The truth about college acceptance rates: Are selective schools really better?

We wanted to determine if schools with lower acceptance rates provide a better return on educational investment. To find out, we split colleges into 6 “tiers of selectivity” based on the percentage of applicants the schools accept:

• Extremely selective: fewer than 10% of applicants accepted
• Very selective: between 10% and <25% accepted
• Moderately selective: between 25% and <50% accepted
• Moderately inclusive: between 50% and <75% accepted
• Extremely inclusive: between 75% and 99% accepted
• Open admissions: everyone gets in

Then, we looked at several factors – like net cost, future earnings, and payback time – to assign each school an “economic score” that reflects how good a deal it is. We found that students who attend open admissions colleges are not getting good value for the money they spend on their degrees. Conversely, attending an extremely selective or very selective school leads to impressive economic outcomes.

But exclusive schools aren’t always an excellent deal. For the vast majority of colleges, there isn’t a strong correlation between acceptance rates and educational return on investment (ROI).

So don’t sweat your school’s acceptance rate too much – other factors should play a bigger role in your choice of college.

The most selective colleges provide an impressive return on investment

Extremely selective and very selective colleges – which together accept fewer than 25% of applicants – offer very good value for money compared to less competitive universities.

Although these colleges are expensive, graduates earn high average salaries. Students go on to earn 54% more than the average college grad 10 years after they start university. Elite colleges tend to be generous with financial aid, so they’re especially beneficial to low-income students. For the nation’s top schools, low acceptance rates do correlate with high earnings down the road.

What are the most selective colleges in the US?

The most selective colleges aren’t all Ivy Leagues. We’ve listed the hardest colleges to get into and their acceptance rates below:

• California Institute of Technology: 3.9%
• Stanford University: 4.0%
• Harvard University: 4.0%
• Massachusetts Institute of Technology: 4.1%
• Columbia University in the City of New York: 4.1%
• Princeton University: 4.4%
• Yale University: 5.3%
• Brown University: 5.5%
• University of Pennsylvania: 5.9%
• Duke University: 5.9%

Inclusive colleges are still a great deal

If you’re considering a moderately selective or inclusive college, its acceptance rate is not a good indicator of value. In fact, colleges that accept between 25% and 75% of applicants offer remarkably similar value for money. We found that moderately selective colleges are serving students just as well as inclusive colleges in terms of return on investment. Graduates of both categories go on to earn similar salaries 10 years after beginning university.

Many top public universities, which tend to have good educational ROI, fall into this range.

Even colleges with very high acceptance rates perform comparably to other tiers in terms of economic outcomes. When we look at extremely inclusive colleges – which accept more than 75% of applicants – we find that there isn’t a huge drop in educational ROI.

This indicates that there are many colleges with high economic value across the selectivity spectrum. Even if you don’t have the perfect grades needed to enter an elite university, there are plenty of colleges out there that can set you on a path to financial security.

So what are the takeaways if you’re a high school senior trying to decide where to go to college? If, like most students, your target schools admit more than 25% of their applicants, you shouldn’t be basing your college decision merely on a school’s selectivity.

For example, if you’ve been accepted to a college with a 30% acceptance rate and another one with 60%, the more “exclusive” school isn’t necessarily the better fit for you.

Instead, consider individual schools’ economic score, as well as the quality of their programs and the financial aid package you are offered.

If you can, avoid open admissions colleges

Selectivity does seem to matter in one other case: open admissions colleges provide a poor return on investment. Open admissions colleges are schools that accept anyone – you may not even need to throw together an application. Although they tend to be cheaper than other degree-granting institutions, graduates go on to earn salaries that are 26% lower than the average for all college grads. This may be because this category has a particularly high number of for-profit colleges, which underperform in terms of educational ROI.

Despite their relatively poor economic value, open admissions colleges do have specific advantages, like their flexibility and simplified application procedure. These make them especially suitable for non-traditional students. If you graduated high school decades ago and don’t want to bother digging up your high school transcript or asking for recommendations, open admissions colleges may be a good option for you.

So how much does school selectivity affect economic outcomes?

The most selective schools often attract the most motivated and privileged students: these individuals have already proven in high school that they have the drive and resources needed to succeed after graduation.

In other words, colleges are only doing part of the work to prepare grads for financial stability; a lot depends on the students themselves: their preparation pre-college, their personal motivations, and their family circumstances.

Socioeconomic factors also play an undeniable role: the more selective the school, the lower the proportion of low-income students. Only 16% of students at extremely selective schools are from low-income families that qualify for Pell grants, compared to 48% at open admissions colleges. This underscores the fact that students at the most competitive colleges already have economic advantages at the outset that will continue to benefit them as they build a career.

Selective schools have better graduation rates.

There is a strong correlation between selectivity and college graduation rates: the more selective a school is, the more likely its students are to graduate. Students at extremely and very selective schools have a grad rate of 95% and 89%, respectively. This figure drops to 69% for moderately selective colleges and 60% for inclusive universities. Students who attend universities with open admissions policies only have a 43% grad rate.

Final thoughts

While highly selective colleges often pave the way to high-paying careers, you shouldn’t pick a college just based on its acceptance rate. Remember that exclusive doesn’t always mean better. Instead, consider factors like educational ROI (as captured by our economic score), financial aid, location, and the degree programs offered. Check out our rankings of the universities that provide the best value for money to help you make your decision. College is a big investment, but a university education pays off – even if you don’t get into a super-competitive school.