Measuring the Value of a Harvard Degree

Most Harvard students rationalize the exorbitant cost of their education by viewing it as a prudent investment. Armed with bachelors’ degrees branded with Harvard’s prestigious name, many expect careers lucrative enough to exceed the nearly $200,000 spent during their four years in Cambridge. In order to result in a net utility gain and therein to serve as a judicious investment, the benefits of student’s time spent under the Crimson must exceed the costs—both the direct financial cost of attending, pegged at $48,868 for next year, and the indirect opportunity cost of four years that could have been spent working. With tuition continuing to rise faster than the rate of inflation, and no sign of a slowdown in sight, Harvard students should ask the question: how much is their designer degree really worth after their hats are thrown in Tercentenary Theatre?

About to be thrust into a daunting bear market, members of Harvard’s graduating class have doubtless pondered the ultimate meaning of their hard-earned diplomas. For 17-odd years in the classroom, success has been relatively easy to define: Good work is, in theory, awarded with good grades; the higher the grade, the more consummately the student has achieved her task. Quantified through its positioning in an alphabetical hierarchy, academic success is seemingly straightforward. Yet, once we depart from the academic bubble, the only quantitative measure available to translate the abstract concept of success into an intelligible form is money. Rather than engaging in the overwhelming process of defining success on their own terms, a significant number of Harvard students have accepted the easy equation of post-graduation achievement with a six-figure salary.

With pessimism about the recession reaching Malthusian proportions, the prospect of securing such a salary by landing a coveted consulting job is decidedly slimmer than in recent years. Even graduating students who have managed to finagle their way into finance realize that Wall Street is no longer (and perhaps never was) a stable route to mega-millions. Having dutifully planned out their lives based on assumptions of monetary success in the banking world, graduating students are finding that these assumptions no longer apply and, more often than not, that the banks no longer exist.

At least Harvard students with quashed financial ambitions can console themselves with immense monetary value of their diplomas—right? The fact that increased education attainment correlates with increased income is indisputable. Two decades of data from the U.S. Census Bureau make manifest this education-income ladder, by which each additional year of schooling (except in the case of graduate school) is associated with additional annual earnings. Although such correlations do not imply causality, the logic that more education means more money lends itself to the logic that a more prestigious education means even more money. According to payscale.com, the median starting salary of emerging Harvard undergraduates who work full-time in the United States is $63,400; even without pursuing further schooling, they boast mid-career median salaries of $124,000. Compare these numbers to the median earnings of the average American male—$45,113 in 2007—and the evidence that a Harvard education increases one’s earning potential appears incontrovertible.

Numerous studies have arrived at the same conclusion: namely, that it pays to go to selective schools. Harvard economist Caroline Hoxby found that students at elite universities can expect to earn back the difference in cost between the tuition at their first-rank private institution and a third-rank public institution more than 30 times over the course of their careers. Ronald Ehrenberg, a Cornell University economist, also found compelling evidence of a significant economic return to attending a private university: a premium that the data suggests has increased over time.

Yet deducing the high monetary value of a Harvard education from the fact that Harvard graduates make lots of money is problematic. Without sufficient correction for the unique characteristics of Harvard students, the value added by a top-tier education may be drastically overstated. By examining the incomes of adults who were accepted by a highly selective college but who choose to enroll at a less prestigious institution, Princeton economist Alan Krueger attempted to correct for such lurking factors as students’ maturity, motivation, and ambition that result in admission to competitive schools but also correlate with high earnings potential. His finding—that the adults who turned down the offer of elite education earned slightly more than their peers who pursued it—gives credence to the conclusion that Harvard students, not Harvard itself, account for the differences in income.

The question of whether the $200,000 cost of a Harvard diploma is a prudent investment or a flagrant rip-off remains unresolved. Frustrated investment bankers need not despair—Harvard students enjoy significantly higher earnings than their peers—but the jury is still out on whether we can attribute these high earnings to our alma mater or simply to ourselves. Although Harvard’s educational program makes an ambiguous contribution to the future net worth of its students, a Harvard degree remains a strong predictor of high earnings later in life—yet it cannot guarantee success. Attempts to place a dollar amount on human life offend our moral sensibilities; success, too, is insufficiently captured by the callousness of a quantity. Ultimately, it is the prerogative of each individual to secure success on her own terms, whether they be monetary or otherwise.


Courtney A. Fiske ’11, a Crimson editorial writer, is a social studies concentrator in Lowell House.