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

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

#311

Post by mnm1 »

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…

People aren't allowed to drink or even smoke now till 21. Seems logical. So why do we expect a 17 year old to have the financial knowledge and understanding to take out a loan that could buy a house in a not so cheap city? With zero education about finances (they are not generally taught in schools). The availability and government guarantees of such loans are hurting everyone except these schools that are making bank while offering education of highly questionable quality.

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

#312

Post by thebean11 »

chrisseaton wrote: post #290
harrisonjackson wrote: post #288

Earlier quoted context omitted.

This is a great argument for starting a company in an industry where you are an expert, but this guy isn't doing house calls for hourly pay. He's taking a big cut of alllll the house calls. According to wiki he is paying his plumbers more than I'd expect, which is cool. >The company promotes itself as providing a high-quality service, employing "£80,000/year plumbers", charging £80–200/hour depending on time of day a…

Someone said a plumbing business wouldn’t scale. He scaled a plumbing business. Obviously in scaling it, this multi-millionaire is not personally doing the plumbing anymore - you are right. I don’t see how that means he hasn’t scaled it though?

Exactly, none of the tech billionaires got where they are by coding or even designing software forever. I don't see a fundamental difference between that and managing a plumbing business.

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

#313

Post by droithomme »

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.…

> Under Obama’s REPAYE, your loan payments are capped at 15% of your discretionary income.

What happens to the many students who are paying at less than their interest accumulation? Does the federal government pay the difference so their loans don't at least keep growing, or does the amount they owe just keep getting bigger and bigger? And in either case, wouldn't such a capped payment scheme be advantageous primarily to the lender collecting the interest?

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

#314

Post by washadjeffmad »

seem_2211 wrote: post #85
john_moscow wrote: post #66

Earlier quoted context omitted.

I would argue averaging across all degrees is makes no sense. STEM degrees do pay off. Liberal arts degrees can pay if you want to boost a specific skill and have a solid plan for using it. E.g. getting an English degree to become a more persuasive speaker while promoting your otherwise sound and solidly executed startup. Aside from those 2 examples there are plenty of colleges with a business model of selling overpr…

Does STEM actually pay off, or does engineering/technology pay off? I've got a few friends who work in science, and it seems to be a pretty poorly paying field, with a real lack of job prospects, unless you secure a job at a government research department.

Former government research scientist here. It also does not pay well.

In fact, funding for scientific research was cut by the Obama administration, leading to the closure of all but two of our branches and displacing dozen of workers amidst a recession.

When I transferred to academia, I took on an underpaying role, and found that the same shenanigans were afoot there. Now, we are approaching the end of the 2000s population boom, and in five years, universities will have many fewer prospective applicants for the following decade at least. The ripples of the contraction caused by the gambling of a few spoiled bankers will be felt again in another 20 years with a much smaller and resource-constrained workforce, still reeling from the burdens of loan debt and overpriced housing.

Unless Sanders gets his way, that is.

It's probably best I plan my exit in advance this go-round.

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

#315

Post by seem_2211 »

kortilla wrote: post #176
seem_2211 wrote: post #98

Earlier quoted context omitted.

Fair enough. When it comes to career advice, I prefer anecdotes to large data sets, because there are far too many variables, and it's too easy to torture numbers.

I take it you didn’t go the STEM route then. ;) More seriously, anecdotes are terrible when giving advice to fresh high school seniors on their way to graduation. When people think of degrees in certain fields, they gravitate to the successful people (“I’ll study acting and make millions like the famous actors I know”, etc). They don’t think of and aren’t even aware of how many people get those degrees and fail hard.…

Correct - I didn't study a STEM subject, but I've done ok for myself despite that.

I think there's a world of difference between "I want to study acting and I'll end up successful like Brad Pitt" and "Hmm, my cousin is in marketing, and seems to have created a great career there, I should talk to them about that."

Anecdotes about people you don't know, and career stories you don't fully understand aren't helpful, but frankly I don't think massive data sets on how much the average graduate earns within two years of graduation (for example) are all that helpful either, except as a broad way to compare yourself. It's such a large number of people, you don't really anything particularly useful at an individual level (even though there are plenty of good uses for data like that).

