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

#571

Post by virmundi » Mon, Jun 05, 2017, 3:39 PM UTC

learc83 wrote: post #321

virmundi wrote: post #211

Earlier quoted context omitted.

You can't discharge college loans if taken from a federal program. Unlike other ventures where you can pay pennies on the dollar when you bet and lose, such loans are pursued by the full force of the United States.

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.

That is still a reasonable period of time to make them low risk. So we get a market flooded by cash. And now due the ubiquity of degrees, many are worthless but necessary. They are becoming the high school degree.

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

#572

Post by [deleted] » Mon, Jun 05, 2017, 3:39 PM UTC

learc83 wrote: post #321

virmundi wrote: post #211

Earlier quoted context omitted.

You can't discharge college loans if taken from a federal program. Unlike other ventures where you can pay pennies on the dollar when you bet and lose, such loans are pursued by the full force of the United States.

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.

[deleted]

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

#573

Post by yourapostasy » Mon, Jun 05, 2017, 3:44 PM 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…

Some interesting questions arise from these observations.

* Other comments in this thread rightly point out that US higher education loan policy is largely the cause of unsustainable growth of college tuition. However, instead of bloated bureaucracies and buildings that are unmaintainable at lower budgets, why didn't at least some colleges invest the proceeds into index funds to directly defray the costs to students, like at Yale? Or allocate to competitively recruit and retain proven professors with observable education outcomes (or invest in establishing metrics to identify such outcomes)? Is there a herd effect at work in how colleges decide to spend the largesse, and if so, where did it roughly originate from?

* I find it interesting that the standard investment is effectively an S&P 500 index fund. If your slow collective consciousness meme is on point, then pointing more working and middle class towards indexing with big life goals like children's higher education could have big ramifications for the financial industry, as one of the large institutions supporting the industry---pensions---starts eroding away in the future, and now another source of funding in 529 plans might open up more to indexing. How likely is indexing going to replace pensions, and when will most 529 plans shift to indexing?

* It is common for US employers to note that colleges are producing graduates that do not hit the road running at the workplace. There are quantified lists of skills that are observed missing in the graduates [1] [2]. Why aren't there "finishing schools" set up to teach these skills?

[1] https://www.fastcompany.com/3059940/these-are-the-biggest-sk...

[2] https://www.forbes.com/sites/karstenstrauss/2016/05/17/these...

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

#574

Post by cyrjulien » Mon, Jun 05, 2017, 3:44 PM UTC

gbersac wrote: post #557

If you don't want to invest a lot of money in tuition and want to learn programation, I went to the 42 school which is free and it made me an excellent programmer : https://www.42.us.org/

Similarly to school 42, there is Holberton that has no upfront tuition. https://www.holbertonschool.com

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

#575

Post by kesselvon » Mon, Jun 05, 2017, 3:49 PM UTC

moomin wrote: post #560

wmeredith wrote: post #328

Earlier quoted context omitted.

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…

Serious point: let's say that, to you personally, investing in the stock market and going to college are a wash. They're not a wash for the state. The state gets more taxes from your higher-paying job. The chances are you're also helping to support some lower-paying jobs as part of your industry. So it's not unreasonable to expect the state to contribute to actually making this happen. The benefits are actually much…

The federal government is having it both ways right now: it earns interest on the money it loaned to you to get a higher education, and it also generates higher revenues via your increased lifetime earnings. This is a bummer because its not like your state taxes went down along with a decrease in state funding for your in-state universities.

Basically state governments off-loaded the burden of funding on the students while reaping the benefits of said investments.

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

#576

Post by kesselvon » Mon, Jun 05, 2017, 3:51 PM UTC

dpark wrote: post #380

learc83 wrote: post #306

Earlier quoted context omitted.

Very few colleges will leave with student loan debt an order of magnitude greater than $20k. That's about the sticker price for 4 years at Harvard. But 70% of their students receive financial aid. Average student loan debt is around $30k. Very few people have $200k student loan debts. >And if you got a degree that led to a $45k Considering that the vast majority of student loans are public loans, and public loans all…

> Very few colleges will leave with student loan debt an order of magnitude greater than $20k. ... Average student loan debt is around $30k You must realize these statements are fundamentally at odds. If the average is $30k, then very clearly most colleges will leave you with $20k+ in debt. The University of Mississippi is an affordable public university that happens to be where I earned my degrees. They estimate $23…

I don't think too many people take full loans for all of their expenses, and don't receive any financial aid. If you're from a well-off family, yeah, you're going to leave with like 80k in loans because the state isn't going to help you

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

#577

Post by kesselvon » Mon, Jun 05, 2017, 3:56 PM UTC

Radim wrote: post #351

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…

I come from one of your "paradise European countries with free higher education" and it's astounding to me that in the 21st century, people still fall for this "free lunch" fallacy. You do realize the education is not really "free", right? That word is such a red herring. It's just tying up resources in a way YOU like, at the expense of other people's preferences. Many people here, teachers and doctors included, are…

It's not free, it's an investment by the state into getting higher tax revenues in the long-term and a more advanced economy. I think everyone wins in the equation

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

#578

Post by ruste » Mon, Jun 05, 2017, 3:58 PM UTC

bigger_cheese wrote: post #414

ma2rten wrote: post #83

Earlier quoted context omitted.

like the rest of the modern world Many countries outside of Europe have tuition fees. Do we really have to label those countries as not part of the modern world?

I graduated from university in Australia 10 years ago. At the time I did not have to pay anything upfront but I did accrue a debt while I was studying. The cost for me studying Engineering was ~$750 per subject (8 Subjects a year * 4 year degree = $24K debt at graduation). The entire debt was interest free and repaid out of my tax return once I started full time work (i.e. I effectively paid higher tax rate until I h…

A significant chunk of the massive numbers people are throwing around talking about the cost of college comes from living expenses.

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

#579

Post by notananthem » Mon, Jun 05, 2017, 4:00 PM UTC

wmeredith wrote: post #328

learc83 wrote: post #294

Earlier 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…

I did undergrad at a state school (University of Illinois at Chicago) and later worked there as a researcher and our pension was bankrupt and the state was just trying to murder what was left of benefits and reasons to want to work there. Hilariously enough colleagues at private schools (SAIC, etc) in design in the area are now all bailing to work at UIC because their benefits and pay are far worse. I am in an evening MBA program at UW Seattle now, Foster School of Business, and its half covered by my employer. Everyone's trying to gut funding but improve education..

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

#580

Post by stale2002 » Mon, Jun 05, 2017, 4:02 PM UTC

matchbok wrote: post #440

stale2002 wrote: post #416

Earlier quoted context omitted.

You don't have to create a new college. All that has to happen is for EXISTING colleges to realize that they can make a ton more money by expanding in size. Obviously, this doesn't happen overnight. You have to hire new employees, buy more land, and build more buildings. But I'd argue that this process would happen a lot, lot quicker than "create new college". Colleges are already expanding all the time.

You don't think they know that? I'm sure they do. But the other option is to stay the same size, but charge much more. Either way, more money. Only one solution demands building more classrooms and housing.

Competition would prove otherwise.

If a single college doubles in size, the effect on total college supply is minimal.

You double the amount of quantity sold, for You, while only slightly decreasing price, because Total college supply has only barely increased.

It is simple supply and demand in a competitive market.