Attending top private colleges or public institutions can provide students many benefits, as prospective students most likely already know, but one of the most significant advantages can take effect after graduation: higher median earnings in graduates’ careers.
California Institute of Technology
Higher education has long been considered a pathway to success, offering individuals the opportunity to acquire knowledge, skills, and, in many cases, greater earning potential. While attending any college can undoubtedly boost one’s future prospects, there is a growing body of evidence to suggest that graduates of elite colleges — that is, schools that are ranked within the top 10-20 spots annually, usually by the US News & World Report — enjoy a distinct advantage when it comes to their earning potential.
Authors of a paper published by the National Bureau of Economic Research in July 2023 found that less than 1% of Americans attend the eight Ivy League schools, the University of Chicago, Duke, MIT, and Stanford, but these graduates account for 15% of those in the top 0.1% of the income distribution. While graduates of these selective colleges do tend to work in high-earning career paths, such as business, finance, and technology, and often come from high-income families to start with, they are still more likely to have a higher starting salary than people with a college degree from a less selective school.
In this article, we will explore the reasons behind this phenomenon and the numerous benefits that graduates of selective institutions often accrue.
Prestigious Schools With the Highest Median Earnings
The research shows that graduates of elite universities tend to earn more than other college graduates. For example, Ivy League graduates earned $161,888 mid-career compared to $101,777 for those from other institutions. Graduates from the top 10 colleges in the United States earn 47% higher early career salaries than those from the ten colleges within the City University New York (CUNY) school system.
However, the university rank alone is a poor predictor of individual job performance. While job candidates from more prestigious universities may slightly outperform their peers, employers can sometimes get a much better deal by hiring the “right” students from lower-ranked institutions. And it’s also important for high schoolers to consider in their school search that other schools can have strong departments in their desired college major while still not having a top rank overall. School rankings and low acceptance rates are not necessarily good indicators of a college “fit” for prospective college students.
Still, a college education from one of these schools can lead to an increase in earnings as opposed to earnings for graduates from other schools. Here are some schools with the highest earning potential post-graduation:
- California Institute of Technology (Caltech): Caltech has the highest median income 10 years after attendance at $112,166. The most popular degrees at Caltech consist of science programs — computer science, mechanical engineering, and physics take the top three spots.
- Massachusetts Institute of Technology (MIT): MIT has the second-highest median income 10 years after attendance at $111,222. Like Caltech, many MIT students pursue a science major, and computer science and mechanical engineering are the two most popular majors. Mathematics is the third most popular
- Ivy League schools: According to Payscale, Ivy League schools — Harvard University, Princeton University, Yale University, Columbia University, University of Pennsylvania, Cornell University, and Dartmouth College — have some of the highest salary potentials for graduates. The worldwide recognition of these schools can lead to great career prospects in a variety of professions.
- Other top-ranked elite institutions: Other elite universities with high earning potential for graduates include Stanford University, Duke University, Georgetown University, and the University of Chicago.
It is important to note that while attending a prestigious university may increase earning potential, individual job performance is not solely determined by university rankings. And of course, many factors determine how much money a graduate will earn after college, including their major, industry, and job performance.
Massachusetts Institute of Technology
The Advantages of Elite Schools
Elite colleges, often ranked in the top tier of national or global rankings, possess certain attributes that set them apart from their peers and make the education they offer a valuable investment for any student who’s lucky enough to be accepted. These attributes include world-class faculty, cutting-edge research facilities, extensive alumni networks, and a rigorous academic environment. This leads to higher recognition of the names of these colleges in the labor market and an expectation of excellence for any alumnus of these schools.
Graduates of such institutions, including alumni of Ivy League schools, prestigious private universities, and top public institutions, frequently experience higher earning potential as a result. Despite high tuition costs, this can prove to be a wise financial decision over time.
But prospective students should note that it is highly recommended to avoid student debt if possible, particularly given the recent Supreme Court decision proving it is unlikely to be forgiven in the near future — high-paying career prospects are not guaranteed merely by attending an expensive school with a strong reputation. Luckily, these schools usually have generous financial aid packages, courtesy of a large financial endowment, that can mitigate college costs for students.
There are a few factors that contribute to higher earnings potential amongst alumni of top schools:
- Prestige and Reputation: The prestige associated with elite and competitive colleges can open doors that might remain closed for graduates of less renowned institutions. While it does not by any means secure a job based on name brand alone, employers often value the credentials of an elite college on a resume, viewing it as an indicator of intelligence, work ethic, and dedication. This perception can lead to increased job offers, better positions, and more significant earning potential. Despite the high cost of tuition, this can prove to have a positive return on investment fairly soon after graduation.
