This question—does it matter where you go to college?—popped into my head after seeing some of the findings of the National Study of Millionaires.
The study helps shed light on two questions:
- What effect does the school you attend have on the age at which you become a millionaire?
- What effect does the school you attend have on your net worth?
I’ll break down what the study found and then talk about some of the other research done in this field.
Does the college you attend affect the age at which you become a millionaire?
The millionaires who attended an Ivy League school became millionaires 4 years faster than those who attended a community college and 2 years faster than those who attended a public school.
Those who attended a private school became millionaires 1 year faster than those who attended a public school.
This isn’t too surprising given that all Ivy League schools along with Stanford, MIT, and Duke, among other top schools, are private.
It’d be interesting to compare the net worth of public school graduates with that of private school graduates after excluding the top 20 private schools to remove the disproportionate effect exerted by the Ivy Plus1 schools and their like.
My guess is that public school graduates would be ahead of private school graduates in this scenario.
Does the college you attend affect your net worth?
So an Ivy League education gives you a one to four year advantage. No big deal in the grand scheme of things.
Well, sort of.
Firstly, it’s important to note that only millionaires were interviewed in this study—that is, the study is comparing millionaires who attended an Ivy League school with millionaires who didn’t.
What the study doesn’t mention, however, is that attending an Ivy League school makes it much more likely that you’ll become a millionaire in the first place—at least 7 times more as I’ll show later on.
Secondly, even among millionaires the effect of an Ivy League diploma is evident when we look at median and average net worth.
Among millionaires, the average net worth of an Ivy League graduate is nearly double that of a community college graduate and one and a half times greater than that of a public university graduate.
The “Ivy League effect” is seen in median net worth as well.
The median net worth of an Ivy League graduate is $1.3 million more than that of a community college graduate and $1 million more than that of a public university graduate.
And if we were to extend this comparison beyond millionaires, I assume the “Ivy League effect” would become even more pronounced.
These two results—age to become a millionaire and a millionaire’s net worth—seem to leave little room for doubt: it absolutely matters where you go to college.
Inner drive matters more than school pedigree
You might be reading this post after not getting into your dream school and I didn’t write it to depress you.
So here’s some good news for you: the college you attend is a small piece of your story; you get to write the rest.
Economists Stacy Dale and Alan Krueger2 published a paper in 2002 which found that:
Students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended a less selective college.
In other words, what Dale and Krueger discovered is that the selectivity3 of the colleges that a student applied to is a more powerful predictor of future income than the school the student actually attended.
Or as Derek Thompson put it in his article in The Atlantic:
If Mike and Drew have the same SAT scores and apply to the same colleges, but Mike gets into Harvard and Drew doesn’t, they can still expect to earn the same income throughout their careers. Despite Harvard’s international fame and energetic alumni outreach, somebody like Mike would not experience an observable “Harvard effect.”
It seems that driven students apply to top schools and that this inner drive later allows them to find career success despite the college they attend.
The takeaway from this is that our future success depends much more on our will to succeed than on the college we attend.
For my part, I was rejected from Stanford, Harvard, and MIT, and ultimately attended the University of Florida.
I studied computer science and upon graduation landed a job at a Big Tech company. I’m now making as much or more than most of the students who graduated from Stanford, Harvard, and MIT.
This serves as small (and anecdotal) proof of the finding of the Dale and Krueger study.
School pedigree matters more for low-income students
The story is a bit more complicated for low-income students.4
Raj Chetty, John Friedman, Emmanuel Saez, and Danny Yagan5 published a paper in 2017 comparing the rates of upward mobility for different colleges.
A college’s upward mobility rate is defined as the product of its low-income access—the percent of low-income students in the student body—and its success rate—the percent of low-income students whose income ends up being in the top 20%.
As an example, they pit Columbia University, a prestigious Ivy League school, against SUNY-Stony Brook, a very good public school.6
Columbia and Stony Brook have similar success rates—61.2% for Columbia and 51% for Stony Brook—but vastly different access rates—5% for Columbia and 16.4% for Stony Brook.
