On average, skipping college and investing tuition costs nets a higher return • Hacker News Board

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

#271

Post by branchless » Mon, Jun 05, 2017, 12:25 AM UTC

habitue wrote: post #200

I think a lot of people are looking at this as "maybe this article is offering advice" instead, the way I'm looking at it is this is giving us a rough quantification of what we all know intuitively: that college is so expensive it's reaching a natural ceiling. The way this manifests in reality isn't millions of people all doing a cost/benefit calculus like this and coming to the rational conclusion they can skip coll…

Nope, it hasn't reached a natural ceiling. As the article says it's adding no real value above the background growth rate. The reason why it has overshot it's natural ceiling is because the price of college is set by available credit. The govt said they would lend X, that was the price.

We should also learn this lesson for land. This is how prices are set.

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

#272

Post by nikdaheratik » Mon, Jun 05, 2017, 12:26 AM UTC

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…

Sports have little to do with it as most of that money is completely separate from the operating budgets of the Public Universities. It does seem to be a good way to attract students for whatever reason. Textbooks are expensive because they have a limited monopoly, but they still aren't a huge expense compared to the per-hour tuition and fees.

The issue, IMO, comes down to decades of budget cuts from state legislatures that ends up being borne by the students. The "fees" end up paying for new buildings for student use, which used to be part of the budget allocation from the state. The "tuition" partially is related to increased administration costs, and partially due to the fact that budget allocations have been frozen for 10+ years but they still have to give professors a COL increase if nothing else.

TL;DR: state budgets have been static for a decade or more while more students are trying to attend. If they want to have classrooms and facilities for these students, and they can't get more money from the states, then they need to raise tuition or hit up donors to build them.

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

#273

Post by geodel » Mon, Jun 05, 2017, 12:28 AM UTC

fortytw2 wrote: post #109

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…

Who pays for "free" things?

Financial wizardry which can make other countries/continents pay in terms of trade or services regulations.

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

#274

Post by jimbokun » Mon, Jun 05, 2017, 12:28 AM UTC

staticelf wrote: post #47

krakensden wrote: post #46

As a culture, we really need to stop telling 17 year olds to not worry about money, go to college, and figure something out. There is always someone ready with a romantic appeal to a classical education, and it is so frustrating for me. Wasting four years is a huge cost. Years, decades of debt is a huge cost. Going to college with no plan about money? The costs are assured. Plus, the degrees people are actually getti…

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…

We used to have something very close to that here in the US, with very low cost state schools.

Just one of the things that has been lost in our rapid head first plunge towards third world status.

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

#275

Post by GCA10 » Mon, Jun 05, 2017, 12:29 AM UTC

This is a provocative but deeply misleading calculation. It assumes that our no-college-S&P-investor is a stoic enough soul to live on truck drivers' wages for 24 years, so that the stock market can do its magic, before collecting what genuinely would be a giant windfall.

That's really hard to imagine. Missing out on the more robust income of a college graduate in your late-20s and early-30s means making sacrifices in terms of the clothes you wear, the vacations you take, the car you drive, the type of person who's likely to marry you; your dental care; your children's schooling, etc., etc.

The temptation to start plucking out money from the S&P honeypot -- in the name of having a better life -- would be fierce. Nothing wrong with that. But if that big knot of savings is used to help pay for a better standard of living at age 25, or 29, or 34, then that means settling for a zero or negative return for that segment of money going forward. Goodbye to the fabled 7.1%.

Bear in mind, too, that the stock market doesn't deliver 7.1%, year after year, with the happy predictability of a government bond. If your start year was 1999 ... and you waited 10 years to see how you were doing, you'd be looking at about a 30% drop in your portfolio. (You would have caught both the dot-com mess and the bankster mess.) http://www.multpl.com/s-p-500-historical-prices/table/by-yea...

It's easy, with hindsight, to say: "Just wait it out." But at the time, the pressure to get out of stocks is intense. And the anxiety about having bet your lifelong well-being on a market index going haywire would be excruciating.

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

#276

Post by Steeeve » Mon, Jun 05, 2017, 12:29 AM UTC

Skip college, invest in stock market.

