FIRE versus private school

By Slow Dad - November 24, 2016

University degree choice has a material impact on average long term earnings. How can you maximise your child's prospects and still achieve FIRE?

Anything is possible, but there is an easy way and a hard way

I believe that if an individual has the ability to achieve something, and the drive to make it happen, then they will make it so. I also recognise that there are easy ways and hard ways to do things, so I recommend following the path of least resistance towards achieving those goals.

If life had a stereotypical recipe for success it would read something like “stay in school, study hard, attend a good university, get a well paying job, and work hard”.

Myth busters?

While that cliché is widely repeated, I suspect few have attempted to quantify its validity.

Eye-wateringly high tuition fees
Eye-wateringly high tuition fees
Recently Jack Britton, Lorraine Dearden, Neil Shephard and Anna Vignoles set out to do just that. They tracked what had happened to around 260,000 British university students 10 years after graduation.

Their paper made for fascinating reading. I was a little disappointed it was unable to call “bullshit” on some of those old wives’ tales society mindlessly repeats. Instead it found evidence to actually support many of them, including:
  • University graduates generally earn more than those who aren’t.
  • Boys earn more than girls.
  • The better the university, the higher the average income of its graduates.
  • Graduates of Medicine, Law, Economics, Management, or Science / Technology / Engineering / Mathematics will earn more than graduates studying other courses.
  • Creative arts graduates from good universities make a good living as management consultants.
  • Money makes money, students from higher socio-economic backgrounds earn more themselves.
University graduate average earnings by field of study.
University graduate average earnings by field of study. Blob size represents number of students.

Graduate average earnings by tertiary institution.
Graduate average earnings by tertiary institution.

University graduate average earnings by field of study. Box plot displays high/low/median of medians cross all universities. Blob size represents number of students.
University graduate average earnings by field of study, box represents high/median/low of all university medians. Blob size represents number of students.

What does that tell us?

It means that a student’s choice of tertiary institution and field of study undertaken have a material and lasting impact their average earnings.

We all would like our children to be happy, and want the best for them.

Therefore it is important that we ensure they understand the potential long term implications of their further education choices upon their earning potential.

This may involve guiding their decisions, potentially in directions that are at odds with our own early retirement goals.

The university close to home may be a cheaper option for the few years your child studies there. However if that choice of institution adversely impacts your child’s long term earnings potential as a result, then pursuing those savings would appear to be selfish or short sighted.

Does this mean my child should attend private school?

Not necessarily. But it helps.

57% of Oxford and 63% of Cambridge students were admitted from state schools. This proportion is inversely related to the student demand of the institution, with virtually all students attending the Ulster and Bolton universities coming from state schools.

The remaining 43% and 37% of students admitted to Oxford and Cambridge respectively were drawn from those 14% of the overall student population who attend independent schools.

Therefore the odds of your child gaining admission to a good university via a private school are significantly higher.

Half of that 14% populate transfer into fee paying educational institutions to complete sixth form only, maximise their good tertiary institution admission prospects while minimising the tuition cost incurred by their parents.

So what?

Given the average independent schools around where I live charge an average annual basic tuition of an eye-wateringly high £21,500 this would appear to be the most FIRE friendly compromise between helping our children maximise their earnings potential while minimising the financial impact to our own early retirement plans.

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  1. I wouldn't make too many assumptions about private schools increasing the likelihood of an individual student to gain admission to Cambridge and Oxford. Yes, a higher percentage come from private schools, but much of that advantage may have to do with socioeconomic status of those families, and the priority of education within them.

    Private schools can be so costly. We consider ourselves fortunate to have excellent public schools where we live.


  2. You make a very valid point PoF.

    If a family can afford the fees at a private school, the chances are pretty good that they can also afford to buy in any additional help that may be required to help their children excel... including the tutoring and coaching required to pass the entrance exams!

    Kids who attend state schools need to figure a lot of this out on their own, and need to want it more.

    Money isn't everything, but it certainly helps!