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Princeton professor and economist Alan Krueger set out to prove an Ivy League education paid off. He wound up proving exactly the opposite.

Well, sort of. In 1999, Krueger and fellow researcher Stacy Berg Dale discovered (.pdf file) that students who were good enough to get into Ivy League schools but who attended other colleges earned just as much after graduation as those who actually went to the more elite schools.

A new version of their study (.pdf file), which includes more data and tracks subjects' income for decades longer, was released this month. It came to the same conclusion: Elite colleges don't pay off financially for most graduates.

The only grads in this group of highly qualified students who seemed to enjoy any significant financial advantage from attending Ivy League schools, the researchers found, were African-Americans, Latinos and people from low-income homes or whose own parents hadn't gone to college.

The researchers' findings, however, seem to have had no discernible impact on the arms race that the elite college admission process has become. Last year, Princeton, for example, was the most selective it's ever been, offering acceptance to a scant 8.18% of the record 26,247 students who applied. Other Ivy League schools reported a similar surge in applications for their finite number of openings.

2010 acceptance rates at Ivy League schools
SchoolAcceptance rateSchoolAcceptance rate
Cornell18.40%University of Pennsylvania14.22%
Source: The New York Times

Whether or not an Ivy League education makes a difference, parents and students think it does, so they continue to battle to get in.

Image: Liz Weston

Liz Weston

Other studies have shown that attending elite private schools does give graduates a financial advantage, especially when measured against the least selective schools. A widely cited study by researchers from Rand, Cornell and Brigham Young University, which was released the same year as the original Krueger-Dale study, found that alumni of an elite school earned more than those who attended a middle-ranked private institution and much more (as much as 39% more) than those who attended one of the least selective public universities.

Measuring an education's worth by future earnings is just one metric. It's also certainly true that elite colleges invest a heck of a lot more in their students' educations than the least selective schools -- and that the gap has widened dramatically in the past couple of generations.

Caroline Hoxby, a Stanford economics professor -- and a Harvard graduate who disparages the Krueger-Dale study -- notes that the elite schools spent about 4.5 times as much per student in 1967 as the least selective colleges. The gap had widened to 7.75 times ($92,000 for the elites, versus $12,000 for the bottom-ranked schools) by 2007.

I'll stop with the studies at this point, because my purpose here isn't to decide the relative value of an Ivy League education for any individual. My purpose is to get parents and students thinking about something else that needs to be a factor, which is what they can really afford. To that end, I'd like to make two points:

  • An education is like anything else you can buy. It's possible to overspend, sometimes dramatically when borrowing is involved.
  • If the choice is between chaining yourself to a lifetime of horrific debt and going to a good public university, the public school should start looking better.

I'm not one of those who warns against the evils of all debt. I see federal student loans -- with their fixed rates, many consumer protections and forgiveness options -- as good debt when used in moderation. That's especially true these days, when a college education is pretty much a requirement to get into the middle class (or keep from falling out of it).

In fact, I worry about those who refuse to take on any debt and so don't get a college degree. Here I'll quote researchers Richard Settersten and Barbara Ray, who parsed a decade of longitudinal and panel studies of people in their 20s for their new book "Not Quite Adults":

"Debt is not the main reason young adults are failing to launch," they wrote. "In fact, not taking on debt is sinking the futures of many young adults. Fearful of the burden of college loans, they are underinvesting in themselves at this critical time, letting their immediate worries compromise their long-term security. . . . Not taking on college debt in this knowledge economy is a costly decision."

But borrowing a huge pile of money, either as a student or a parent, on the assumption the education will pay off no matter what -- well, that's just foolish.