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I’VE TAUGHT BEHAVIORAL economics, which holds that even our most important decisions are influenced by unrecognized biases. For my students, there’s no better example than the choice of where they went to college.
Although the cost is enormous, the decision of where to go hinges on the smallest things. A teenager who says, “I want to be close to my boyfriend,” will zero in on a nearby college, even if her high school romance is fading. The opposite impulse—to go far away—led my brother from New Jersey to attend college in Los Angeles.
After my children toured colleges, we didn’t hear anything about the number of students who go on to get graduate degrees or the percentage of students who graduate in four years. Instead, we heard about the elegant ballet flats the tour guide had worn, or how cool it would be to attend a city school.
When faced with a difficult decision, people tend to ask themselves an easier question and answer that one instead. We usually don’t notice this substitution and later tell ourselves that we considered our options carefully.
Because America is full of great colleges, little harm is done by such decision-making shortcuts—until the bill comes due. Those who borrowed to attend their dream school can find themselves drowning in debt, unable to pay both their student loans and their rent.
When I enrolled at the University of Rochester in 1974, it cost $4,000 a year. Tuition, room and board now exceed $80,000. Wages have risen at a far slower pace than the 20-fold increase in college costs. Many students realize too late that the central question at the heart of their college decision is, “Can I afford this given the salary I’ll earn afterward?”
That’s a hard question to answer, especially for 18-year-olds. That’s why parents of college-bound seniors may want to consult The Wall Street Journal’s 2025 college rankings published this month. It gives extra weight to financial outcomes, particularly how much a school “boosts a student’s salary beyond what they would be expected to earn regardless of which college they attended.”
Viewed through this return-on-investment lens, some unfamiliar names rose to the top. Business- and technology-focused schools like Babson, Claremont McKenna, Georgia Institute of Technology and Davidson all broke into the top 10 colleges in the nation. Bentley University, Lehigh University, San Jose State and Virginia Tech landed in the top 20.
That’s quite different from the U.S. News & World Report rankings, issued this September for the 40th year. By now, many schools have gamed the U.S. News rating systems to raise their standing. No less of an authority than U.S. Education Secretary Miguel A. Cardona said, “It’s time to stop worshiping at the false altar of U.S. News & World Report. It’s time to focus on what truly matters: delivering value and upward mobility.”
The Journal seems to be trying to do that. Still, it’s wise to view any ranking system with skepticism. The Journal’s algorithm does produce some head-scratching results. The college where I taught, St. Joseph’s University in Philadelphia, is ranked No. 42 nationally, ahead of Duke (No. 45) and Dartmouth (No. 57). St. Joe’s may be benefitting from the extra credit given to schools that create upward social mobility, helping students to rise above where they started in life.
The Journal estimated that St. Joe’s added $51,405 per year to a typical graduate’s salary and cost $31,894 a year after scholarships and discounts. At this rate, St. Joe grads would need an average of just two years and five months to repay their student loans, according to the Journal, provided they used only the extra pay that their degree added to their wages.
Compare this to Savannah College of Art and Design, No. 431 in the Journal’s rankings. Savannah added $17,274 a year to the average graduate’s salary but cost $44,790 a year to attend. It would take Savannah grads 10 years and four months, on average, to pay off their student loans using only the extra pay conferred by their arts degree, according to the Journal’s calculation.
What should we make of the Journal’s ranking? Is St. Joe’s really a better school than Duke? Certainly not in basketball. The Journal’s system is still on its shakeout tour, I suspect. That said, a contrary view—even when flawed—can open the eyes of high school seniors to a wider array of colleges.
When making a difficult decision, behavioral economists advise us to place one hand on the data. Seeing how others have fared when making a similar choice can disrupt our tendency to make snap decisions.
Psychologist Daniel Kahneman said data can provide us with “the outside view.” In this case, the outside view might disrupt the tendency to fall in love with a college based only on the campus tour. Kahneman called that kind of decision-making “the inside view,” and wrote that it’s based on WYSIATI—what you see is all there is.
Greg Spears is HumbleDollar’s deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles.
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My kids went to women’s schools outside Philly and Boston. The reason: One daughter spent the weekend at the Philly school and remembered her days at Fort Convent, an all-girls she attended in Mumbai. My mother selected the Boston suburbs college for the second daughter after she saw a couple “misbehaving” at Georgetown. This is how momentous decisions are made!( Both girls did very well).
For those in the process or soon to be in the process of searching for the right college for a family member, The Washington Monthly has published an annual guide for a number of years. Here is how they approach it “We rank liberal arts colleges—four-year institutions that award almost exclusively bachelor’s degrees and that focus on arts and sciences rather than professional programs—based on their contribution to the public good in three broad categories: social mobility, research, and promoting public service.” Here is the link to the 2024 report https://washingtonmonthly.com/2024-college-guide/national/