The takeaway is that the odds that a low-income student will end up making a top 20% income7 are similar whether they attend Stony Brook or Columbia.
That’s the good news.
But it’s not the whole story.
While Columbia and Stony Brook have similar success rates for reaching the top 20% in the income distribution, Columbia has a much higher success rate for reaching the top 1%—15% of low-income students at Columbia reach the top 1% compared with 2% at Stony Brook.
So a low-income student who attends Columbia has significantly better odds—7 times higher—of making a top 1% income8 than a low-income student who attends Stony Brook.
Here’s how the authors of the study summed it up:
While Stony Brook is a pathway to the top quintile for many low-income students—which is presumably a reasonable metric for “upward mobility” for much of the population—it does not offer a pathway to upper-tail success [top 1 percent] for a large number of students.
More generally, we find that upper-tail success is highly concentrated at elite colleges like Columbia with very high levels of instructional expenditure and large endowments, and no university in the U.S. currently offers both high rates of upper-tail success and substantial low-income access.
This study offers further proof that it definitely matters where you go to college, especially so if you come from a low-income family.
School pedigree matters more for women
Women also deserve special consideration when it comes to analyzing the effect of college selection on future income.
Suqin Ge, Elliot Isaac, and Amalia Miller published a paper in 2018 which concluded that:
For men, our findings echo those in Dale and Krueger (2002): controlling for selection eliminates the positive relationship between college selectivity and earnings. We also find no significant effects on men’s educational or family outcomes.
The results are quite different for women: we find effects on both career and family outcomes.
Attending a school with a 100-point higher average SAT score increases women’s probability of advanced degree attainment by 5% and earnings by 14%, while reducing their likelihood of marriage by 4%.
The effect of college selectivity on own earnings is significantly larger for married than for single women. Among married women, selective college attendance significantly increases spousal education.
In other words, women who graduate from more selective schools wait longer to get married and have kids, are more likely to get an advanced degree, and stay in the labor force longer.
All these factors combine to provide a big boost in earnings.
And the effect is particularly pronounced on women who end up getting married as their spouse is more likely to both be well-educated and make a high income.
Like the Chetty paper, this study bolsters the proof that it matters where you go to college, and more so if you are a woman.
School pedigree matters more depending on the field of study
There’s one last factor to consider and this is the major studied by the student.
As Eric Eide, Michael Hilmer, and Mark Showalter showed in a paper published in 2015, attending a prestigious school provides a big boost in earnings in some fields and little to none in others.
For example, the study found that the school a student attended had little effect on their earnings if they studied a STEM-related major.
This has been my experience having studied computer science at the University of Florida and still being able to land a job at a top tech company.
And I’m far from being a unique case. Plenty of my peers did the same and many of them have climbed the corporate ladder at astonishing speeds.
Outside of STEM, however, the school attended matters tremendously.
Business majors who graduate from selective colleges make 12% more than those who graduate from midtier colleges and 18% more than those who graduate from less-selective colleges.
This difference is 11% and 14% for social-science majors, 6% and 9% for education majors, and 0% and 11% for humanities majors.
Once again, this study shows that it does matter where you go to college, triply so if you’re not studying a STEM-related field.
It seems silly to deny that attending an Ivy Plus school is a huge advantage.
These schools give students the opportunity to be taught by Nobel laureates and world-leading experts as well as to rub elbows with the top 1%, providing access to a powerful, lifelong network.
Not to mention the twinkle in the eye of job recruiters when they see Harvard or Stanford on a resume.
It’s no coincidence that from the 32 US presidents9 who graduated from college, 1710 went to an Ivy League Plus school.
Or that more than half of all Supreme Court Justices have attended an Ivy League school.11
Or that 9.8% of the CEOs and 14.1% of the directors of Fortune 500 companies in 2011 had degrees from Harvard, though far less than 1% of Americans have attended Harvard.12
But putting these somewhat depressing statistics aside, it feels equally silly to pout and complain about the status quo—life isn’t fair and nobody said it would be.
