “better” schools. They are empirically more talented on average. The question is why. I think it is because they showed up on campus more talented, not because the colleges in question improved them in any way.”

    Its also possible that the students at elite schools are not that much more talented. But having gone to an elite school is a status symbol and it makes people think they must be smarter therefore we should hire them. I think the numbers may skew higher at least partially simply due to bias towards the more competitive schools.

    I do agree with your idea that most of the reason people do better is that they were more talented to begin with and the more selective schools end up with a pool of more talented people on average.

  • By Frank Curmudgeon, July 24, 2009 @ 2:53 pm

    It’s worth pointing out that The Decider was not sucessful in the private sector at all and was basically a cronic screw-up until he entered politics. People will vote for somebody because of who their daddy is a lot quicker than they will hire them. Also, W has an MBA and so would be excluded from the survey.

    There are people at places like Dartmouth who got in becuase of the stupendous wealth of their parents or grandparents, but they are rare, far outnumbered by, for example, the ones there because of athletic skill.

  • By Mike, July 26, 2009 @ 12:11 am

    I think the type of degree makes a difference. Where you attended school has no impact on pharmacists’ pay.

  • By ralph, April 16, 2010 @ 1:46 pm

    dartmouth is a joke – yea they have highest earning because of a good ole boy network – the research they do is dismal compared to most true universities

  • By Honesty, May 17, 2010 @ 3:04 pm

    Universities love WEALTHY legacies, hence W was appealing to Yale–it meant more alumni bucks for the school.

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