- Access to Exceptional Resources: Elite colleges typically invest heavily in their students, providing access to state-of-the-art facilities, top-notch libraries, and renowned faculty members. These resources allow students to develop specialized skills and knowledge, making them highly sought after in the job market. The ability to leverage these resources can lead to more lucrative job opportunities, even before graduation.
- Robust Alumni Networks: Graduates of elite colleges often benefit from extensive alumni networks that can provide invaluable connections and mentorship opportunities. These networks can facilitate introductions to influential individuals in various industries, potentially leading to high-paying jobs, partnerships, or entrepreneurial ventures.
- Exceptional Career Services: Elite colleges typically offer robust career services and job placement programs, helping graduates secure competitive positions in their desired fields. These services include internship opportunities, interview preparation, and job fairs that can significantly enhance a graduate’s ability to secure high-paying jobs.
- A Competitive Edge: The academic rigor and competitiveness of elite colleges challenge students to excel and develop a strong work ethic. Graduates often emerge from these institutions with a competitive edge, well-prepared to thrive in demanding professional environments. This edge can translate into higher earnings over time.
- Alumni Donations and Philanthropy: Elite colleges often benefit from generous alumni donations and philanthropic contributions. These funds can be used to invest in research, scholarships, and facilities, enhancing the overall college experience for current students.
Industries that Attract Graduates of Elite Schools
College graduates with prestigious degrees work in a variety of industries, many of which have higher median earnings than many other industries. Even at top-ranked liberal arts colleges that are well-known for their humanities programs, many graduates have chosen fields of study that have a high return on investment, such as careers in STEM. These lucrative majors can prove to offer graduates long-term economic success.
Some of the most common industries that these graduates work in include:
- Business and finance: Many graduates of schools that have high university rankings work in business and finance, including investment banking, consulting, and private equity. Research shows that 20% to 30% of elite college grads go into finance or consulting, and many of these consulting and finance companies, such as Bain & Company, Goldman Sachs, Morgan Stanley, and Deloitte, recruit directly from these schools starting as early as students’ junior year.
- Technology: Graduates of highly-ranked public institutions and private colleges are often recruited by top technology companies such as Amazon, Apple, Google, and SpaceX. According to Salary.com and Indeed, the average starting salary of a software engineer in the United States ranges from $76,813 to $116,457 per year.
- Law: Graduates of elite schools are more likely to obtain high-paying jobs in top law firms such as Cravath, Swaine & Moore, and Sullivan & Cromwell. For instance, Harvard Law School reports that most of its graduates in 2021 opted for jobs with private law firms earning an average salary of $205,842.
- Health: A small percentage of graduates of elite public and private institutions pursue careers in health, including medicine and public health. A common path is attending medical school after being in a highly-ranked pre-medical program, which can lead to career paths with high potential earnings. For instance, out of the 105 members of the Yale School of Medicine’s class of 2027, over 30% attended an Ivy League school, Stanford University, MIT, or Caltech.
- Engineering: An engineering degree from a prestigious institution can prove to have a high return on investment, making engineering majors one of the most lucrative majors at any school — and especially at a top college. The average salary of an engineer in the U.S. is $105,077, while entry-level positions — where an engineering graduate will begin their career — start at $80,093 per year. Most experienced engineers make up to $150,000 per year, if not more depending on their specialty.
- Academia and research: Graduates of higher-ranked pursue careers in academia and research, especially tenure-track professor positions. Oftentimes, an undergraduate degree from one of these higher-ranked institutions makes it easier to get into a top-tier graduate school, which can easily lead to more lucrative positions.
- Arts and entertainment: A small percentage of Ivy League graduates pursue careers in arts and entertainment. While median earnings in many creative career fields can be lower than other fields, it is still more likely to score well-paying positions in creative careers with a school degree from one of these top schools.
It is important to note that graduates are not limited to these industries and can pursue careers in a wide range of fields. Additionally, while graduates of top schools may have an advantage in obtaining high-paying jobs, individual job performance is not solely determined by university rank or competitive admissions rates.
While attending an elite college may come with a higher price tag, the investment often pays off in terms of greater earning potential and career opportunities. The prestige, resources, alumni networks, and competitive advantages associated with these institutions can significantly impact a graduate’s financial future. However, it is crucial to note that success in life is not solely determined by the college pedigree of the school one attends. Hard work, dedication, and a commitment to personal growth remain, of course, essential factors in achieving long-term prosperity — regardless of where you go to school or what you study.
Ultimately, elite colleges offer a unique environment that fosters personal and professional growth, positioning graduates to excel in their chosen fields. While the earning potential is just one aspect of the broader benefits of attending such institutions, it is undoubtedly a compelling reason for many to aspire to join their ranks.