I went to grad school in the middle of a startup. Probably cost me a million dollars. I learned so much, met great people, and met my future wife. I wouldn't have made a different decision any day of the week.
On average, skipping college and investing tuition costs nets a higher return
561–570 of 669 posts
Re: On average, skipping college and investing tuition costs nets a higher return
#562An enormous missing part of this seems to be that you are comparing the "return" of something that pays annually and a lump sum result at the end of the 20 years.
You'd need to compare it to an investment where you're also withdrawing the difference with the higher salary per year. Or, equivalently for this, have the extra money earned paid into investments each year.
Really, part of what this is doing is comparing invested money to non-invested money.
Edit - for a quick figure, let's assume you're getting the equivalent of a 4% annualised return on a $100k investment. That means you're earning $219k over the 20 years more, for simplicity I'm going to assume that's an even $11k each year. Our 7% example would be $507k over 24 years, invested all up front.
Instead of $219k, we're actually at $480k.
The two line up once you hit roughly 22 years in the workforce, at 23 you're slightly ahead. By 40 years of working, investing upfront is $400k behind, at a little over $2.3M vs ~$1.9M
A way of phrasing the question to ignore working / etc, is which works out better
$X invested at $Y as a lump sum.
$Z invested each year at $Y.
The question the article appears to ask is the better of
$X invested at $Y as a lump sum.
$Z kept as cash each year.
Re: On average, skipping college and investing tuition costs nets a higher return
#563Good; it will result in only the people who are actually likely to make some benefit from the education to get one, not everyone who has money or wishes to get deeply in debt.
College education is not for everyone, it doesn't pay for the simple and stupid reason that you can't buy yourself better brains, or better personality traits. If lower fraction of people go to college, ROI will increase as these will be people better suited to benefit from education, it will also make prices fall due to natural law of supply and demand.
It is sad to see a ton of young people wasting best years of their lives for something which is of no benefit for them anyway. I did it too.
Re: On average, skipping college and investing tuition costs nets a higher return
#564Earlier quoted context omitted.
Why have special rules for student loans at all? If a degree is not very important anymore then it should be just free choice. Banks will step in to provide private loans on whatever terms they feel like. They'll be bankruptable. The banks can make their own judgements about the borrower's ability to repay it - eg. higher interest rates for useless degrees or low grades. I thought the whole business of government hel…
> Banks will step in to provide private loans on whatever terms they feel like. They'll be bankruptable. The banks can make their own judgements about the borrower's ability to repay it Banking industry does not have a concept of a college loan. A loan is either secured (mortgage, auto, HELOC) or unsecured (personal, credit card). Without government participation all college loans are treated as unsecured, which mean…
I think the degree should be security for the loan. You can discharge your degree in bankruptcy, but you also lose the degree. Your resume legally has to show a blank spot that you cannot explain as anything other than wasting your time. (or possibly working part time if you had a job).
Want a new degree, your credits won't transfer so you start over as a freshman. (if you can get in - school is competitive and the bankruptcy is sitting there on your record)
Re: On average, skipping college and investing tuition costs nets a higher return
#565Re: On average, skipping college and investing tuition costs nets a higher return
#566The cornerstone of this statistical conclusion is that you will invest the money you will use for college, however the fact is if you try and loan out the money that you need to go to college for any other purpose, that loan will be a lot more expensive that what you would get from a student loan. Also, the chances of you getting that loan is slim.
If you already have that kind of money with you and you are going to invest you own money for college then these arguments have a little more statistical weight. However, if you have that kind of money, you are probably already rich and wealthy at which point, you already have a good business/income and this delta that you would invest into that business will not yield you significantly more income than what you already have. At this point, its still better to go get a college degree.
Re: On average, skipping college and investing tuition costs nets a higher return
#567Earlier quoted context omitted.
They also come with income based repayment plans that mean you'll never have to pay more than 10% of your discretionary income (income above 10% of the poverty line), and they are cancelled after 20 years of payment.
thats only if its government loans. Private loans are still not dischargeable and don't have income based repayment
Private loans make up about 7% of student loans dispersed each year.
Re: On average, skipping college and investing tuition costs nets a higher return
#568Earlier quoted context omitted.
This article from 538 argues that almost 3/4 of the rise in tuition is accounted for by a drop in state support. https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
For a pure apples-to-apples price comparison it's reasonable to use an out-of-state tuition that's free of state support, grants or scholarships, as that reflects the true price sticker. The rise in college tuition is the most baffling, as this industry refuses the amortize costs. The buildings have been built, the books have been written, the intro courses have been handed down to graduate students, the handouts are…
The price doesn't necessarily represent the cost.
Re: On average, skipping college and investing tuition costs nets a higher return
#569Earlier quoted context omitted.
This article from 538 argues that almost 3/4 of the rise in tuition is accounted for by a drop in state support. https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
I came here to say this. My wife left the private sector four years ago to work in higher ed. This was a huge epiphany to both of us after she had been there a while and we could see the big picture from the inside. Sure there are a couple other factors at play, but it's small potatoes, comparatively. If you look at the big state schools and the support they receive from the community, they've systematically had thei…
Is there a name for the "law" that you can always find "credible" information supporting both sides of any issue?
http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
Re: On average, skipping college and investing tuition costs nets a higher return
#570This is a huge, spirited discussion. There was a very similar discussion with many of the same points when child labor was outlawed and education was made mandatory a bit over 100 years ago.
All the points against college education made here...they just as easily apply to that case as well. So we should stop funding public schools, invest it in the S&P 500 and start letting 12 year olds maximize lifetime income by beginning professional life early?