"A number of bloggers in economics and the financial sector have risen to prominence through the sheer strength of their work. Note it was not their family connections nor ties to Ivy League schools or elite banks, but rather the strength of their research, analysis and writing." 
-- Barry Ritholtz 

An Ivy League degree may be impressive, but is it really worth it? There are logical arguments for and against, but a financial analysis suggests that it may not be worth it.

Student Studying Hard Exam and Sleeping on Books

Image source: Getty Images.

Meet the Ivy League

In case you're not quite sure what the Ivy League is, here's a quick primer: The term came about in 1954, with the formation of the NCAA Division I athletic conference. The Ivy League today is a group of eight private colleges. Here they are, with a little info on each:

School

Date Founded 

Location

Undergraduate Enrollment 

Class of 2021 Acceptance Rate 

Brown University

1764

Providence, R.I.

6,652

8.3%

Columbia University

1754

New York, N.Y.

6,102

5.8%

Cornell University

1865

Ithaca, N.Y.

14,315

12.5%

Dartmouth College

1769

Hanover, N.H.

4,307

10.4%

Harvard University

1636

Cambridge, Mass.

6,699

5.2%

Princeton University

1746

Princeton, N.J.

5,402

6.1%

University of Pennsylvania

1740

Philadelphia, Pa.

9,726

9.15%

Yale University

1701

New Haven, Conn.

5,532

6.9%

Data sources: USAToday.com and USNews.com.

Why an Ivy League degree may be worth it

So why go to an Ivy League school? Well, there are a bunch of upsides to doing so. Of course, you end up with an impressive diploma -- very likely written in Latin. That can open (or help open) some career doors for you. Ivy League schools tend to have big endowments and devoted alumni and strong alumni networks that can be tapped when seeking a job. According  to Christopher Ingraham in The Washington Post, U.S. Department of Education data shows that, "10 years after starting college, the typical Ivy League grad earns more than twice as much as the typical graduate of other colleges."

Another plus is the caliber of student you'll be in class with. Yes, if you take a geology class at an Ivy League college or a modest state school, you'll still learn much of the same stuff. But your classmates will differ. There are brilliant students and terrific professors at all kinds of schools, but on average, students at Ivy League schools will be brighter, having higher SAT scores, higher grade point averages, and so on. Workloads at Ivy League colleges (and other schools known for their rigor) can be heavier than at other colleges. For example, you might be required to read a novel per week in an English course, whereas at another college you might only read a few novels over the duration of the course.

stack of books against a white background

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Why an Ivy League degree may not be worth it

All that said, as I noted, you can do just fine at a non-Ivy college. You can take courses from excellent professors and learn a lot in the studies you pursue. You can graduate and land a good entry-level job, just as Ivy-League grads do, and can climb whatever professional ladder you want.

Ivy League colleges can cost a lot more than a state school, so going to one might leave you with more student-loan debt than if you'd attended a less pricey school. Here's what the Ivy League recently cost:

School

Tuition and Fees

Brown University

$51,367

Columbia University

$55,056

Cornell University

$50,953

Dartmouth College

$51,438

Harvard University

$47,074

Princeton University

$45,320

University of Pennsylvania

$51,464

Yale University

$49,480

Data source: most recent college rankings from USNews.com. 

To compare, here are some state schools:

School

Tuition and Fees, In-State

Tuition and Fees, Out-of-State

University of California-Berkeley

$13,509

$40,191

University of Virginia

$15,722

$45,066

University of Michigan-Ann Arbor

$13,856

$43,476

University of North Carolina-Chapel Hill

$8,834

$33,916

University of Florida

$6,389

$28,666

Data source: most recent college rankings from USNews.com. 

A last consideration is that as the years go by, where you went to college will be less and less meaningful, at least in regard to your career.

What the numbers say about an Ivy League degree

One way to answer the question of whether an Ivy League degree is worth it in the job market is to do a rigorous analysis, crunching lots of numbers. That's what Adam Brownlee at Investopedia.com did. He took the average cost of a four-year degree from an Ivy League college and the corresponding costs at the average four-year non-Ivy private college and a state college and then compared that with expected starting salaries. He made a bunch of calculations, using the rather complicated method of "discounted cash flow" analysis, adjusting future expected values (such as expected earnings) so that they can be compared with current values.

Brownlee concludes:

From the results a clear winner emerges: public schools have a net present value of approximately $3 million compared to $2.07 million and $3.22 million for private and Ivy League schools respectively. In relation to costs, public schools deliver an 84.7% return compared to 33.5% and 38.4% for private and Ivy League schools. 

In other words, Ivy League graduates can expect to earn a bit more in the long run than public school graduates can expect to earn, but when you factor in the cost of their education, the public school grads come out way ahead.

That would seem to be that, right? Conclusive evidence that an Ivy League degree isn't worth it in the job market. Not quite, though -- note that the calculations didn't factor in financial aid, and according to folks at The College Board, about two-thirds of full-time undergrads were receiving some financial aid as of the 2014-2015 school year -- and 57% of that aid was in the form of grants, with 34% being federal loans. (Of course, financial aid helps students at Ivy and non-Ivy colleges alike, so it improves the calculations for both groups.)

Financial aid is very present in the Ivy League, too. Here, for example, is what Harvard recently offered, according to Business Insider:

Students from families with incomes below $65,000 are not expected to contribute toward the cost of attending Harvard College. Families with incomes between $65,000 and $150,000 will contribute from 0% to 10% of income, depending on individual circumstances, and families with incomes above $150,000 are expected to pay proportionately more than 10%, based on their individual circumstances. Families at all income levels who have significant assets must pay more than families with less assets.

Here's Princeton:

Students from families with incomes $140,000 or less will have free tuition at Princeton. Families that make $65,000 also qualify for free room and board.

The bottom line may be that a state school will still offer the best bang for your buck, depending on the state school and the Ivy League school you're deliberating between -- but the difference, when you factor in financial aid, may not be quite as stark.

a bunch of graduates viewed from the back, with their caps and gowns on

Image source: Getty Images.

Is an Ivy League degree right for you?

So given all that, is an Ivy League degree right for you -- or your kid? Well, that all depends. Each college, Ivy League, state, or what have you, will have various strengths and drawbacks. It's best for each prospective student to do their own review of what they're looking for, what kind of setting they prefer, what kind of workload they can handle, what size school they like, and so on. Perhaps also consider your career aspirations and what you might expect to earn in the future. If you're planning to be a lawyer, for example, you'll likely have a different expected income than if you're planning to go into social work. Remember, though, that lots of undergrads don't yet know quite what they want to do after graduating, and many who do know will change their minds.

As you're thinking about which college to attend and studying candidates, gather financial information on each, too, so that you know what each will cost you. Then apply to a bunch of schools of interest and see what kind of financial aid packages you're offered.

Finally, remember that the term "Ivy League" may be overly restrictive. There are scores of top-notch, demanding colleges with solid reputations -- and quite a few are regarded in almost as much, if not the same, esteem as Ivy League schools. A few examples of those would be Stanford University, the Massachusetts Institute of Technology, the University of California at Berkeley, the California Institute of Technology, Johns Hopkins University, the University of Chicago, Duke University, Georgetown University, and so on.

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