Ithaca Times, February 26, 2011, Saturday

Ithaca Times

February 26, 2011, Saturday

Ithaca Times

Are Elite Colleges Worth It? Cornell economics professor weighs the value of higher education

By Joseph Murtaugh

Throughout America's history, the university has served as a powerful vehicle for social mobility. In the 20th century, thanks to an expanding public university system and government-sponsored programs like the G.I. Bill, higher education allowed millions of Americans to escape the chains of poverty and rise up the social ladder.

These days, however, as tuition rates continue to climb and students grapple with ever-increasing amounts of debt, the benefits of attending an elite college or university are less clear. The prevailing wisdom is still that attending a good college or university will help you in your career and give a boost to your future earning power, but as the cost of attending four-year colleges continues to skyrocket, families can hardly be blamed for asking the question: Is it worth it?

That's a question that has been at the center of the career of Ronald Ehrenberg, an economics professor in Cornell's School of Industrial and Labor Relations. Concerned that the tuition at private colleges and universities had been going up by two to three percent more than the rate of inflation, Professor Ehrenberg set out several years ago to discover whether it still made sense to attend these institutions given their increasing costs. Joining forces with researchers from Brigham Young University and the Rand Corporation, he produced a paper in the late '90s that found that students who attend select colleges or universities are more likely to earn more and wind up in graduate or professional school at a higher ranking place. "Strong evidence emerges of a significant economic return to attending an elite private institution," wrote the researchers in their report, "and some evidence suggests this premium has increased over time."

And yet, while the research suggests a correlation between attending an elite institution and career success, the underlying reasons for this are unknown, said Ehrenberg.

"All the research that has been done on this topic can't identify the forces that cause it," said Ehrenberg. "What exactly are the advantages? Is it because employers flock to these schools? Is it the quality of the student body? Both of my sons were aided in getting their first jobs from alums, so is it the alumni network? Is it the faculty? Is it simply that when you put bright students together, they learn more?"

While the motivating factors are unknown, the results are clear: attending an elite school confers definite financial advantages. However, as Ehrenberg points out, this track might not be for everybody; it also depends on what you want to do with your life. Some professions, like teaching, have salary scales that are independent of where you went to college, and an elite education may be unnecessary if a student wishes to go into a socially-important but not high-paying occupation.

"Obviously we hope that there are educational benefits that are independent of what they will bring to your future earnings, but there are some occupations where it might not make sense to attend a select private college or university," said Ehrenberg. "Say you want to be a teacher. Not only are salaries for teachers not linked to where you went to school, but most school districts tend to hire teachers who grew up in the area or went to college in the area.

"That's part of the reason why many private colleges and universities don't have education departments anymore, because they've eliminated them," continued Ehrenberg. "And that's a shame because there is actually research that shows that students learn more when they have good, bright teachers."

It's no surprise that elite colleges and universities have earned a reputation for being expensive: tuition for the 2010-11 academic year at Harvard, for instance, is $35,568 for a full-time student, and that doesn't include extra costs, like living expenses and books. It would be next to impossible for a middle-class family to pay this amount in full, said Ehrenberg, but in the last few years a combination of factors have led private colleges and universities to alter their financial aid policies to ease the burden on middle-class families who are unable to afford the full tuition. One such change is to deemphasize the use of college loans, so that students don't graduate with a crippling debt load.

"Princeton was the first selective private university to eliminate all loans in their financial aid package," said Ehrenberg, "and this change has now made it possible for most students to go through with no or limited loan burdens. In the research Princeton did after they took this step, they found that more students entered occupations that they wanted to go into."

Other universities - including Cornell - have implemented similar policies over the last few years, said Ehrenberg, making it easier for students from the lower- and middle-income brackets to afford to attend college. Even more surprisingly, private institutions have been able to sustain these financial aid policies throughout the recent years of economic hardship, when the country was facing high unemployment rates and many colleges and universities were experiencing budgetary setbacks and asset declines. The change in financial aid policy arose because of a number of factors, said Ehrenberg.

"The changes started in the 1990s when endowments were soaring and the universities had all this extra cash, and they were spurred along when the Senate Finance Committee pressured and held hearings on higher education in 2007 and 2008," said Ehrenberg. "Another contributing factor is that institutions have realized that they have a social responsibility given all the benefits they get from federal and state government. Much of their property is exempt from taxes, for instance, and the question naturally arises of why the government provides all these tax benefits to private universities, and the answer is that society as a whole benefits from them, whether it's the research they do, or the education they supply."

While today students at elite institutions have more financial aid options available to them than they did even just a few years ago, students from wealthier backgrounds still make up a disproportionately large amount of the student body at these schools, said Ehrenberg. This is true even at Cornell, whose founder, Ezra Cornell, vowed that he would create a school where "any person can find instruction in any study," a vow that eventually became the school's motto.

In fact, the big challenge for higher education, said Ehrenberg, might lie more with the country's public universities and community colleges, which have a higher proportion of students from lower-income backgrounds, and which have been hard hit by the financial recession as states and municipalities have pulled back on funding.

"In this country we have a number of extraordinary public institutions that are very selective: the University of California, UCLA, the University of Michigan, the University of Virginia, the University of North Carolina, and here in our own state, the SUNY system, in particular SUNY Binghamton and SUNY Geneseo. These are wonderful institutions, but the problem the public universities are facing is that they don't have any resources, and this makes it very difficult for them."

Indeed, the rates of college graduation over the last 30 years have stagnated in the U.S., said Ehrenberg, a worrisome sign that might not bode well for U.S. competitiveness in the longer run. Historically, the U.S. led the world in terms of the share of its students who have received college degrees, and it gave the U.S. a great edge globally. Over the years, however, college graduation rates in the U.S. have remained roughly constant, while other countries have forged ahead. Once a leader on the global stage in terms of the number of college graduates it produced, today the U.S. isn't even in the top ten.

"If you think in a modern knowledge-based economy that an educated workforce is important, these statistics should concern you," said Ehrenberg. "It's going to lead to all sorts of problems in our society if we have a perpetual uneducated underclass."

As Ehrenberg points out, it's not the case that attendance at a four-year college has to be the gold standard by which everything else is measured. President Obama recently called for all U.S. students to have some form of post-high school education, which could include attendance at a two-year college. In fact, two-year colleges are where over 50 percent of American students start out, said Ehrenberg, and while they may have different goals once they get there, such as transferring to a four-year college or graduating with an Associate's Degree, students at two-year colleges are a crucial part of the American education system that is often overlooked.

"If you include two-year colleges, 80 percent of American students are in public higher education, and I don't want to say that what goes on at selective institutions is irrelevant, but if we are concerned about the future of the country we have to worry about public education," said Ehrenberg.

"One of the real serious problems that we face in New York state is trying to maintain the funding for public higher education, and it's a shared responsibility: some comes from the state, some comes from the county, some comes from the students. Increasingly, however, we're putting the burden on students to finance their education, and students who attend two-year colleges disproportionately come from lower-income families. Increasing tuition at these schools could restrict access to education for these families, which could have severe consequences for society in the long run."