By: Meghan Clancy
The American Enterprise Institute (AEI) recently released a report entitled Does Attending a More Selective College Equal a Bigger Paycheck? The report explores the relationship between the selectivity of an undergraduate four-year institution and college graduates’ early career earnings.
The findings indicate that in the four years post-graduation, earnings of those from less selective four-year colleges are, on average, strikingly similar to those of college graduates from more selective institutions. Selectivity was calculated by the National Center for Education Statistics using admissions rates and ACT/SAT scores. The resulting classifications were, from least to most selective: “open admission,” “minimally selective,” “moderately selective,” or “very selective.”
Key findings include:
- Graduates from the three least selective institutions earned an average median income of $46,000 four years post-graduation while those from very selective schools only had a modest earning premium of 10 percent or $51,000 on average.
- Between 1993 and 2008 the median earnings for graduates from very selective institutions increased by $2,000 while their peers from less selective and open admissions institutions rose by $3,000, on average for a median earning increase of 4 and 7 percent respectively.
- While prestigious universities and colleges have an initial positive net benefit with their graduates’ earnings, this diminishes with time.
- Graduates from less selective colleges who do not initially benefit from the selectivity of their institution, are able to raise their earnings as they accrue work experience at an increasing rate significantly higher than graduates from more selective institutions.