People love to chart out how great it is to invest in the stock market and how historically it generates great returns. Nobody seems to remember everyone around them losing enormous amounts of money whenever the economy tanks.

Where were all those 7.1% earnings going when the banks were getting bailed out and people were camping on wall street because their houses were foreclosed? Who pays that 7.1% that everybody wins every year? It must come from tax dollars if nobody is losing any money in the market. Or maybe so much money is being generated from all that business that everything is just dandy and there's more money than there used to be. Or maybe the big investment firms are just handing it out to everybody who participates in the market.

I don't know and I guess it doesn't matter. I should tell my kids to forget college and invest instead. They can learn about how it works as they go. Heck, high school is definitely more advanced than when I went. Maybe they teach kids how to invest now. It's so easy to make 7.1% every year that I'm sure the old shop teacher can cover it since they killed the shop program due to lack of funding. I guess the state didn't know that you just had to put your money in the market to have it grow 7.1% every year. Someone should let them know.

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

#277

Post by reaperducer » Mon, Jun 05, 2017, 12:30 AM UTC

udkl wrote: post #223

forkandwait wrote: post #168

Earlier quoted context omitted.

> Wasting four years is a huge cost. At college I: learned calculus, computer programming, advanced mathematics, urban planning, how to communicate like a grown up, and those are just the big topics. I also took acting classes and learned social skills and made lifelong friends. When I graduated, a professor arranged my first professional job which was an order of magnitude better than any blue collar gig I had ever…

I think you missed the point completely. The parent post isn't against college education. It is against spending those years studying 'non-professional' subjects and calls these a waste. This is corroborated by the statement : "Going to college with no plan about money? The costs are assured. (absurd)"

Want college without non-professional subjects? That's called trade school.

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

#278

Post by jimbokun » Mon, Jun 05, 2017, 12:31 AM UTC

Cyph0n wrote: post #224

ecshafer wrote: post #218

Earlier quoted context omitted.

The amount of money that goes towards marketing, administration, and buildings that are far fancier than they need to be is the issue. The professors are a fraction of the costs. Universities spend far more money than they need to on useless extraneous offices and bloat. Get back to focusing on education and the costs will drop.

It's not that simple at all. Regarding buildings and marketing: you have to work hard to attract the absolute top students, especially in a huge education market like the US. Now you may argue that students shouldn't be so superficial, but they are, so universities have to deal with that when competing at the national stage. As for administration, you probably have no idea how complicated it is to keep a university r…

"Regarding buildings and marketing: you have to work hard to attract the absolute top students"

Bullshit.

Relatively recently, the very top students lived in crappy dorms and ate standard issue cafeteria food and worked out in mediocre gyms. None of which mattered. Because they had top rate professors and high academic standards and intelligent peers competing against them. Throwing away money on fancier buildings and food does absolutely nothing to increase the quality of education.

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

#279

Post by jimbokun » Mon, Jun 05, 2017, 12:35 AM UTC

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…

We created terrible economic incentives.

Instead of investing directly in public universities, we decided to provide grants and loans (but mostly loans) directly to students to use at any university, public or private. This simply created a bubble, similarly to the mortgage lending bubble. College tuition in the US is just another over-inflated asset class.

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

#280

Post by geodel » Mon, Jun 05, 2017, 12:36 AM UTC

coldtea wrote: post #243

krakensden wrote: post #46

As a culture, we really need to stop telling 17 year olds to not worry about money, go to college, and figure something out. There is always someone ready with a romantic appeal to a classical education, and it is so frustrating for me. Wasting four years is a huge cost. Years, decades of debt is a huge cost. Going to college with no plan about money? The costs are assured. Plus, the degrees people are actually getti…

> As a culture, we really need to stop telling 17 year olds to not worry about money, go to college, and figure something out. There is always someone ready with a romantic appeal to a classical education, and it is so frustrating for me. How about as a society we need to lower college tuition?

I paid negligible fees and ended up better but millions who also paid same have almost no liberal/conservative/scientific or job appropriate education or skills.