If you're the parent of a college bound high school senior, as I am, you face a potential body blow to your
family's net worth. Four years of college anywhere is not cheap, but four years at a selected private
college could easily cost me...or you, or anyone a quarter of a million dollars before it's over. There are
some non-financial reasons you might be willing to shoulder that kind of discretionary cost, but from a
pure financial point of view, does it make any sense at all. In other words does an elite education pay off
in higher life time earning power, a lot of people would say no. Many who do cite a famous study from
1998 that made a very interesting finding, it looked at students who had been accepted to colleges with
high SAT scores but ended up going to schools with lower scores. It found that 20 years later those
students were making just as much money as peers who did go to the more selective colleges. But what
people never say about that famous study is that it had an important hedge, if you define selective by
something other than SAT scores the graduates of the more selective schools did seem to have an
advantage in life time earnings. So far from busting the myth that selective colleges were worth the
money, the study was actually kind ambiguous and once you put that study aside the overwhelming
balance of other research suggests that where you go to school does give you a leg up. It surely doesn't
define your life and in the end the effort you put in the field you choose to of into and luck too have a lot
more to do with your earning power than the name on your diploma, but the research does give high
achieving kids and their financially nervous parents a reason to aim high. Yes, the cost of elite colleges is
crazy but if your kid can get in, it's not crazy to pay it.
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