Your family is too proud for the business to declare bankruptcy and go through Chapter 11 debt restructuring? When you're looking to pay tens of thousands in tuition, it helps to have a smart accountant, and plan a few years ahead. Is it a little unfair that people enter adulthood without a spec of financial literacy, and are immediately taken advantage of? Yes, but if a fool and his money are easily parted, the only…
Wow, fantastic advice -- if only we weren't so financially illiterate, proud, and foolish to boot!
Why's your father's business not bankrupt then, and why are you pissing away a fortune and going into debt when you shouldn't? Add denial to the lot.
Would like to offer an argument that the Ivy League schools that hire hedge funds also are very good at subsidizing tuition. When I went to Princeton, only 40% of students paid the full "45k" tuition, and those were families that were so well off that they don't mind the 45k at all. I would say the average tuition paid at Princeton is closer to 20k. So there does seem to be such a correlation: rich schools -> using HFs -> make a bunch of money -> fund students from poorer backgrounds to attend the school.
Most active investment strategies are not scalable - true. But the real issue is that there is no convincing proof that active managers can reliably out-perform passive investment strategies over long term.
They don't outperform them in terms of returns, but when it comes to risk-adjusted performance they do much better than index funds.
Could you point to the literature you have in mind that substantiates this?
We have a limited amount of subsidy to allocate where it will do the most good. Most of the time the children of rich parents - even those who had little interest in college - have more advantages overall than even a fully subsidized poor student would have. So it makes sense to focus our subsidy on those poor students.
Rich parents? Hilarious. You way overestimate where the line is drawn. When I went to UCD, my parents' income was ~$70k (in California) and I got some subsidized loans , then mostly unsubsidized loans, then they made my parents take out PLUS loans in their own names (more accurately, they capped the amount of loans I could take personally and the only way to make up the delta is either family cash contribution, or pa…
Yeah, 70k is well into rich territory. What's the median income again?
It's strange to me that you're a professor but the things you're saying aren't true. The 2/3 grant money thing I think you are talking about indirect costs? That's not money off the top of received grants, it's computed like a tip, where when you receive $1 of grant funding, the university receives $0.66. And only on non-equipment, non-tuition (for funding students) items. So it usually works out to being about 35%.…
Let's make sure to compare apples to apples, even when discounting the 9-month salary (no CS professor truly gets the summer off, that isn't how the academy functions): * Entry-level software engineers have 0 months experience. * Full professors in CS have 5 yrs of a Ph.D., and perhaps 2-4 years of postdoctoral experience, and 5-7 years of professorial work.
Totally agree the comparison isn't equal. But what I'm saying is that the 9-month salary is already way higher than an industry salary. If they worked the 3 summer months funded by a grant, it's like getting a 33% bonus on top of their 9-month salary.
It's strange to me that you're a professor but the things you're saying aren't true. The 2/3 grant money thing I think you are talking about indirect costs? That's not money off the top of received grants, it's computed like a tip, where when you receive $1 of grant funding, the university receives $0.66. And only on non-equipment, non-tuition (for funding students) items. So it usually works out to being about 35%.…
Yes. Cmon man. You're being overly literal. I'm just starting as a professor in biomedical sciences, where you probably know the terribleness reaches its peak. I'm also nearing 40 so the duration of "training" required is also a total bullahit factor especially in my area. The general point is true: the financial incentives in academia are blatantly terrible. The quality of what's produced isn't much better. So this…
Okay, fair enough. Sorry for being a bit antagonistic. I guess I'm just a lot less pessimistic about academia, having worked in industry before as well. The financial part isn't as good as it could be for what we think we do, but I feel that it's a nice institution in many ways. A lot of lifetime academics don't appreciate the flexibility they get in terms of what they spend their time on, how they do their work, who they work with, etc.
Just to clarify so that people won't plan their retirement wrong, the 4% safe withdrawal rate from the Trinity study is for having at least $0 of a fund at the end of 30 years. The withdrawal rate for an indefinite fund like Yale's is much lower.
You say that, but Wikipedia states that 4-6 percent are spent annually on operations and capital. It offers no citations, but I can produce some: Princeton ( https://finance.princeton.edu/policy-library/endowment/endow... ): > The Trustees have endorsed a spending rate range of 4%-5.75% to achieve this balance. In order to enhance predictability and stability in endowment payout, the Trustees have established a stand…
I was specifically clarifying the 4% safe withdrawal rate, which is often used in the context of retirement and is often misunderstood as safe to withdraw for perpetuity. For perpetuity, a lower withdrawal rate is required. As for Yale's and Princeton's higher withdraw rate, they probably count on additional incoming endowment going forward.
Back then money was based on precious metals, not monopoly money. Although Early America did have problems with hyperinflation from war debts. Anyway the point is the money is invested, so it's not literally just cash sitting in a vault, but is earning itself interest.
The point is that interest does not always cover inflation. The fact that money was gold or paper back then makes no difference. Invested money can be lost.
With a currency backed on gold there is no such thing as inflation. And in fact money tends to increase value over time, as the economy grows.
Of course invested money can be lost, but on average it grows. The expected value of investing is almost always positive.
The trouble is, not many families with HHI below $65k know that Harvard, Yale, etc are free for them. Instead they see the enormous sticker price and they hear on the news constantly that college is expensive. The guidance counselors who know enough to tell them are mostly at richer schools. If a news story went out tomorrow saying "Harvard is free," Harvard would get a lot more applicants from the <65k bracket. I ag…
That's what High School counselors are for?
I don't think a ton of high school counselors push their poorer students to apply to highly selective schools. I think the kids with wealthier parents usually end up better supported.