Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Is College Still Worth It? The New Calculus of Falling Returns [pdf]

stlouisfed.org

Post reply on HN
Print view View original

241–250 of 360 posts

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#241

Post by macspoofing »

rayiner wrote: post #238
macspoofing wrote: post #228

Earlier quoted context omitted.

>How “discerning” could you be when making loans to teenagers with no income and no credit history? Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. >The only thing that would happen is that the banks would force all loans to be co-signed. They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade…

All of the policies you propose would have a disproportionate impact on black and Hispanic students, who generally come from families with less means to qualify for credit. Policies that disproportionately channel these students to trade schools and community colleges is a political non-starter.

What are you really trying to say? That black and Hispanics families are disproportionally a higher risk of defaulting but should still get loans they cannot afford? Is that your argument?

Loans are not grants nor gifts. You're not doing anyone a favour by giving them a loan they cannot afford to repay.

There are other ways to subsidize education rather than distorting the lending market.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#242

Post by dahart »

woopwoop wrote: post #230
dahart wrote: post #114

Earlier quoted context omitted.

IQ correllates somewhat with income and even more with school performance, so by “controlling for IQ”, the authors are intentionally flattening and hiding some of the income variation. They’re effectively discounting for the probability of going to college in the first place. That will, of course, hide differences in income due to going to college. The actual data shown in that reference seems to tell a different sto…

The 100k is a net present value calculation, which includes a 5% per year discount, which is quite steep. 1/1.05 15 30<0.25. The undiscounted difference in lifetime earnings looks, just eyeballing the figure, to be around 300-500k.

Yes, precisely. It seems like a good idea to keep an eyeball on the absolute, unadjusted numbers, even if controlling for IQ and other factor is a valid way to look at it, since the experience of being someone in the disadvantaged bracket is not a minuscule difference. Flattening the perceived income difference by controlling for IQ hides the absolute magnitude of income differences. Plus there’s always the chance that the model is wrong, and/or not accounting for everything.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#243

Post by rayiner »

amiga_500 wrote: post #27
seem_2211 wrote: post #12

I have a degree from a no-name university in New Zealand. I'd do it again for a few pragmatic reasons. 1: Lots of companies will reject you on sight without a degree. I don't think it's a good thing, but it is reality. 2: With a degree your ability to move overseas dramatically improves. I moved to America after graduating. I flat out couldn't have done that without a degree. Points based systems immigration systems…

You didn't go to uni in the USA and the paper is by the St Louis Fed on USA grads. You took your degree in a country with far lower inequality and better inward education investment, and then jumped over to work in a country that doesn't tax people enough to support USA students. I'd imagine that is pretty good value.

You are incorrect about your assessment of US education expenditure. Governments in the US spend a similar percentage of GDP on tertiary education as New Zealand: https://jobmarketmonitor.com/2016/09/23/tertiary-education-c.... Both spend in the 4-5% range of GDP in terms of public money. (We spend a higher percentage of GDP, again just public money, than countries with “free” education like Germany.) Additionally, because US GDP per capita is 65% higher than New Zealand adjusted for cost of living, we spend far more than New Zealand per person in absolute terms.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#244

Post by vegetablepotpie »

macspoofing wrote: post #223
Retric wrote: post #218

Earlier quoted context omitted.

Discharable loans would also increase interest rates by about 2%. That’s 100$ a month for 60k worth of loans, which makes them even harder to pay back.

The key here is that you wouldn't get a loan to a college that won't provide you a useful degree for the tuition rate they charge the student. You want the lender to be discerning and not give out bad loans. Right now, the entire industry assumes students are not price conscious and you only need to sell them on the college experience instead of the price and value of the degree. Having said that, the government can…

>you only need to sell them on the college experience instead of the price and value of the degree.

I think this is a good point because the problem with college recruiting is that they simultaneously advertise that they are an experience and a good investment, while shrugging off the responsibilities of being a good investment.

I disagree with the idea that financial institutions should be in the business of determining what a “useful degree” is because a Debian Developer I know has a degree in philosophy. He does development because he happens to like programming and the mission of the project. He doesn’t need a CS degree and I think him having a philosophy degree let’s him bring something unique to the table. Education is abstract enough that you can’t put it into discrete boxes. If you tried Universities would become business schools.

Borrowing money for college isn’t bad if the loans are low. College is expensive because of ballooning administration. Federally subsidized loans arguably gave an incentive for this. The right policy is to give Universities a disincentive to adding overhead.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#245

Post by [deleted] »

throwno wrote: post #184

If trades make so much money, how come no one is bitching about fatcat plumbers and roofers? Why hasn't the NY Times published any articles about how "Big Plumbing is soaking the middle class" etc.? For all the ways the middle class is getting hammered, I have yet to see one book about how plumbers are killing the middle class like I have with doctors, lawyers, techbros, and bankers. Until a journalist from NY Times…

[deleted]

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#246

Post by NPMaxwell »

This paper argues implicitly for getting a college education. Reason is that very few people would be able to understand this paper before getting a college education. Many Americans may graduate college without being able to understand this paper. For those who do graduate able to understand the paper, I'm sure college increased their earning power and wealth.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#247

Post by dahart »

rayiner wrote: post #235
brownbat wrote: post #195

This is a really interesting addition to the literature if you dig through it, with subtle distinctions between income gains and wealth gains and interactions with demographics. It's not a simple "college ain't what it used to be" story. The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth. Increasing tuition is a…

The three parties are schools, teenagers, and the government . More than 90% of existing student loans, and nearly all new loans, are issued by the government. The student loan system will cost the government $170 billion in losses over 10 years, because interest doesn’t cover money written off due to hardships and loan forgiveness. The non-dischargability of student loans protects the government from further losses.…

> The student loan system will cost the government $170 billion in losses over 10 years

I don’t doubt this, but it’s a statement that focuses only on losses and completely ignores the economic benefits of the educated workforce.

