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Elite Colleges Raise Women’s Lifetime Earnings

There are many good reasons for a young woman to attend college after high school, only one of which is to enable her to earn more money during her career. Those who do have earnings potential uppermost in their minds should note that highly selective schools raise a woman’s lifetime earnings significantly above the levels of  schools that are less selective.

One might assume that this disparity is due to the fact that admission to top-tier schools requires an excellent academic record, but this, although true, isn’t the reason. Studies indicate that women who were accepted at elite schools but chose to attend a less selective one earned less than those who chose to attend an elite school. In other words, women with equivalent high school academic records experience different earnings levels based on the selectivity of the schools they choose to attend.  

Recent research in this area relies on a decades-old study by Stacy Dale, now with Mathematica Policy Research, and economist Alan Krueger of Princeton. Dale and Krueger analyzed testing, application, and acceptance data for thousands of women who entered 30 colleges and universities in 1976, and then followed up with them two decades later. They stated the purpose of their research as follows:

“A burgeoning literature has addressed the question, “Does the ‘quality’ of the college that students attend influence their subsequent earnings?” Obtaining accurate estimates of the pay-off to attending a highly selective undergraduate institution is of obvious importance to the parents of prospective students who foot the tuition bills, and to the students themselves. In addition, because college selectivity is typically measured by the average characteristics (e.g., average SAT score) of classmates, the literature is closely connected to theoretical and empirical studies of peer group effects on individual behavior. And with higher education making up 40 percent of total educational expenditures in the United States, understanding the impact of selective colleges on student labor market outcomes is central for understanding the role of human capital.”

In a recent article in The Washington Post, Andrew Van Dam reviews new research that seeks to account for the divergence in career earnings of women graduating from schools with different levels of selectivity. He cites a paper by economists Suqin Ge of Virginia Tech, Elliott Isaac of Tulane, and Amalia Miller of the University of Virginia that built on the analysis of college women done by Dale and Krueger.

According to the findings of the new research, one reason for the earnings differential is that attending a more selective school boosts a woman’s odds of earning an advanced degree, which increases lifetime earnings. Another reason is marriage. A woman graduating from a highly selective school was found to be less likely to marry within twenty years than a woman who was accepted at an elite school but chose to attend a less selective school where average SAT scores were 100 or more points lower. The study goes beyond paychecks to measure other benefits of an elite college education for women. These include better health and economic status and the greater utility of personal networks.

There are a number of publications that rank colleges based on their return on investment, i.e., costs vs. lifetime earnings. It’s assumed that students graduating from highly selective schools possess better admissions credentials, and, so it is inferred, higher intelligence than those graduating from less selective schools. However, this study analyzes different variables than those in ROI analysis. Results show that women of equal intelligence experience different lifetime earnings depending upon whether they attend a highly selective school to which they were admitted or a less selective one.

IvySelect is a college admissions consulting firm specializing in high achieving student who aspire to attend Ivy League or similarly elite institutions. At the start of our engagement with you, we develop a thorough understanding of you as an individual, your educational and career goals, academic record, accomplishments, strengths, weaknesses, interests, talents, and preferences. With this information, we work with you to create a comprehensive admissions strategy that is uniquely yours. Then we assist you step-by-step in the successful execution of the strategy.

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