Salient to Investors:

Sarah Turner at University of Virginia said it is not just the sticker price and the net costs, but how likely it is that you will get into medical or law school or have some other opportunities if you choose the more prestigious college? Turner said if you know you want to end up on Wall Street then borrow and go to NYU, but borrowing to go to culinary school does not make sense – in most cases, few high school seniors really know what they want to do and, by extension, what they will earn.

Author Lynn O’Shaughnessy said families need to look realistically at what they can afford. O’Shaughnessy said East Coast schools that are not top-tier but are in cities can get away with charging outrageous amounts and giving mediocre financial aid because students fall in love with these schools and whose parents are willing to sacrifice beyond all rational reasoning.

Alan B. Krueger and Stacy Berg Dale at Mathematica Policy Research found that equally smart students had the same earnings whether or not they went to top-tier colleges, while the big difference came from minority and low-income students who went to top-tier colleges and did better later on.

Lawrence Katz at Harvard sees more instances when paying to go to a large, non-elite university was a waste of money because there are higher returns to all upper-end skills and connections, and larger, private, expensive non-lite university were not necessarily better than the flagship campus of a top-notch state university. Katz said parents should not think about it as an investment but as a form of consumption, like a wedding or a vacation.

Parents and students should look at the graduation rates of the colleges they’re considering, and merit scholarships are a sign that a college really wants the student.

James Montague at Boston Latin School encourages students to apply to at least one state college that would give them merit aid and to stick to the federally subsidized loan limits.

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