$170 billion over ten years is on the order of 1% of education spending. Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively, the extra income taxes paid by the non-defaulting group of college graduates alone makes the loan forgiveness losses a drop in the bucket, the income makes up for the losses many times over.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#248

Post by VLM »

throwno wrote: post #184

If trades make so much money, how come no one is bitching about fatcat plumbers and roofers? Why hasn't the NY Times published any articles about how "Big Plumbing is soaking the middle class" etc.? For all the ways the middle class is getting hammered, I have yet to see one book about how plumbers are killing the middle class like I have with doctors, lawyers, techbros, and bankers. Until a journalist from NY Times…

Plenty of people complain in a stealthy dog whistle way WRT real estate prices and high rental payments.

There's also the value proposition where I could make $15/hr at a McDonalds, so its hard to set a labor cost floor below $15/hr. I KNOW from experience that even when everything goes wrong I can replace a kitchen faucet in ten hours. Sure it starts out as an hours work but three trips to home depot later for strange wrenches and adapters and valves and next thing you know its ten hours. Thats an absolute minimum of $150 of lost income doing likely physically easier work standing at a mcdonalds cash register or whatever. Obviously I can make way more than $15/hr doing software development. On the other hand, a plumber has seen it all, has all the tools at his fingertips, and can do it in an hour for $150, and the hardest physical labor I'll have is writing a check.

Maybe a fair price for replacing a kitchen faucet is the hourly price of any other sweaty dirty technical complicated highly skilled tool/capital intensive job, which across the entire labor market seems to run $30/hr to $100/hr billed. If I were a $100K+ extremely highly experienced and trained diesel engine mechanic like my cousin, it would be financially foolish to turn down work to replace his own kitchen faucet. Even if he paid me a fraction of his hourly to haul around his toolbox and lift things for him as some kind of apprentice, I'm still honestly financially better off being a diesel mechanic's assistant than trying to replace the faucet myself.

Google shows union building and construction trades are ALL billing around $50/hr around here, plus or minus $10/hr related to lifestyle, I suppose. Picking a fight with the plumbers means picking a fight with the residential electricians and the ironworkers all making within a couple dollars per hour of each other. It is kinda shocking how all building trades make about the same hourly.

Of course Starbucks is a better working environment if you have a liberal arts degree and a mortgage sized student loan, and only pays $11.02 nationwide average. Almost any profession on a construction site will get you five times the pay achievable with a liberal arts degree... Yes a small fraction of liberal arts degree holders will get six figure sinecures, but then again a small, yet larger, fraction of plumbers will be multimillionaire business owners.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#249

Post by cgriswald »

macspoofing wrote: post #228
scarface74 wrote: post #224

Earlier quoted context omitted.

How “discerning” could you be when making loans to teenagers with no income and no credit history? The only thing that would happen is that the banks would force all loans to be co-signed. Guess who is statistically unlikely to get loans in that scenario?

>How “discerning” could you be when making loans to teenagers with no income and no credit history? Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. >The only thing that would happen is that the banks would force all loans to be co-signed. They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade…

The requirement of a co-signer essentially means that the only people who get to go to college are the people who can afford to go to college before they go to college. You end up with a system where people who shouldn't go to college still go, because their parents can afford to send them; but people who should go to college can't, both because they can't get the funds (even though they could pay them back as a graduate) and because the first group is driving up prices.

Re: Is College Still Worth It? The New Calculus of Falling Returns [pdf]

#250

Post by rossdavidh »

dahart wrote: post #247
rayiner wrote: post #235

Earlier quoted context omitted.

The three parties are schools, teenagers, and the government . More than 90% of existing student loans, and nearly all new loans, are issued by the government. The student loan system will cost the government $170 billion in losses over 10 years, because interest doesn’t cover money written off due to hardships and loan forgiveness. The non-dischargability of student loans protects the government from further losses.…

> The student loan system will cost the government $170 billion in losses over 10 years I don’t doubt this, but it’s a statement that focuses only on losses and completely ignores the economic benefits of the educated workforce. $170 billion over ten years is on the order of 1% of education spending. Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively, the extra inc…

Once the job market got better a couple years ago, the percentage of job postings which required a college degree dropped. In other words, the "requirement" was mostly a way of filtering, not something that actually increased productivity.

Speaking as a person with two degrees myself, I can say that non-degreed programmers seem to be just as productive as those with degrees. In fact, CS majors in particular have a problem just solving the problem in front of them, and often want to over-engineer things using the techniques and patterns they learned in school that are applicable to huge systems, whereas non-degreed programmers often just solve the actual problem they have without trying to justify (in their own minds) years spent learning other techniques.

I am not at all convinced that a college-educated workforce is more productive, for more than half the jobs in which it is required.

Post reply on HN