On the heels of my post yesterday about a study that showed that high achieving students end up with similar test scores whether they get into the most competitive high schools or not, a study this year by researchers at Princeton University discovered a similar phenomenon in regards to the most exclusive universities. In this 2011 study, they found that most high achieving high school students who applied to the most elite colleges, but ended up going to a less competitive school (whether because they weren't accepted or chose a different school), earned the same average salaries as their peers that graduated from the exclusive colleges (Ivy League-level schools).
This study is particularly interesting because it was a repeat of a study that the same economists published about 10 years ago. That study revealed the same thing--applicants to top tier universities who attended less elite colleges generally obtained comparable salaries to the graduates of the most exclusive schools. In the first study, however, the salaries were self-reported, which left room for some, padding, shall we say. But in this follow-up research, not only were many more people included, with the time span now reaching to careers of people in their 40s and 50s, but the data on salaries was taken from more objective sources, such as Social Security information. Still, the results were the same; there was no boost in income for graduates of top colleges compared to other students with comparable test scores and such who didn't attend those types of schools.
So, the bottom line is: Big name colleges are not required to earn the big bucks. If you have the grades and test scores, along with personal qualities like self-confidence and persistence that are related to applying to these types of schools, of a viable candidate for admission, ON THE AVERAGE, you will earn as much even if you attend a less prestigious college. Depending on how much you have to pay for the big name schools, in fact, you may be better off turning them down (if accepted) and pursuing an education at a less costly alternative.
There are some BIG caveats to this conclusion, however. Graduating from a highly competitive/Ivy League type university DID significantly increase the incomes of minority students (black and Latino), students from low income families, and those whose parents did not attend college. It appears that the elite colleges do provide those types of students with skills, habits, or networks that do advance their professional chances at gaining a larger salary.
But for white middle or upper income students, the debt they might occur to attend the most exclusive schools is not likely to translate to significantly higher salaries.
Of course, we hope that earning a lot of money is not the sole criteria by which we judge our universities. Income upon graduation is an even worse stand-in for educational quality than standardized tests are. However, there can be questions about the educational value of the highly elite schools. In many of them, the focus is really on graduate education, so that a majority of undergraduate classes are taught by graduate students, who may have only a shallow command of either teaching techniques or the subject area (and sometimes, even of the English language itself!).
This is all to say that students don't need to feel that their lives will be ruined if they don't get into their desired Ivy League schools. There are a lot more factors involved in finding the right school than simply the prestige of its name.