An Elite Degree Doesn’t Necessarily Mean Higher Earnings in Some Fields
Posted By Donna Fuscaldo on March 10, 2016 at 10:18 am
Anyone deciding which colleges and universities to apply to has long heard the old advice: attend an elite school and you are golden. After all, everyone is going to want to hire a Harvard University graduate, right? Well think again. Turns out attending a prestigious school only helps graduates in certain fields and has little to no impact in other disciplines, according to research by economics professors Eric Eide and Mark Showalter of Brigham Young University and Michael Hilmer, professor of economics at San Diego State University. They laid out their findings in the Wall Street Journal showing attending an elite school doesn’t necessary equal higher income.
Analyzing a survey of thousands of college graduates and looking at their earnings a decade after they graduated college, the professors found the prestige of the school has a “major” impact on future earnings expectations for business and liberal arts majors but in science, technology, engineering and math, it didn’t matter if the person attended an expensive elite school or a cheaper one. That is particularly telling because many families spend thousands of dollars sending their children to top engineering schools when the money could have been better spent saving for retirement or paying down high-interest debt.
Skills trump pedigree in STEM jobs
The fact that the school doesn’t matter when it comes to STEM careers surprised even the professors who looked at 7,300 colleges graduates ten years after they earned their degree. They found there was no statistically significant difference in average earnings for science majors that went to a prestigious, hard-to-get-into schools, than those that attended a mid-tier or less selective school. The same goes for engineering graduates. The professors found engineering graduates of Rice University began their career with an average median salary of $72,500 and earned $145,000 by the midpoint of their career. Graduates of Manhattan College, a city school, earned a median of $60,900 starting out and $140,000 by the middle of their career.
Meanwhile, computer science graduates of Columbia University earned a median salary of $98,900 in the early part of their careers and $145,000 by the midpoint. University of Delaware graduates started out with less, with the median standing at $66,700 but by the mid-point of their career, the median salary was $143,000.
“For potential employers, the skills students learn in these fields appear to trump prestige—possibly because curriculums are relatively standardized and there’s a commonly accepted body of knowledge students must absorb,” said the professors in the Wall Street Journal piece. “So a student may not need to attend the best possible school to ensure a good salary after graduation.”
While a college degree is important, increasingly some employers are reducing their reliance on it when bringing on new staff. Ernst & Young, Deloitte and PricewaterhouseCoopers are examples of companies that are lowering the emphasis on formal education when recruiting graduates. It makes sense since skills should matter more than where the candidate earned a degree.
Where you graduate from matters in business, social sciences
Because a degree in STEM-related fields isn’t as important as the knowledge and the skills, students can go to cheaper schools and still thrive. That means lower student loan debt, which will have a huge impact on a person’s financial wellbeing. Unfortunately, that can’t be said of business and social science majors.
The researchers found business graduates of a prestigious school earned 12 percent more than mid-tier graduates and 18 percent more than less selective schools. In social science, the difference was 11 percent compared to mid-tier graduates and 14 percent for low-tier ones. Take a business graduate as an example. The report shows a University of California-Berkeley graduate is going to earn a median pay of $72,800 early on in their career on average. That jumps to $140,000 at the middle part of their career. Meanwhile, a business graduate from Illinois Wesleyan University will earn $51,000 starting out and $128,000 by the mid-point of their career. Santa Clara University graduates have a median salary of $64,700 in the early part of their career and $124,000 by the middle point.
“There are many possible explanations for the disparities. In business, more prestigious schools may offer better alumni networks and other connections with potential employers. In other fields of study, more prestigious schools may offer better peer connections, faculty, university resources, and, at least in social science and the humanities, access to better graduate programs,” said the authors of the report. “Whatever the reason, parents and students may be justified in looking for a prestigious degree in these majors.”