Many people describe today, May 1, as National College Decision Day.  At most selective colleges, including Williams, today is the deadline to accept or decline an offer of admission and place a deposit for the first year of college.

A few years ago, Michael McPherson, the former Williams Dean of Faculty, economics professor, and, later, President of Macalester College, wrote a piece in the Wall Street Journal defending the current debt-financing model for colleges and encouraging students and parents to continue to assume mountains of debt in pursuit of higher future earnings: Get Smart About College: Parents and students like to think they’re rational when it comes to picking a college and paying for it. They aren’t.

With co-author Sandy Baum, past Skidmore College department chair in Economics, McPherson writes:

For starters, a college education is really a joint production between both the college and the student, so “fit” matters greatly. The best college for one student might be a nonstarter for another. Second, both the benefits and the costs, at least for the two-thirds of students who borrow, are extended over a long period of time, requiring a kind of investment perspective.

Moreover, investing in college is not something families deal with frequently, so learning from experience is hard. Reliable information is hard to come by, and decisions aren’t reversed easily or without cost; transfer is possible, but it’s often expensive and risky.

This framing of the problem is reasonable.  But are McPherson and Baum correct in their conclusions?

[P]eople tend to overvalue current consumption relative to future opportunities. Small wonder: It’s always difficult to pay now, or soon, for benefits we won’t enjoy until years in the future… This myopic approach can lead people to opt for schools that offer better prices, regardless of whether the schools are the best fit—and that can be a huge mistake.

When people read news articles about students who borrowed $100,000 for undergraduate education and have been unemployed since graduating, they tend to believe that this will happen to them (and that it will last forever). Likewise, people put lots of stock in the recurring (and misleading) warnings that college is a bubble or that it isn’t worth the money in the long run.

These stories make for captivating headlines, but all the evidence is that college pays off better than ever.

To be sure, McPherson and Baum emphasize that college decisions must be made based on individual situations, and note that cognitive biases can lead to decisions that overestimate earnings potential and underestimate debt loads as well.  But underpinning their analysis is both the last statement: “that college pays off better than ever,” and the suggestion that the “best fit” is more important than the “best price.”  That may be true if your “best fit” is Williams College, or a handful of other top-brand institutions, but it’s increasingly dubious as you work your way down the ladder.  This is particularly true because “fit” often has little to do with the educational dimensions – formal or informal – and more to do with whether it was raining on the day you visited the campus, and what drink you ordered at the coffee bar in the fitness center.

The debate over educational choices, costs, and benefits has continued in the four years since McPherson and Baum wrote this article, and unfortunately, EphBlog’s hiatus has kept us out of that discussion.  But on this Decision Day and the next one, I encourage skepticism when eloquent writers and speakers — even those with deep Eph connections — from traditional academic backgrounds urge “Ignore the Cost, Go With the Fit.”

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