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The Great College Hoax

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Re: The Great College Hoax

#71

Post by tptacek »

yummyfajitas wrote: post #70
tptacek wrote: post #61

Earlier quoted context omitted.

I was offered a job at Bloomberg in 2003, at a significantly better starting than $110k/yr, moving from Ann Arbor, MI. I did this math. So, three things: (1) I'll spare you yet another hypothetical family budget monthly itemization. (2) I'll concede that it is clearly possible to raise a family in New York on $110k/yr. (3) I'll assert again that it is not comfortable to raise a family in New York on $110k/yr, nor doe…

Could you define comfortable? I'm really curious to know what goods and services are beyond your reach at $110k/year. I've also done the math and lived it. Commuting from jersey is better, but even manhattan (north of 111'th st) is quite livable.

$110k is ~$6600/mo net working Manhattan, living in Jersey.

Aggressively assume $2500/mo to rent a house (forget buying). Assume part-time child care @ $900, commute @ $400, lowball utilities @ $500 (I pay more than that in Chicago), food @ $1000, car insurance for one car @ $200, and dependent health care at $150.

At $110k/yr, you're now less than $1000/mo over break-even. Lose an alternator in the car, you're in the red. Fill 3 cavities, you're in the red. Fly to Tucson for a funeral, you're in the red.

Can you do it? Yes. But I'm not going to call it easy.

Re: The Great College Hoax

#72

Post by Xichekolas »

tptacek wrote: post #65
Retric wrote: post #59

Earlier quoted context omitted.

Median household income income in the US 48,000 USD (2006). Let's say you get to keep 1/2 of the 60,000 per year over that for rent. That's easily 2,500 extra rent to cover living close to Manhattan / San Francisco over the national average and you probably don't need a car. The secret is to avoid Starbucks and other expensive things that are not part of the normal middle class lifestyle but seem so important to yupp…

That's a gross oversimplification. Drink a $5 cup of Starbucks every working day, and you've added $100 to your budget. Cut that expense; congratulations, you've saved 3% of your college loan payment. (Can you tell I've had this argument with Erin before?) The big-ticket items I don't trust you're considering: * Child care will cost between $1000-$2000/month. * Commute will add $300-$500; parking $500-$900 (plus car…

Just to spin your head...

I currently live on $14k a year.

Granted, I'm 25 and live in a college town in the midwest. My share of the rent is $255/mo (live with g/f). I spend $115/mo commuting. My car is paid for. My high deductible insurance is $60/mo. I spend about $220/mo on groceries and another couple hundred eating out and entertaining myself. Of course I have no children.

I'm in no way saying everyone should live like me, but I'm quite content living so cheaply. It's not because I have to (I make about $60k/yr) but the vast majority of it goes towards 'vacations' of 6 months or so between jobs (sometimes that involves traveling). I could easily afford a mortgage if I was willing to be tied down, but I'd rather not be. I tend to work for 6-12 months and then take that much time off. The rest of it goes towards my Roth IRA and savings.

Re: The Great College Hoax

#73

Post by chris11 »

tokenadult wrote: post #2

"Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work." That choice of a law school was probably crucial in how the story unfolded. That's not a law school with a high return on investment in that local job market.

I agree with that. Law School numbers put admissions at nearly 50%, and median LSAT is around 153 which is about better than 60% for LSAT test takers. Also U.S.NEWS ranks it at 400. Also their pass rate for the California bar is 6% lower than the state average. Those are all horrible numbers.

I was considering law for a while, and have done a little research into it. Basically law is a numbers game. Schools only care about g.p.a and LSAT scores. Law firms only care about where you went to school and your g.p.a if you went to a bad school. And the firms who care the most about your school's name also pay the most. So the difference in salaries from private law firms at a top ranked law school and a bottom ranked school can be as high as 100k.

Sure there are loan repayment programs at law schools for people who go into public service, but again it seems like the top schools are able to forgive the most debt.

