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On average, skipping college and investing tuition costs nets a higher return

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Re: On average, skipping college and investing tuition costs nets a higher return

#201

Post by cmurf »

imesh wrote: post #54
staticelf wrote: post #47

Earlier quoted context omitted.

What about... offering college for free like the rest of the modern world? Then you would only have to worry about living costs and those loans are pretty small. I could pay off mine in like 4-5 years if I really wanted to. Plus, then people still could get an education even if their parents didn't save up for you. What about as a society/culture you start telling people that the country should offer education for fr…

Education in America is cheap, the problem is people don't go to their local school, they see college as an experience where they travel halfway across the country and stay in student housing.

That's not true, it's highly variable. Community colleges are much less expensive, that is true. But depending on the chosen career, a diploma from a community college means lower starting pay than a state university or a private college. Just the way it is.

There are some worthwhile tricks, where you do 2 years at a community college, transfer credits to the state university, and finish a degree there and you get a diploma from the state university.

Re: On average, skipping college and investing tuition costs nets a higher return

#202

Post by conanbatt »

Cyph0n wrote: post #151
ooqr wrote: post #121

Earlier quoted context omitted.

That's still time opportunity cost for the student and merely shifts the financial burden. I'm not against a liberal education for the betterment of the person, but it's not a sound investment. We should not aim to make college free by means of government sponsorship, but rather education free or inexpensive by means of lowering the actual costs. As someone else said in this thread, certain kinds of knowledge are rat…

> We should not aim to make college free by means of government sponsorship, but rather education free or inexpensive by means of lowering the actual costs. I think that you're vastly underestimating how much money is needed to provide quality higher education. Trust me, the last thing we need is a race to the bottom when it comes to higher education.

Depends on the branch, but considering that about 10-15% of costs of college is actually faculty, and marketing is twice that, then something is going wrong.

Re: On average, skipping college and investing tuition costs nets a higher return

#203

Post by mSparks43 »

kelnos wrote: post #85
eqmvii wrote: post #45

Earlier quoted context omitted.

Because repossessing property is (statistically speaking) more likely to work out for the bank than repossessing whatever random stocks an investor decided were a sure thing. That's why margin accounts aren't available to everyone, and margin calls kick in to protect the investment firm before total loss. Housing is volatile, but stocks are significantly more so, and with significantly more near-total losses over tim…

In addition to that, the bank knows what they get back if you default on your loan: your house. If you want to invest in the market, the bank has no idea what stocks or funds you'll be investing in, and can't even remotely guess at what they'll get back if you default.

Its funny that you are the only mention of default on the entire page. When the majority of student loans will default. And its easy to skip them just by emigrating to a better country - of which there are lots.

Re: On average, skipping college and investing tuition costs nets a higher return

#204

Post by deagle50 »

ma2rten wrote: post #65
imesh wrote: post #54

Earlier quoted context omitted.

Education in America is cheap, the problem is people don't go to their local school, they see college as an experience where they travel halfway across the country and stay in student housing.

No, education in America is expensive. If tuition was free or cheap, you could work part-time to pay living expenses and take more time to finish your degree as many students in Europe do.

I went to my state's top public school for <7000/year. It's doable. In addition to a predatory loan system, the US also has a problem of too many kids who can't afford it being suckered to private or out-of-state schools.

Re: On average, skipping college and investing tuition costs nets a higher return

#205

Post by adpoe »

Opinion:

Just like the stock market, college is also an investment. There is risk involved.

One of the main problems is that this is NOT communicated well. (If it all.)

Too many people take on huge long-shot risks that are unlikely to pay off.

Yes, if you get an English degree and become a professional writer selling books and screenplays at $1MM a pop -- that's an awesome and incredible gig. But not many people can get it. The $30k - $150k for that degree is a very risky investment.

On the other hand, spending $30k for a degree in engineering, CS, physics, math, etc... is much less risky. And it's a better investment. However--even in this case--maybe it's not worth the extra $100k for a private college. Maybe Big State U is good enough, and a safer bet with similar outcomes.

When I first went to college, everyone around me said: "it doesn't matter what you major in, just get a degree and you'll be fine." They were wrong. It doesn't work that way anymore (if it ever did).

