I'm sure you've seen them. They meander through campus clutching folders with a sense of bewilderment, trailed by sets of parents snapping photos. They wear sweatshirts from the bookstore so new that they still have the tags. Their moms stop you in front of CoMo to ask how to find South Dining Hall.
They're the accepted students of the Class of 2016, and they have fewer than two weeks to decide where to attend. It's time for them to weigh their options.
In finance, an option is a contract between a buyer and a seller that includes the "option" of a future transaction. There are two basic types of options: calls and puts. The buyer of a call option has the right to buy an asset at a specified price from the seller if he chooses to exercise his option. The buyer of a put option has the right to sell the asset if he chooses to exercise.
In both cases, the seller of the option is obligated to take the other side of the trade if the buyer chooses to exercise. But, if the buyer chooses not to exercise, the contract is void. To compensate the seller for the risk of not knowing whether the buyer will exercise, the buyer pays the seller at the outset to purchase the option.
The bright-eyed accepted students probably don't realize they hold a call option with Notre Dame. They paid for the option via their application fees, and, after being accepted, they have the right, but not the obligation, to enroll next fall.
They probably hold options with other schools as well, all expiring May 1, but, unlike financial options, they can only exercise one.
How should they choose? From an economic perspective, it's simple: Of the options they hold, which will give them the highest payoff?
When they exercise the option, they'll be purchasing an asset, specifically a Notre Dame degree. Yes, they still have to put in the time and hard work, but if they pay the tuition and take the classes, they'll put themselves on the track to graduation. The payoff is the value of the degree minus the cost of tuition.
But how should they measure the value of a diploma from Notre Dame? Should they look at rankings, curriculums or class sizes? How about job placement or alumni networks?
These metrics are certainly useful in valuing a college degree. They're rational, quantitative and easy to organize into pro and con lists that get spread out over the kitchen table. With something as important as a college choice, it's comforting to know the numbers support your decision.
But if I still think numbers are everything, I've failed to learn Notre Dame's greatest lesson. It might be possible to assign a value to a Notre Dame degree, but, in the end, that value isn't the payoff of the option. During four years here, while you're busily sitting in a lecture, logging late nights at the library or dashing to another group project meeting, what you're really getting is not just a Notre Dame degree, it's a Notre Dame education.
There's a difference between a degree and an education. The degree is made up of credit hours, papers, and exams. It's necessary because it gets us a job or entrance to graduate school, but it doesn't shape us as young adults. That's where the education comes in.
The education is made up of the kinds of discoveries that will stick with us throughout the rest of our lives. Discoveries like the fact that sometimes it's important to study and sometimes it's important to play pickup basketball, that getting coffee with your professor might help you find your passions and that the best way to make friends is spontaneous late-night puddle jumping.
The education makes the option payoff much harder to assess. It doesn't lend itself to quantitative values. In the end though, it's all that really matters. It's the true payoff of the option. That's why I'm thankful I chose Notre Dame.
Grace Concelman is a senior majoring in finance and philosophy. She can be reached at gconcelm@nd.edu
The views expressed in this column are those of the author and not necessarily those of The Observer.