So basically, that law school seems like it has a horrible rate of return, and it looks like Kellum was lucky getting 100k+ a year. Also not looking at the terms of the loan was stupid

Law School Numbers:http://calwestern.lawschoolnumbers.com/

Salary info: http://www.ilrg.com/rankings/law/median.php/1/desc/MSPrivate

Re: The Great College Hoax

#74

Post by jeffcoat »

gaius wrote: post #68
silvajoao wrote: post #11

Earlier quoted context omitted.

So you pretty much put off 4 years of salary, 4 years of raises, 4 years of building contacts, 4 years of climbing the corporate ladder [...] While I agree with much of what you say, 4 years in college surely builds contacts (likely of much better quality than otherwise), and you surely get a kick-start in the corporate ladder (if this is fair or not is another matter).

4 years in college surely builds contacts I've not worked with or for anyone I was at college with, nor found a job through them, nor interacted with them professionally in any way. Sure we're good friends an' all, but the networking people think they're going to do in college doesn't really exist.

And I got my first job out of college through a friend who had joined the company a year earlier. He knew me, had a decent sense of my ability from our classes together, and gave me a strong recommendation. Every job since has built off that first one, both technically and relationship-ally.

So that's two competing anecdotes. The number of variables here is enormous, but I'll pick out just one: my college network may be unusually meaningful (career-wise) because I'm still living in the same state that I went to school in.

Re: The Great College Hoax

#75

Post by yummyfajitas »

tptacek wrote: post #71
yummyfajitas wrote: post #70

Earlier quoted context omitted.

Could you define comfortable? I'm really curious to know what goods and services are beyond your reach at $110k/year. I've also done the math and lived it. Commuting from jersey is better, but even manhattan (north of 111'th st) is quite livable.

$110k is ~$6600/mo net working Manhattan, living in Jersey. Aggressively assume $2500/mo to rent a house (forget buying). Assume part-time child care @ $900, commute @ $400, lowball utilities @ $500 (I pay more than that in Chicago), food @ $1000, car insurance for one car @ $200, and dependent health care at $150. At $110k/yr, you're now less than $1000/mo over break-even. Lose an alternator in the car, you're in th…

You can rent a 3bdrm apt for $1500 in JC, easily enough space for a family of 3-4. Utilities, figure $100-200/month. (Savings of $1200 over your numbers). Maybe you want a really big house?

The apartments I'm talking about are close to the path, so forget the car (save $200). Path+subway every single day is $185/month (save $215), for a 23 min commute.

So using your numbers, you are $1000 over break-even. In reality, you are closer to $2500 over break-even. How is this uncomfortable?

Re: The Great College Hoax

#76

Post by Retric »

tptacek wrote: post #69
Retric wrote: post #63

Earlier quoted context omitted.

First off they started at over 200k/year and one consulted on the side so they where probably into 300k/year fairly quickly. With 200k in student debt you should not buy a house until it's paid down. Rent a nice place for 2500$ / month in 1995 and in 3 years that's down to 160k. This is normal for most people starting out. My guess is they where trying to keep up with the jonzes and living way above their means.

I don't understand your math here. In 3 years, they reduce their debt to 160k. They can't buy a house until their debt is basically 0. How many years from now do they have to wait to raise children in a house? Again, they didn't die . They just broke up. And $2800/mo is a shitload of money, however you want to rationalize it.

I don't understand your math here.

My point was that they could comfortably go from 2,000/mo in interest down to under 1,600/month in three years. Interest is API / 12 per month so principle gives (1 + API / 1200) ^12 return per year. (1.01)^12 = 12.8% that's after taxes and powerful. They should also be making more money over time even as their debt is less of a problem and you feel good that debt is shrinking fast. Which should help the psychological situation.

Using 12% an extra 1000 down saves them 10$ in next month and every month after that it keeps compounding. At 1000$ per month over interest you pay down 12,700 in principle in one year (assuming you don't reduce your payment as interest drops). In 3 years they are saving 430$ / month, but assume they roll that savings into paying down principle in a ~9 years it's all payed off.

But, they don't need to wait that long, they just need to find the right cushion so they feel comfortable taking on more debt. Pay down 82k (saving 820/month) in 5 years and the world looks like a brighter place, your making more money, and buying a house might be a good idea. Don't want to wait that long, fine share a 1 bedroom, drive a used Honda civic etc and and all that debt just about GONE in 3 years.

