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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

#331

Post by FalcorTheDog »

FalcorTheDog wrote: post #302
dsjoerg wrote: post #90

Earlier quoted context omitted.

that's effectively only ~4 observations then (100/24). i wouldn't want to make a very important life decision based on data from only 4 observations. with only 4 observations, "common sense" and other forms of first-principles reasoning are much more important than the 4 data points. also one should consider data from other countries and other historical eras.

It's not though. There are ~75 24-year windows you can use between 1913 and today. I suspect you will find similar results with almost all of those windows. Obviously past performance is not an indicator of the future, but 75 data points is a pretty decent amount of data.

Following up, I plugged in the data from here into Excel: http://www.multpl.com/s-p-500-historical-prices/table/by-yea...

Some observations:

  -there are 122 24-year windows in the dataset
  -not a single 24-year period had a negative return
  -the lowest average return for a 24-year window was 0.15% in the window from 1874-1897
  -there have been only two 24-year windows since 1876 with average annualized returns less than 2%
  -every window since 1912 has been at least 3%
  -every window since 1968 has been at least 7.1% (the author's assumption)
  -every window since 1971 has been at least 8%
Note that this doesn't take inflation into account, but also does not factor in the returns from reinvested dividends. Those effects would probably approximately cancel each other out, but hard to say.

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

#332

Post by thesagan »

bpodgursky wrote: post #312

If this was actually true, there would be no private college loan lenders -- they would all prefer to invest their money in the S&P 500 than in college students.

I think the risk/return profiles are very different between those two types of financial instruments. And the goals and incentives for lenders [generally] aren't the same for young, individual investors, anyhow.

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

#333

Post by rifung »

udkl wrote: post #292
almostApatriot1 wrote: post #253

Earlier quoted context omitted.

If 'non-professional' courses are taught well, they can be a huge asset. I personally learned quite a bit from the couple in-depth history courses I took because they taught me how to research, how to understand information, and how to understand the context in which information is presented.

Sure, you will get something out of college.... better reasoning skills, better social skills and other 'horizontal' skills that you would probably have got from say an engineering major too.

Only anecdotal but my experience would lead me to seriously doubt that engineering majors learn social skills.

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

#334

Post by imesh »

jonathankoren wrote: post #104
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.

Where do you get this impression, because it's simply not backed by any study, or even any anecdotal information? Quite the contrary, most people attend a college within 50 miles of their home[0]. [0] https://www.insidehighered.com/news/2016/02/03/when-students...

No anecdotal information? My life? I went to the local college and graduated with less than 8k in debt and no scholarships. And that study doesn't really dispute my point, most may not, but a large percentage do, and those those who do are the ones without mountains of debt.

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

#335

Post by kevin_thibedeau »

tedivm wrote: post #270
icantdrive55 wrote: post #266

Earlier quoted context omitted.

I don't have an answer either. I do think they should make student loans bankrupt-able. It's time. Oh yea, and put a hiring freeze/salary cap on all administrative personnel for any school that accepts federal loans. The best teachers I had were at community colleges, and usually had summer jobs. I never figured out what most of the administration did besides irritate the better teachers.

Administration costs have risen quite a bit, and are even used as political gifts. Mitch Daniels, former governor of Indiana, stacked Purdue's board with his contributors and supports and when he left the governor position they made him president of Purdue. The detachment from the administration of schools and the actual education portion is a big issue.

They also gold plate all of their new facilities. Not enough to have a normal hand dryer. Gotta have it covered in custom graphics.

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

#336

Post by gozur88 »

akhilcacharya wrote: post #330
gozur88 wrote: post #327

Earlier quoted context omitted.

College in the US is used by employers as a proxy for intelligence, something that's an outgrowth of laws and court rulings that date back to the '70s. So if you want to put yourself on the path to the C-Suite in a Fortune 500 company or to a partnership in a major law firm, you have to get into one of the very top colleges in the country. That, in turn, means top colleges can charge pretty much whatever they want an…

Hmm, what happens if we don't go to any of these schools?

Meaning what, not going to college or going instead to the local State U?

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

#337

Post by debaserab2 »

forkandwait wrote: post #168
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…

> 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…

> Now, I think there is a problem when naive, often blue collar people, go to college and don't know how to make the most of that experience

Huh? Isn't anyone going to college almost always a "blue collar" worker due to the fact that they don't have an education suitable to a white collar environment yet?

It sounds like you were in a great position to make an informed decision about how to get the most out of your education. I don't think many young adults are able to do that as objectively as someone older with more real world experience.

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

#338

Post by qwertzzz »

forkandwait wrote: post #168
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…

> 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…

In high school I: learned calculus, computer programming, and how to teach myself topics I found interesting.

At college I: learned advanced mathematics (in direct violation of my advisor's advice), discovered that most people are in fact bad at what they do (still trying to unlearn this one), and realised that my professors consistently keyed 10-15% of the questions on exams incorrectly [1]. I went to professors' office hours and found that they had no interest in talking to students. When I asked questions (outside of class), I was either 1) informed that the answer is only covered "at the graduate level" and promptly dismissed, or 2) assumed to be a complete moron with no understanding of the class material and given a remedial description of some irrelevant subject and promptly dismissed. I took some humanities classes that covered less material than I learned in high school. I wrote incoherent essays in the hour before class, and yet still got As. My writing ability worsened over time as I realized that I could write worse and worse and still get a good grade. I found that the only other people studying the subjects I loved where only there because they heard there was good money, and had no interest in gaining a real understanding.

A waste.

I had an image of what college was supposed to be, and found that my experience was nothing like that vision. I envy your experience.

[1]: I once took an final exam in which I got "none of the above" (the classic cop-out for professors who screw up) on 40-50% of the questions. Since I found this disconcerting, I discussed the exam with the professor right afterwards. It turned out that he hadn't bothered to check his own answers and that the correct answers were not in fact provided. He gave everyone full credit for those questions, which amounted to over 10% of the total grade in the class. This professor was a well-respected researcher in his field.

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

#339

Post by bobwaycott »

tastythrowaway2 wrote: post #329
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…

As a butthurt American I only have one real gripe with what you said - our roads aren't free. Our taxes pay for them. I think we need to change this mentality and acknowledge that our taxes going to something else useful is actually a net good - not 'welfare.'

The roads are free to travel on, as a publicly funded post-secondary education would be free to acquire. The parent was quite obviously not suggesting these things were not paid for by someone/everyone—at least not directly at time of use.

Otherwise, totally agree with your last point. It's a shame we Americans, in our infinite political stupidity, devalue and denigrate tax-funded programs.

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

#340

Post by bbcbasic »

kcdev wrote: post #289
icantdrive55 wrote: post #266

Earlier quoted context omitted.

I don't have an answer either. I do think they should make student loans bankrupt-able. It's time. Oh yea, and put a hiring freeze/salary cap on all administrative personnel for any school that accepts federal loans. The best teachers I had were at community colleges, and usually had summer jobs. I never figured out what most of the administration did besides irritate the better teachers.

Bankrupt-able student loans will not help the problem. The universities who are taking advantage of the easily available money from the government will still get paid. During bankruptcy, the loan write down hurts the lender. In this case it's us taxpayers. The real answer is to cut what's funded by the government, make the rest of the financing come from the universities themselves, AND make it bankrupt-able. Then as…

And they'll all offer coding bootcamps, for max ROI, and nothing else. Future doctors can be imported.
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