What makes a “great university?”

When our daughter was applying to colleges, she visited a bunch of college campuses but ended up applying to only two. One was Washington University in St. Louis, which was only a few blocks from where she grew up. The other was Colorado State University in Ft Collins, which she saw on her big college campus tour.

Since my wife worked at Washington U, our daughter could have attended WU tuition-free. And Wash U’s tuition benefit extended to any college or university at half of the Wash U tuition, which was equal to or exceeded the tuition at any state university. 

Friends of ours at the time said that surely, we would make her go to Wash U. When I asked why, they told me: “because Wash U is a great university.”

Here’s the deal. When people talk about a “great university,” they’re usually referring to the research reputation of the university. And the top universities are research universities. Since research is always and everywhere a cost center, universities have to subsidize research. Why do they do it? Because of the positive externalities. Tuition and philanthropy are two of the major ways research universities subsidize research. A strong research reputation is a magnet for philanthropy. And parents want their kids to go to a prestigious university, even though (a) most undergrads never do research and (b) top research faculty don’t teach undergrads.

This is what I told my friends. In the event, our daughter graduated with honors from CO State. Wash U paid all her tuition. She then matriculated at Wash U School of Law with a full-tuition merit scholarship.

Does it repay the effort and expense to attend an elite research university? That’s up to the trainee. I’ve known plenty of people who trained at elite research universities and who ended up in careers they could have found out of a state university. There’s certainly nothing wrong with attending an elite university. But it’s not clear to me that the premium will be repaid.