Study: High-Cost College Pays Off

The debate over the value of a high-cost college education continued this week with a Newsweek article titled "The Worthless Ivy League?"

The article contradicts a recent study by Kahn Associate Professor of Economics Caroline Hoxby '88 linking expensive colleges and later earnings--but an author of the study on which the Newsweek article is based claims the magazine misconstrued his findings.

Princeton economics professor Alan B. Krueger and Stacy Berg Dale, a researcher at the Mellon Foundation, studied the salaries of college graduates compared to the cost and prestige of their undergraduate institutions.

The study found that among schools in the top tuition tier, prestige was not a factor in determining graduates' salary.

Krueger took issue with the article because, he said, the Newsweek story disregarded the second part of his study, which looked at a wider range of schools, both top-tier and otherwise.

He said that the second part of the study compared schools in the top income bracket to less expensive universities and found that there is a benefit to paying more.

"Students who attend schools with higher tuitions have higher incomes subsequently," Krueger said. "These results suggest that there are economic returns" to attending more expensive schools.

Newsweek reporter Robert J. Samuelson '67 focused his article instead on the part of the study that declares that students make the same salaries regardless of the average SAT score of their classmates. He omitted Krueger's and Dale's finding that students increase their potential earnings by attending schools in higher tuition brackets.

Samuelson, who is a former Crimson editor, defended his piece, saying that he felt the second part of the study was less significant than the first.

"There was some statistical correlation between higher tuition and subsequent higher earnings, but Krueger and Dale couldn't explain it," Samuelson said. " I don't consider it an important finding."

A direct correlation between high college costs and later income just doesn't make sense, he said.

"If you applied the logic that higher tuition means higher earnings, then every college would raise its tuition by $100,000 to improve its standards," Samuelson said.

These findings support a study by Hoxby that was published this past summer. Her study sparked media interest with its declaration that students who attend elite universities are likely to earn higher salaries than graduates of lower-ranked schools.

Yesterday, Hoxby questioned the value of asking which school offers higher returns within a given tuition bracket, as Krueger's study did.

"I don't know whether Harvard or Johns Hopkins is the better choice," she said. "And I don't think it's a very interesting question."

In her study, "The Return to Attending a More Selective College: 1960 to the Present," Hoxby showed that attending a top-tier school does pay off in the long run. But Hoxby's definition of a top-tier school was more inclusive than that of Krueger and Dale--her top tier included their system's top three tiers.

"The schools surveyed by Krueger and Dale didn't have much difference in cost. They were looking at the top 1 percent," Hoxby said.

Samuelson, who concentrated in government at Harvard in the mid-1960s, said he's not sure whether or not attending a top-tier college strongly affected his earnings after graduation.

"You make or break the situation yourself," he said. "I tell my kids it's what you do and what you know, not where you go that counts."

Krueger, who earned his Ph.D. from Harvard in 1987, said that another Harvard professor recently challenged his study during a conference. The professor wondered how Harvard students could not have an edge when their professors are of such a high caliber.

Krueger answered that the access of students to high-quality resources at schools of similar costs is fairly uniform.

"I asked him when was the last time he taught undergraduates," Krueger said. "And he couldn't remember."