A recent Washington Post article highlighted the new book Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania by Frank Bruni, which asks the question: does the college admissions process actually predict how successful you’ll become in life?
It’s a Crazy Time
High school parents and students stress every year around this time as to what college lay in their future and many have dreams of an Ivy League education that will set them on a lifelong trajectory for success. However, as this article highlights, only 6% of US college students attend these schools. What about the other 94%?
As a financial planner, I work with parents to help them plan for and pay for the amount of college that they want for their kids, but part of my process lies in also helping them determine the best return on their investment. As Mr. Bruni highlights, an Ivy League education may not give students and parents the best return for their investment. Out of the Fortune 500 CEOs, less than 30 graduated from an Ivy League School, including Howard Schultz, the CEO of Starbucks, who is a Northern Michigan University alum.
(Note from Joe: Lydia Frank, on Wednesday’s podcast, also highlights this point while talking about the ROI on a college education!)
This type of analysis wasn’t as important 20 years ago when college costs were dramatically lower and job availability was dramatically higher. In today’s economy, though, parents and their future college attendees need to take a serious look at the financial burden they plan to take on and determine if it makes sense.
Focus On The Big Picture
As those acceptances start to come in, parents and children should sit down and take a look at each school, list the pros and cons and then run a financial analysis on each. There are some great resources out there, but I personally love the college calculators on Smart Asset’s site. Even if parents plan to pay the full amount of school without the need for student loans, their children should have an understanding and appreciation of the financial burden of their decision.
If student loans are needed to help cover the gaps, then this analysis is even more crucial. The difference in a monthly student loan payment between a state university and a private university could mean more than $1,000 per month, and this decision needs to be made at 18 rather than regretted at 22. Harvard may sound great to you right now sitting from the comfort of your parent’s home; however, when Harvard means living back home with them in 4 years versus state school and living on your own, you may think differently.
What’s Best For You?
I personally love the idea of Mr. Bruni’s book, which shows in black and white the long term potential of higher education. I attended a private university in North Carolina over 18 years ago; however, I wouldn’t recommend that school today for my son. I truly believe that each student makes their own success and the school is just a small component of their long term success, and if this is the case, then the cost benefit analysis doesn’t look quite so appealing for those private schools today.
Do you think that private universities give you a good return on your investment? Did you attend a public or private university? Would you recommend it today?