Elite Colleges - do they pay off?

Doug once told me about a study that cast doubt on how important it is to attend an elite institution, in terms of accounting for lifetime earnings. I asked him if he could find the article for me, and he came through (as always).

Here is the original article.

http://moneycentral.msn.com/content/CollegeandFamily/Savingforcollege/P36742.asp

In the December 20th, 2004 issues of BusinessWeek, there was a related article about fund-raising at top-tier universities.

The description of the stratospheric amounts of money raised at Harvard, Yale, Stanford, and Princeton, which are the schools widely considered to be the top echelon in the U.S., is breathtaking. With the use of words such as "relentless" "ferocious" "frenzy" and "blockbuster campaigns" it sounds more like overheated Wall Street action than stodgy old campus fund-raising. Stodgy it definitely is not, with cutting-edge publicity, targetted marketing, and all sorts of new and sexy campaign methods.

I've been targetted multiple times by the University of Southern California. They keep calling me, send me glossy alumni magazines, and special embossed invitations to special events at the University. Since I took my degree there using their distance learning system, where classes were broadcast to me over a satellite link, I've actually never stepped foot on the University before. It would be weird for my first ever trip there to be for a fund-raiser, for buildings I didn't and will probably never use, and for teachers I never met in person, but fund-raising accounts for a disproportionately large amount of upper-echelon schools' budgets.

In the BusinessWeek article, for example, 37% of Harvard University's annual budget is covered by gifts and endowments. The average U.S. university gets 8% of budgets from gifts and endownments. Many community colleges get even less from gifts and endowments.

The concern is obvious after reading through this second article. If the top-tier schools have super-heated funding, then their advantages, whether perceived or real, can only grow. When you look at the disparity in funding, there is quite the gulf, and a lot of it is due to a tremendous 1990's-to-present increase in American wealth. People are giving to educational institutions at a rate that has doubled in the past decade.

So, given the "arms race" in university fund-raising, won't that drive up costs even more? Does it matter, given the Princeton study by Alan B. Krueger?

"In this environment, the top private universities are counting on fund-raising to provide their margin of excellence. In the past, sponsored research - primarily paid for by the federal government - made up two-thirds of the budget at MIT. "Today it's only 37%, so we've become much more depending on private giving.," says Charles M. Vest, who retired as MIT president on Dec. 6 after leading a $2 billion fund-raising drive."

The cash is good because it's being earmarked, in many schools, for pure research. Pure science is research of ideas that aren't directly tied to development of a product that a company thinks people will buy. This makes the sorts of questions explored by research somewhat different than the "Corporate R&D" environments in the private sector.

The notable exception was Bell Laboratories. Because the Bell System was a monopoly, they could afford to sponsor pure research. The number of discoveries and advancements that had nothing to do with phone products that came out of Bell Labs is legendary. Bell Labs has not been duplicated since. It died with the breaking up of the Bell monopoly. No modern company engages in pure research to that level. In fact, I can't think of any company that engages in pure research at all.

Universities are supposed to, in the eyes of some, but they often have partnerships with corporations which ends up directing the work. Then, you have things like this. USC recently launched The Mark and Mary Stevens Institute for Technology Commercialization. So, not science. Not technology even, which is the application of science towards a goal. No, it's commercialization of technology. Talk about levels of indirection, and becoming more like a trade school than a university.

Lest I be accused of being an intellectual snob. let me say right now that I indeed am.

The interesting thing about the Institute for Technology Commercialization is that it is in the engineering department, yet moves in on turf long dominated by the MBA crowd. Generally speaking, I'm in favor of this, because MBAs generally don't prepare you very well for the decisions that have to be made in commercialization of high-tech products. Teaching engineers to be more aware of commercial demands on their designs might be easier than teaching a finance major how to design a circuit more cheaply. Of course, the best case is that everyone communicates well, the goals are known, and egos don't get in the way, but I'm not holding my breath.

So does it matter where you go to school? My take on it has traditionally been that the ivy league gives you a better network than the mid and low-tier schools. But, you have to take advantage of that network. The resources at a top-tier school may be easier to use, but you must actually apply yourself. I agree with the direction of the first article based on my experiences at the University of Arkansas at Little Rock (definitely not a top-tier school) and at University of Southern California (approaching if not in the top tier).

My educational experiences at both schools were great. I tried to take advantage of it. I went to school with a generally better prepared crew at USC, but that didn't translate into job or achievement any more than it had at UALR. The temperament and self-motivation of the people I studied with always seemed to trump background and educational advantage.

The point about disadvantaged and minority students getting a bigger bump from top-tier schools is important and deserves to be studied a lot more. It goes hand in hand with some of the studies, debates, and discussions currently going on in K-12 education about how the No Child Left Behind act implements its goals.

Essentially, more money doesn't translate into success. However, more money can't hurt, especially if the student is motivated. Since motivation comes from many sources, but is crystallized and applied within the individual, the burden of success must be shouldered by the student and not by the fund-raiser, politician, teacher, teacher's union, parents, or any other related group. Someone can indeed be derailed by bad teaching, bad parenting, or sheer poverty of books and equipment. But, motivated people can and should be expected to find a way around it. The resources are out there, and you cannot afford to wait for someone else to raise the money to provide it for you.