It doesn’t take much looking to find plenty of people who’ve had tremendous success even while not attending an elite university—Sam Walton, Maya Angelou, and likely multiple people in your immediate circle or broader group of friends and family.
So does it matter where you go to college? Absolutely.
Is there reason to despair if you got rejected from an elite university and will instead attend a less selective college?
I don’t think so.
If money is what you’re chasing, then study a profitable major (i.e., a STEM major), work your butt off, and prove people wrong.
If you’re not sure what you’re chasing, step back and reconsider.
Read Epictetus to get some perspective.
Go on long, meandering walks.
Explore different ways of living (without money? vanlife? WWOOF-ing?)
Read The Autobiography of Malcom X (or this article about the Bali Hai boys, three crazy Americans who invented the overwater bungalow) to get inspired and remind yourself that no matter our circumstances—past or present—it’s within our power to change and start living virtuous lives.
No matter your current situation, don’t forget that life is a bizarre game—almost as if some hyper-intelligent being started a game of The Sims that quickly got out of hand—and that no one gets out alive.
I wish you the very best.
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The Ivy Plus schools are the eight Ivy League colleges plus the University of Chicago, Stanford, MIT, and Duke. ↩
Krueger was a world-renowned economist. Had he not passed away in 2019, he likely would have won the Nobel Prize in Economics in 2021. ↩
Selectivity was measured using the college’s average SAT score. More selective colleges have higher SAT scores and lower acceptance rates. ↩
Low-income students are defined here as students who come from families in the bottom income quintile. Families in the bottom quintile have a household income that ranges from $0 to $30,000. ↩
Raj Chetty is one of the youngest tenured faculty in the history of Harvard’s economics department. Emmanuel Saez is a well-known French economist. John Friedman is another well-regarded economist who frequently works with Chetty. And Danny Yagan is a professor of economics at Berkeley, currently working as a chief economist in the Biden administration. ↩
For reference, Columbia is ranked 18th by U.S. News while SUNY-Stony Brook is ranked 77th. Stony Brook faculty and alumni have included 7 Nobel laureates and 2 Pulitzer Prize winners. Columbia faculty and alumni have included 4 US presidents, 100 Nobel laureates, and 125 Pulitzer Prize winners. ↩
The authors of the study define a top 20% income as earning more than $58,000 at ages 32 to 34. ↩
The authors of the study define a 1% income as earning more than $197,000 at age 34. ↩
12 out of the 44 US presidents never graduated from college. These presidents are George Washington, James Monroe, Andrew Jackson, Martin Van Buren, William Henry Harrison, Zachary Taylor, Millard Fillmore, Abraham Lincoln, Andrew Johnson, Grover Cleveland, William McKinley, and Harry S Truman. See this article in the Washington Post. ↩
Harvard claims 7 US presidents: John Adams, John Quincy Adams, Rutherford B. Hayes (law degree), Theodore Roosevelt, Franklin D. Roosevelt, John F. Kennedy, and Barack Obama (law degree).
Columbia claims one: Barack Obama.
Yale claims 5: William Howard Taft, Gerald Ford (law degree), George H. W. Bush, Bill Clinton (law degree), and George W. Bush.
Princeton claims 2: James Madison and Woodrow Wilson.
The University of Pennsylvania claims 1: Donald Trump.
Duke claims 1: Richard Nixon.
And Stanford claims 1: Herbert Hoover.
See the List of presidents of the United States by education on Wikipedia. ↩
See the List of law schools attended by United States Supreme Court justices on Wikipedia. ↩
See this paper by Richard L. Zweigenhaft. The paper also reports that 31.9% of current or ex-CEOs of Fortune 500 companies and 28% of directors of Fortune 500 companies in 2011 earned undergraduate degrees from elite colleges or universities. ↩