In early 1998, Princeton University boosted its financial aid rates, triggering a rash of aid increases among top colleges. It also made people across academia wonder: is an Ivy education worth the price tag?

Kahn Associate Professor of Economics Caroline M. Hoxby '88 had done previous research on the topic, and in a week she pulled together a study. Her answer, reassuring to check-signing parents, is that at high-dollar colleges you get what you pay for.

Hoxby's study, "The Return to Attending a More Selective College: 1960 to the Present," analyzed survey data showing how quickly students who went to top colleges got their money back in the form of higher wages.

Using data from the 1960s through the 1980s, she found that choosing a college two "tiers" above another, the cheaper school in an eight-tiered national rankings system usually paid back the extra tuition money within a few years, and students always broke even within a decade.

And so Hoxby recommends that students with a chance to study at an expensive, top-tier school like Harvard or Princeton should take that chance--even in the face of a full scholarship offer from a state school or even a well-established public university--because it is the most lucrative in the long run.

Plain and simple

Princeton's financial aid increases triggered other increases at Stanford, Yale, MIT and eventually Harvard, which last fall initiated a massive financial aid increase designed to give back $2,000 in loan or work-study debt in exchange for grants.

As Harvard hesitated over whether to increase its aid, many said this decision didn't make sense economically--Harvard's high yield in the admissions process despite its lack of an aid increase seemed to demonstrate that students would bear any burden to get into the University.

Hoxby's study, 18 pages of writing and 37 pages including tables and appendices, deals mainly with broad answers to questions raised during these debates over aid.

Her research seemed to affirm the conclusions of many at the time--Harvard would be forced to change only so as not to seem stingy, not to stave off any real loss of students.

Hoxby had long researched income and wage inequalities among recent college graduates, and this study sums up that work in laymen's terms. Its method is simple, comparing the amount of money paid for college and the amount received in wages.

"I am little bit floored about how many people are interested in this story," Hoxby says. "I have written on related topics. People could have done this before me."

Hoxby had originally planned not to publish the study, but the increased attention coaxed her to pursue the publishing process.

For Hoxby, Dean of the Faculty Jeremy R. Knowles was one of the many people who asked her if it was possible to put some of her previous research into more accessible, non-jargon-filled language.

However, the study still remains very numbers-based--a feature which Knowles praises for strengthening the argument that a large investment now will pay dividends later.

"She makes a very strong case that education at a more selective