Choosing The Best School is a Cost Benefit Decision

I have three family members who are of the age, where making a college choice is a stressful experience.  As I have witnessed each child’s experience, I remember my experiences choosing a college.  As life has played out, I have had this experience twice—once for undergraduate studies and another for graduate studies.  I have conveyed to them my thoughts and experiences but when I was sent an article debating historically black colleges (HBCUs) and ivy league institutions, I felt compelled to put my thoughts down in a more permanent setting.  Hence, this blog entry.

In considering an HBCU versus an ivy league school, the student faces one core choice, which school is best for them.  I have found that the best way to make a school choice is to use a cost benefit framework.   Selecting any school comes with some level of benefits, and importantly some level of costs.  Properly assessing both the cost and the benefits is crucial to making the best choice.  What follows is my outline of the process for making cost benefit decisions.  To keep the length reasonable, I don’t discuss how to convert the many forms of information and measures described below into a common comparable scale—Very easily achieved, a bit technical, but not the subject of this post.

Decision Criteria

One of the first decisions to gain comfort with is the applicable decision rule.  Rationally there are four decision rules possible.  The student can select the university with:

  1. the highest benefit within the feasible choices
  2. the lowest cost within the feasible choices
  3. the highest benefit to cost ratio
  4. a positive marginal benefit to cost ratio on all lower cost choices

For many families the university choice discussion pretends as if costs are irrelevant, thus people behave as if the highest benefit choice is the applicable rule.  However, cost constraints exist and are important in differentiating school choices.  In my experience, the fourth rule–seek the positive marginal benefit—is the best choice.

Some people argue that the decision criteria selection can wait until the end of data gathering.  But considering how you would make the final choice before examining the individual institutions, helps focus the mind.  I believe the additional focus brings some level of realism to the consideration of the benefit and cost attributes for each school.


Measuring a university’s benefits involves three core steps; 1) determining what matters; 2) finding a way to measure each what matters attribute; and 3) determining preferences for each attribute.  In determining what matters, two perspectives are particularly important for school selection.  Each is discussed below.

What does the Student Need from the School

The student needs four things from a school.  Each will be measured differently depending upon the student.  For example, student-athletes and non athletic scholarship students will have very different attributes attached to these factors.  The four factors:

  1. Knowledge in the selected major / Skill development in the selected sport
  2. Graduate network
  3. Environment conducive to learning
  4. Peers in school

The school’s ability to deliver on its implicit promise to enhance the student’s skill set is very important for most students.  The graduate network refers to two distinct activities.  One, is the existence of the network and the second is the school’s commitment to make the network function.  This measure is often difficult for students to appreciate, nonetheless, it is a critical attribute in selecting a school.

An environment conducive to learning contains many submeasures important to most students.  I often include in this measure attributes like class size ratios, weather & scenery, access to faculty and other resources that support knowledge transfer, and the fit of the student into the environment.  This last attribute is important, because it is inevitable that the student will struggle in some aspect of the transition from one high school to college.  Thus, the support systems available for the student is important to assess.

And lastly the peers in school is an important concept.  Obviously peers in school make-up the graduate network, but the interaction with peers while in school is quite different from graduates after school.  The assessment of peers comes down to two factors, which have proven true for most students that attend college.  Are the peers a likely source to find a spouse or best friends?  Peers are a crucial assessment.

What does the School offer the student

The school offers four things to all students.  The match of these four are crucial to the student’s long-term happiness.  The four criteria are a) status of the university on the national or local level, b) the support for putting students into the job market or graduate programs, and c) the school’s ability to expose the student to the latest thinking in their field.  The later measure differs from the knowledge in the major by the distinction of “latest thinking.”  Many academic fields are well understood, which enables many schools to deliver a core competence—measure in the first section—without exposing the student to the latest thinking.—measured here.


The costs for going to school are often considered in monetary terms alone.  And no doubt money is a significant attribute, but, there are at least two other important cost aspects.  One form of costs is the distance from home.  Depending upon the family situation and the student’s personality the preference can be for staying close to home or going far away, either is acceptable.

Additionally, students should consider their fit into the culture of the school as a cost of attending.   The difficulties of “fitting in” with any environment are well documented in other literature.  The point I’m raising here is to consider the level and type of challenge the student is willing to undertake and how much similarity they desire.   The many dimensions of diversity arise in this attribute: race, sexual orientation, religion, region of the country, political values, and more are worth careful consideration in the choice of school.


These measures and attributes, if fully considered, often lead a student to a very narrow set of choices–The goal of the process.  As a parent when listening to a child explain their choice, listen to what they are not considering, from the list above—The follow-up questions will help reach a better decision.

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