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

#316

Post by seem_2211 »

anonymoushn wrote: post #164
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…

For knowledge workers who could have begun a similar career without college, the cost of the degree should also include the money they would have made by working 4 additional years at the end of their career (probably one of the highest points?)

I've done the math on the opportunity cost of how much I would have made if I hadn't gone to university. It was about $120k over 4 years, and raised the opportunity cost to about $160k (I borrowed $60k, but some of that money was for living expenses, that would have been covered by working full time). I was earning about $16/$17 per hour at the time. It increased the jump I needed to make from $.50 per hour to $2 per hour.

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

#317

Post by seem_2211 »

bobcostas55 wrote: post #207
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…

>4: The cost isn't that bad, when you spread it out over a career. My degree & living costs cost about $60k NZD (~$40k USD). That's $1k USD / year, or $.50 per hour. Considering how my income has multiplied in the few years since I've graduated (SF wages help tremendously here), the actual cost is barely anything, even when you control for the opportunity cost of studying. You also need to take into account the oppor…

Yep, I was giving up about $30k a year ($120k / 4 years). I was working in a supermarket. $2 more an hour needed over the course of my career to make the juice worth the squeeze. Nothing to write home about.

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

#318

Post by seem_2211 »

IkmoIkmo wrote: post #192
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…

I'd say this is spot on, particularly the part about going to college for lifestyle reasons, combined with a field that is low-paying, and a choice of uni that isn't particularly cheap, is a bad combination. I'm not sure I agree on grad school, perhaps you could elaborate? It's true that it's very much hit or miss. But my experience is that there's plenty of grad schools which offer 1 - 1.5 year Masters' and tuition…

Rolling deep into anecdotal avenue, but my thoughts on grad school

• Lucrative fields like medicine & dentistry saddle you with enormous debts (often in the mid six figures) that take multiple years to pay off. The ROI is probably worth it if you work to 65, but you're locked in for easily twenty years, and such high debt levels make taking risks very difficult.

• Lucrative, but more populated fields like law & business also often saddle you with enormous debt, and for these degrees you need a school with a strong brand name to get a look in anywhere (if you do an MBA and you aren't at Harvard/Stanford/Wharton, and a very few others, what's the point?).

• In a lot of fields (liberal arts/social sciences) what's the point of getting a masters? Do you get an earning premium? Is the earning premium worth the opportunity cost? I'd be surprised if the answer is often yes. I have a friend who was a teacher and is now studying to be a families therapist. Lovely person, but absolutely terrible choice. Years of additional study and debt, and no hope of a future earning substantially more money to show for it all.

I agree completely with your points about teenagers not doing enough due diligence before they study.

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

#319

Post by brownbat »

kryogen1c wrote: post #233
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…

>Most notably, the inability to discharge school debt in bankruptcy since 2005 may have had strong effects. >That last legal change remains bewildering to me. I have done no research on the matter, but my parents told me that doctors would go to school on loan for 7+ years, start a practice, and discharge all their loan debt through bankruptcy.

Interesting... that led me to this article: https://www.savingforcollege.com/article/history-of-student-...

It's skeptical of those claims of abuse that seemed to originate in Congress, but nonetheless discusses some of the other historical approaches to solve for that, such as requiring a 5-7 year waiting period for bankruptcy after graduation.

I think rayiner added some compelling points above too, income based repayment may be a substitute here to solve for this issue while preventing abuse.

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

#320

Post by brownbat »

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.…

These are good points and make me want to go back and yell at the study authors for pointing fingers at 2005 while ignoring the REPAYE Act.

I think it's better terms than even you said -- 10% of discretionary. Discretionary is AGI minus 150% of the poverty rate... a real hardship borrower--say the barista with a million dollar pottery degree--could easily qualify for a $0/mo payment then have all loans discharged after 20 years. (That forgiveness would result in a massive tax bill, however...)

My only remaining quibble is that while private loans might be 7-8% of all loans, they're still large in absolute terms, and seem to cluster around the most problematic areas of education, like unaccredited schools. Yet somehow they seem to have the benefit of both worlds, nondischargability without income based repayment, unless I'm missing something.

May not be the cornerstone issue here, but still seems like the policy on private educational loans could be better.

After your comment, poked around, this history seemed especially useful to fill in some of the gaps I had on the policy history here: https://www.savingforcollege.com/article/history-of-student-...

Thanks, you changed my mind.

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