The Best Colleges for Making Money

* ALSO SEE SLIDESHOW: Colleges That Pay Off

Is an Ivy League education worth the money?

The debate over the long-term value of a pricey private-school education is heating up, especially in this tough economy. Sure, everyone knows that by sticker price alone, public schools are a sweet deal, with out-of-state tuition and fees that run about 30 percent less than most of their private rivals—and in-state fees running up to three-quarters less.

Indeed, the math is pretty jarring; the difference, on average, ranges between $7,700 and $18,600 a year, obviously no small matter with stock market woes depleting so many people's savings. But in the back of everybody's mind, there's that nagging question: Is the extra money worth it?

To their credit, elite private schools do boast lower student-to-faculty ratios, fat endowments and name-brand cachet that, along with their active alumni networks, have long provided entrée into the upper echelons of the working world.

But if long-term career and salary are what matters—and what else should, especially in today's economy?—then a growing chorus of private-school critics point out that the public-school scenario may actually deliver a far better bang for your buck.

In a new twist on traditional college rankings, SmartMoney took a crack at quantifying the long-term value of a college education. Our goal was to spotlight the relationship between tuition costs and graduates' earning power. Working with consultant PayScale.com, which recently published a groundbreaking survey on alumni salaries, we first looked at what graduates from 50 of the most expensive four-year colleges earn in their early and midcareers. Then we factored in their up-front tuition and fees. The result? A unique "payback" ratio for each school.

In the end, our scorecard may be music to the ears of many state-school admissions deans—not to mention a lot of struggling parents. After all, who would've guessed that Texas A & M, No. 1 in our survey, would deliver a payback more than two and a half times that of Harvard? Or that the state universities of Delaware and Rhode Island would beat out every Ivy in the ranking?

Indeed, those unheralded public universities turn out to be a far better deal than virtually all the privates we surveyed. The Ivies in general? They deliver nowhere near the payback on tuition that most parents staring at a six-figure bill over four years might expect.

Ultimately, we weren't trying to measure the quality of education or colleges' selectivity. Other rankings take ample care of that, and dedicated students will thrive at any of these fine schools. But with boutique private colleges coming under heavy criticism for spiraling costs, our payback numbers certainly raise questions about the actual "return" on an educational investment. For parents fretting about sending their kid to the University of Washington versus, say, Columbia or Brown, they can rest easier knowing that Husky alums recoup their tuition costs, on average, twice as fast as grads from those two Ivies.

Of course, rating colleges is not an exact science, and our methods did get their share of criticism from the private-school sector. At Carleton College, a small liberal arts school in Minnesota that normally ranks very high in college surveys—but only 39th in ours—Dean of Admissions Paul Thiboutot says we underestimated their alums' average salaries by including only those who stopped at a bachelor's degree. "The real earning power is what they end up doing in professional and graduate school," he says.

Other private schools, including the Ivies, say that many of their students pay less than the full sticker price we used for tuition, because of grants and scholarships. (True, but public schools also discount their tuition, especially for in-state students.)

Then there are the schools that argue that payback surveys miss the whole point, since you should enter their hallowed halls to enrich your mind, expand your cultural IQ and improve your critical thinking. (Why else would anyone suffer through Descartes, Dostoyevsky and differential equations?) Caesar Storlazzi, Yale's director of student financial services, for one, points to his school's world-class faculty, libraries and art collections. "Put this all together and the experience is without compare," he says.

Still, critics of the elite-school path have a quick retort to all this: Show me the money. In a recent survey by the Higher Education Research Institute at the University of California, Los Angeles, 70 percent of college students said making more money after graduation was a major reason for going to school.

And it's no wonder. Along with that diploma comes an average debt of $22,000 (more than double that of 10 years ago), a financial parasite that eats away at starter paychecks, making it harder for grads to upgrade from their beater cars and ramen-noodle dinners. And in this economy, more families are hard-pressed to help support low-earning kids who've boomeranged back home—making financial independence a more compelling goal than ever.

So who gets there faster? It's probably no surprise that when it comes to paycheck size, private-school alums still outearn their public rivals. Using PayScale.com data, we found that three years out, Ivy and liberal-arts grads pull in an average of $51,500, compared with $48,500 for their state-school counterparts. And looking 15 years out, the public-private gap widens more.

But once you factor in the tuition investment, the picture changes dramatically. In our ranking, no private school even makes the top 18. Dartmouth grads, for example, report the highest average midcareer salary, but their payback ranking falls to 21st on our list after you factor in historical degree costs. (Georgia Tech's payback, by contrast, is twice as high.) Got No. 40 Swarthmore on your wish list? While its grads pull in the same early-career salary as alums from Texas A&M, the Aggies' long-term payback is three times better. University of Georgia President Michael Adams, for one, is not surprised at his school's high ranking. "We are such a bargain," he says.

Of course, public schools reminded us that it's not just lower degree costs that explain their ranking; they're also attracting brighter students than before. Experts say that with the number of high school grads soaring (last year marked an all-time peak), state schools have been fielding more applications—and becoming increasingly selective. Many public schools we spoke with report a steady rise in their incoming students' SAT scores, GPAs and class rankings. "The competition to get into top schools has trickled down," says Alexandra Robbins, author of The Overachievers: The Secret Lives of Driven Kids. "There's no such thing as a 'safety' school anymore."

And roping in more-promising freshmen is only a start. For most students, it's the course of study they choose that determines how fat their future paychecks can be. Considering a fine arts, religion or drama major? Such liberal arts degrees are "bottom of the list, earning-wise," says Al Lee, director of quantitative analysis at PayScale. According to its research, the best dough comes in fields like engineering and business—strong programs in many of our survey's top-ranked public schools.

That's a fact that doesn't go unnoticed in corporate America, where recruiting pros say the bias toward brand-name schools is on the wane. "Often, there's a waiting list of companies trying to meet our students because they know we're a rich ground for recruitment," says Fred Wood, a vice chancellor at University of California, Davis. Indeed, according to a study published in the Harvard Business Review, nearly half the top executives at Fortune 100 companies now hail from public schools.

Whether or not they agree with our payback rankings, few private schools deny that their price tags can be daunting, especially in an era when family savings have been so hard-hit. Their financial-aid officers stay busy looking for new ways to help worthy students. In a well-publicized move, many Ivies have started rolling back costs, with Harvard, for one, offering tuition breaks for families earning under $180,000 a year.

But many public schools are staying ahead of the game—by focusing on keeping costs down instead. Elsa Murano, president of No. 1–ranked Texas A&M, bragged to us about how stringently it economizes on administrative costs. In fact, she says, it recently bucked the education-inflation trend by limiting this year's tuition hike to its lowest percentage in 10 years.

It's the kind of thinking that's getting into the heads of more parents, like Kelley Atkinson. Her son, Doug, is still in the 11th grade, but the Eldersburg, Md., mom says they've already decided to up the number of public schools he'll apply to. "There's no way of telling how much money we'll have a year or 18 months from now," she says.

Additional reporting by Jason Kephart and Laurence Witherington

UPDATE (December 23, 2008): After SmartMoney received an inquiry from another school, No. 1-ranked University of Georgia said it inadvertently provided some incorrect information about its tuition. As a result, No. 2-ranked Texas A&M moves up to the top spot, followed by the University of Texas (Austin) and Georgia Tech. University of Georgia falls to No. 4. None of the other rankings were affected. "We regret the error and apologize to SmartMoney and to the other institutions in the ranking," said Vice President for Public Affairs Tom Jackson. (More details here. This story and its companion slideshow, “Colleges That Pay Off,” have been updated to reflect the changes.