I was invited to a dinner by a client couple of mine. Their youngest daughter has been accepted to three universities and they are having a hard time picking the right one and they wanted my help. 

Universities A and B are both out-of-state Ivy League universities that cost more than $60k a year in tuition. University C is an in-state university that costs only $15k. I listened to their reasoning as to why it is so hard to make a decision. They really want to give the best to their daughter and besides, an Ivy League university would give them a lot of face (there you know they are a Chinese American family) since their peer families all brag about their children’s academic achievements and they feel pressured to keep up.

Before I said anything, I forewarned them that the choice of university is a very personal one for them and their child so they should take my words only as my observations and not as my professional advice.

First, since universities A and B are four times as expensive as university C, do they provide four times more value? By this I mean, would their child acquire four times as much knowledge or earn four times as much after graduation? (I will get to this point later.) If not, they would be paying the extra just for the bragging rights.

Second, what financial values do they want to impart on their children? That they should borrow money to pay for something they can’t afford just for vanity? Would such a value system not lead to financial ruin for their children down the road?

Third, their two older children both went to state universities that cost a lot less. Would they perceive their parents sending their younger sister to an Ivy League school as favoritism and hold resentment? 

After pondering over my questions, they told me they could now make their decision with peace of mind. 

Now let me add a few words regarding the difference in post-graduation earning power between top universities and regular universities. A 2016 study researched this subject and it found that for people with ten years of work experience, the salaries of regular university graduates are not different from those of top university graduates. Check out this video that discusses the subject of education in the US: https://tinyurl.com/59d52wnx

Also in one of Malcolm Gladwell’s book – I forgot which one – he shares a study that shows that students of equal intelligence could be either middling students in top schools or top students in middling schools. It turned out those who were top students in middling schools were much more successful later in their careers than the middling students in top schools. Does anyone want to venture an explanation for this? Feel free to reply to this email.

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