PROVO -- Attention prospective college students: If you are fantasizing about large financial rewards after graduation but are attracted to public universities with relatively low tuition rates, beware.
Students who pay hefty tuition fees and earn degrees from elite private schools make more money once they enter the work force than those who graduate from less competitive colleges, according to a study conducted by Brigham Young University, Cornell University and RAND Corp.Graduates of high-ranking, four-year private universities receive more than 30-percent higher earnings annually than graduates of lower-rated public schools, regardless of race, gender or socioeconomic status, researchers say. The findings were published in the current issue of the Journal of Human Resources.
"We found that college students should be concerned about costs," said Eric Eide, a BYU assistant professor of economics who was involved in the study. "But paying high tuition at elite schools pays off in the long run. The costs are going up, but the benefits of attending these schools are going up as well."
Eide says there has been "a lot of attention in the popular press" about tuition increases at highly competitive private schools. He, Cornell economics professor Ronald G. Ehrenberg and Dominic J. Brewer, an economist and researcher at RAND, a non-profit think tank, wanted to know if there was a correlation between high tuition costs and post-graduation earnings.
The trio examined high school graduates from 1972, 1980 and 1982. In all, about 12,000 people from around the country who had attended college served as samples in the study. The data were supplied by the U.S. Department of Education.
Using Barron's Profile of American Colleges, which rates four-year universities based on annual acceptance rates, average ACT/SAT scores and average grade point averages of incoming freshmen, researchers placed the nation's schools into three groups -- highly competitive (elite), very competitive (middle) and non-competitive (bottom).
Researchers compared tuition charges at private schools, such as BYU, to tuition at public schools.
"It was about four times higher at private universities," Eide said.
Tuition for two semesters of at least 12 credit hours each at BYU is $2,720, compared to the $2,282 to attend two full-time semesters at the publicly owned University of Utah.
Members of the high school class of 1972 who earned degrees from a highly competitive university took in a 15-percent higher hourly wage in 1986 than their counterparts who studied at less competitive schools.
Earnings of 1980 and 1982 high school graduates were evaluated in 1986 and 1992, respectively. For those from the class of '80, the gap between the salaries of those who graduated from elite schools and those who attended less competitive colleges was 20 percent. Members of the class of '82 who graduated from top schools saw 39 percent higher wages than their counterparts.
Rising tuition rates at high ranking private institutions can be partially attributed to the higher earnings of graduates, Eide said.
"When all is said and done, elite universities can charge more tuition because the returns are so much greater in the end," he said.