Choosing a College: Evaluating the Relative Influence of Academic Fit versus Affordability on Financial Well-Being in Adulthood

Abstract:

Many college-bound students face a tradeoff between attending a more academically selective or affordable institution. We link the universe of SAT-takers with their college enrollment records and financial information thirteen years after high school to examine which of these two factors more strongly predicts early-career financial well-being. Increasing quality of academic fit is associated with stronger financial well-being in adulthood, while college affordability is negatively correlated with annual income and less positively correlated with other outcomes, even after controlling for academic fit and institutional selectivity. These findings suggest that academic fit warrants more consideration than affordability for students who attend college to improve their financial circumstances, and policies that emphasize affordability over academic fit may harm students financially in the long run.