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Published Study: Higher SAT Scores Lowers Student Debt

June 23, 2017, 03:30 PM

A new study published by Nitro, an online college and financial aid counseling service, reveals that students with higher SAT scores graduate with less student debt, while students with lower SAT scores take on more loans to pay for college. While everyone knows SAT scores are an important factor in college admissions, few studies have proven the long- term financial pay off of higher SAT scores.

Which Schools Have the Lowest Student Loan Debt

Well, not surprisingly Harvard was at the top of list, as well as Duke and Princeton, with median student loan debt at graduation around $8000 (that’s amazing for four years!) At Harvard, the average SAT scores ranged from 1450-1500 (on the New SAT).

Which Schools Had the Highest Post-Graduation Earnings

If you guessed Harvard, you are….incorrect! That’s right. Harvard was actually tied for #4 on the list. Other Ivies and pseudo-Ivies, like Duke and Stanford, ranked even lower. How is that possible? The top three colleges with the highest ten-year post-graduation earnings (from  $113-$119,000/year) were all undergraduate pharmacy schools.

Remember that these colleges were exceptions to the rule. As a whole, colleges with an emphasis on science, medicine and engineering had the highest post-graduation earnings, but you need to do the research.

As a general rule, schools with higher SAT scores occupy the section of the graph with higher earnings and lower student debt. Schools with lower SAT scores occupy the section of the graph with lower earnings and higher student debt. But there is lots of variation, so we recommend playing around the interactive graph above. Just hover over the plot points to compare SAT scores, student debt and post-graduate earnings for different colleges.

What This Study Teaches Us

  1. Studying for the SAT generates huge financial rewards. We are not talking about savings of hundreds of dollars but thousands, maybe even hundreds of thousands of dollars over a lifetime. Just increasing SAT scores 100-150 points could increase post-graduation earnings by $10,000+/year and reduce student debt by half. That is a super good deal.
  1. Public Universities Offer the Best Value. For students and parents looking for the best bang for the buck, public schools tend to graduate students with less student debt. The best public schools have high SAT score averages, so you still need to prioritize your SAT prep. Avoid colleges with high student loan debt and low earnings, especially for-profit colleges, which tend to fall into this category.
  1. Be Smart About Student Debt. A good rule of thumb is to limit the amount of debt you will have at graduation to 50% of estimated salary post-graduation and avoid colleges (and potentially certain majors) with high average student loan debt and weak earnings. Check out Nitro’s online calculator which gives the you the percentage of post-graduation income that will go to student loan repayment depending on college and major. You might be surprised by the results!

The Bottom Line

When we speak with students and parents hesitant to invest in SAT prep, we always remind them of these hidden financial advantages of prepping for the SAT. So what are you waiting for? 

Get 30% off Kranse Institute's digital PSAT/SAT with code COACH30 when enrolling online at www.Kranse.com.

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