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A college buyer's rule of thumb

Updated: Oct 22, 2023

Making a good college decision is challenging. Our culture suggests that college is an excellent investment. The truth is, it can be, but the trick is not overpaying for the value. We suggested that large firms often recruit broadly across many selective and less selective colleges. Many firms also consider objective performance criteria as a gatekeeper to the interview process.

About the author: Jeff Hulett is a career banker, data scientist, behavioral economist, and choice architect. Jeff has held banking and consulting leadership roles at Wells Fargo, Citibank, KPMG, and IBM. Today, Jeff is an executive with the Definitive Companies. He teaches personal finance at James Madison University and provides personal finance seminars. Check out his new book -- Making Choices, Making Money: Your Guide to Making Confident Financial Decisions -- at

Please check out Jeff's YouTube channel for the presentation of this article: A college buyer's rule of thumb

We discussed this in the article called: “What do employers think of college graduates?” As an example, let's say you go to college and graduate with a reasonably marketable major. Let's also say you either:

  1. Went to Harvard and got a 2.5 GPA or

  2. Went to a less selective public college and received a 3.5 GPA.

The Harvard "you" would likely not be interviewed by many firms. Whereas the less-selective public college "you" would be heavily recruited. As further confirmation, research by Dale and Krueger suggests the return to selective colleges is insignificantly different from less-selective colleges across large groups. They determined this by controlling for those colleges applied to and accepted across a large group of college applicants. As an example, they considered high school graduates who got into BOTH a non-selective school and a selective college. They compared earnings of the subset that went to the selective vs. the subset that went to the not selective schools. They looked at long-term earnings to compare the performance of those different groups. [xxiii] (By the way, there are some exceptions to Dale and Krueger's findings, that I discuss in the notes)

Per our College Hope discussion in the earlier article, Dale and Krueger's research suggests many outcomes like getting a good job, networking, emotional well-being, life skills, and others will happen regardless of which college is attended.

The idea is this: There are approximately 4,000 U.S. Colleges and Universities. Almost all of them know how to put on a good “College Show.” Most are very capable of delivering a successful learning experience.” More important is to properly make the high school student’s “Now” or “Not yet” determination. This is the key enabler for delivering great outcomes. Almost all colleges can deliver the education mission, it is more a matter of whether the student is ready.

In the main, there appears to be little incremental benefit to selective colleges from a large firm recruiting standpoint. Beyond this, college risk is a significant factor. We discussed this in the article - How would a risk manager advise a college decision-maker?. The risk of getting it wrong is significant, both from a frequency and severity risk standpoint. In the article, we discuss significant risks such as:

  1. Not graduating,

  2. Not getting a job requiring a college education,

  3. Defaulting on a college loan, and

  4. Missing out on wealth building because of student loans.

Certainly, if you are confident that 1) you can get a good GPA and 2) it would not cost you any more than a public college education, then a selective college may be worthwhile.

Next, we explore the segments offered in the earlier graphic:

The Challenged segment is where there may be long-term financial damage and slower employability because of the lower GPA.

The Slow start segment has a better debt situation but may take longer to start building wealth because of the challenge of getting a good job.

The Treadmill segment is where you are more likely to get a good job, but much of the income goes to pay college debt.

Finally, the Great Start segment is where the benefits align. A higher GPA helps you get a good job and a lower debt situation allows you to build personal wealth faster!

Now, to be fair, these segments are more likely, but they are not exact. In fact, I have a great friend who recently reminded me that he went to an average college and got a 2.0 GPA. Upon graduating, he was in the "Slow start" segment. Today, he is the CEO of a successful mid-sized company and has created significant wealth.

Everyone’s story is different. However, when you are faced with an uncertain future, going after the Great Start segment will greatly increase the likelihood of your long-term success.

Making the best college decision starts with a great decision process. The process includes the high school student and their caregivers evaluating their criteria – or – in other words -the many "what is important about college” preferences. Their criteria need to be applied to their college alternatives - the 5-10 schools they will seriously consider both applying to and accepting. Being a good risk manager and channeling your future employer should be considered in the criteria and alternatives-rich framework.

Check out the app called College Xoice® to help high school students through the challenging college decision process. It provides education, a confidence-inspiring decision process, and a fun-to-use, high-school-age-appropriate technology

You get access to College Xoice when you buy my book, Making Choices, Making Money.


[xxiii] Dale, Krueger, Estimating the Return to College Selectivity over the Career Using Administrative Earnings Data, NBER, 2011 - As an exception, Dale and Krueger did identify certain first-generation college cohorts as benefiting from selective colleges. This suggests the additional college resources generally found at selective colleges and provided to those with less family college experience have some incremental benefits.


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