Communicating this risk/reward tradeoff, and what it means for one's future, is the source of most college-related money problems.

--- Personal anecdote: I have a CS degree, but started out in a liberal arts discipline. So those experiences form my opinions.

Re: On average, skipping college and investing tuition costs nets a higher return

#206

Post by _delirium »

whyenot wrote: post #136

Tuition at a California State University is only $5,472 a year. That is pretty darn close to free. Many other state schools have low tuition. Nearly 500,000 students in California attend a CSU. Almost twice as many students as attend a UC school. Yet, in these kind of analyses, these low cost state schools always seem to get the shaft when in fact they educate a tremendous number of students at very low cost. https:/…

I wouldn't call $22,000 plus whatever interest you have to pay on those loans "pretty darn close to free". Though yes, it's lower than many other options in the U.S.

I do think California is one of the better places to make this work, though. The community college system really is almost free, and California has mandated that 4-year colleges must structure their degree programs in a way that makes it possible to do in-state transfers from an Associate's degree. Therefore you can do the first two years at a community college (~free) and pay "only" $11,000 to finish the last two years at a CSU.

Re: On average, skipping college and investing tuition costs nets a higher return

#207

Post by im3w1l »

vowelless wrote: post #68
staticelf wrote: post #47

Earlier quoted context omitted.

What about... offering college for free like the rest of the modern world? Then you would only have to worry about living costs and those loans are pretty small. I could pay off mine in like 4-5 years if I really wanted to. Plus, then people still could get an education even if their parents didn't save up for you. What about as a society/culture you start telling people that the country should offer education for fr…

On the other hand, one should wonder why college is so expensive in the US in the first place. Even without any subsidies, non-American tuition is a fraction of the cost of the big universities in the US. Why? Why are book so expensive here? Why is so much money spent on buildings, stadiums and hiring football coaches? The highest paid public employee in 39 states in the US is a college sports coach! [1] Throwing mor…

College is expensive because it has resisted commoditization. You can't get a Stanford diploma from just any school if you know what I'm saying.

Re: On average, skipping college and investing tuition costs nets a higher return

#208

Post by dawnerd »

maxk42 wrote: post #51
sillysaurus3 wrote: post #6

How do you skip college and invest the tuition in the S&P 500? Ah, you can't: Of course, lenders won't give out large loans for an individual to skip college and dump tuition into the stock market, this is just a hypothetical scenario. So this article is unrealistic.

Well the extra four years of work experience and income are worth roughly three times the hypothetical 7.1% yield.

I did about a month of college before I realized I could make a lot more money jumping right into web dev. Sure I missed out on some things, but I'm doing pretty damn well right now.

Re: On average, skipping college and investing tuition costs nets a higher return

#209

Post by sokoloff »

aianus wrote: post #116
eqmvii wrote: post #45

Earlier quoted context omitted.

Because repossessing property is (statistically speaking) more likely to work out for the bank than repossessing whatever random stocks an investor decided were a sure thing. That's why margin accounts aren't available to everyone, and margin calls kick in to protect the investment firm before total loss. Housing is volatile, but stocks are significantly more so, and with significantly more near-total losses over tim…

You have this exactly backwards. Stocks are much easier to repossess and liquidate during a margin call which results in margin interest being lower than mortgage interest. You can't get as much leverage as you can with real estate but that's because of government regulation not because banks are unwilling.

From most brokers, margin rates are higher rate than mortgage financing. Etrade, Fidelity, Schwab, Merrill, Scottrade, Ameritrade, Vanguard are all (much) higher than mortgage rates right now.

Some deep discount houses (IB and TradingDirect among likely some others) are lower than mortgage rates.

Re: On average, skipping college and investing tuition costs nets a higher return

#210

Post by zabuni »

pmiller2 wrote: post #135
ThrustVectoring wrote: post #81

Earlier quoted context omitted.

College is expensive because debt is cheap because of the expansion of pensions and retirement accounts as a proportion of the economy.

You had me at easy credit, but lost me with the reasoning.

I would assume because retirement fund managers and pensions like constant safe returns on investment, given they have a to have a constant payout, they go for things like debt, especially tasty non-dischargable student loan debt. Debt is a lot easier to predict than investing in companies.
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