Re: The Great College Hoax

#77

Post by nazgulnarsil »

Xichekolas wrote: post #72
tptacek wrote: post #65

Earlier quoted context omitted.

That's a gross oversimplification. Drink a $5 cup of Starbucks every working day, and you've added $100 to your budget. Cut that expense; congratulations, you've saved 3% of your college loan payment. (Can you tell I've had this argument with Erin before?) The big-ticket items I don't trust you're considering: * Child care will cost between $1000-$2000/month. * Commute will add $300-$500; parking $500-$900 (plus car…

Just to spin your head... I currently live on $14k a year. Granted, I'm 25 and live in a college town in the midwest. My share of the rent is $255/mo (live with g/f). I spend $115/mo commuting. My car is paid for. My high deductible insurance is $60/mo. I spend about $220/mo on groceries and another couple hundred eating out and entertaining myself. Of course I have no children. I'm in no way saying everyone should l…

I live on 12k a year in one of the richest counties in the nation. It's easy. You know that stuff you think you want? You don't actually want it, you want the feelings associated with buying and showing things off. Sit down sometime and take stock of the things you actually use and derive enjoyment from on a daily basis and you'll be sitting there with a very tiny and cheap list. This is easier now than it used to be. Broadband internet is unlimited entertainment for $20 a month.

Re: The Great College Hoax

#78

Post by SystemOut »

tptacek wrote: post #50
acgourley wrote: post #43

Earlier quoted context omitted.

Yes it's a lot of money, but it also leaves them with a lot of money left every month. I don't know exactly what your net income in CA on 200k is (and if they filed jointly, etc), but they should take home at least 10k a month. They still have 7k a month to live on. I don't see the problem.

Assume they're living in a house and they have one child. Then: $2800 for loans. $3500 for mortage and escrow. $1300 for child care (both work). $1000 for food and day-to-day living expenses. $1000 for utilities, Internet, services and recurring expenses --- parking, commute, health care copay and (with most employers) dependent coverage, etc. I get $9600. Survivable? Of course. You can clearly survive in America wit…

Here's the problem. Why do they need a 3500 mortgage? Why should they be entitled to a house that expensive if they took in that kind of law school debt? Let's say you knock off 1500 of that and just pay rent. That's what my wife and I did and she only has about 400 a month in loan payments. We didn't have kids but let's just leave it there and put it in savings or pay off the loans faster. Let's even leave the 2000 in other expenses. That leaves you at 2800 + 2000 + 2000 = 6800. 8100 if you factor in rainy day savings. You should be taking home more than 10k a month at that income range, even in California with its crappy taxes.

It's doable, more than doable. I hate being judgmental or assuming more than I know from their situation but these people just reek of getting overextended and not being able to apply any discipline in their lives.

Then again, they're both law students and didn't read the fine print. Would you really trust a lawyer that did that? I wouldn't.

Re: The Great College Hoax

#79

Post by nazgulnarsil »

sanj wrote: post #41
edw519 wrote: post #30

You had me right up until "bachelor's degree in history".

There was a time when I felt that way. But somewhere along the line I married a woman who's got a degree in History and Literature. I can see your eyes rolling already. It gets worse: she never even (gasp!) took Calculus. But the fact is that she's smart. Crazy smart. Quoted by the Supreme Court smart. And she sees the world through glasses that are very, very different than my own. Our discussions are not about whet…

count yourself lucky. attractive women who don't spend their lives acting like 3rd graders just because they can are few and far between. This is also why people join mensa and similar clubs even though it seems kind of stupid to pay to belong to a "smart club". People need a level of interaction similar to their own. I'm sure most of the people on hacker news are frustrated on a daily basis with the 8th grade reading comprehension level (and the level of mental acuity that implies) of those around them and thus come here for a semblance of intelligent interaction.

Re: The Great College Hoax

#80

Post by yummyfajitas »

tptacek wrote: post #65
Retric wrote: post #59

Earlier quoted context omitted.

Median household income income in the US 48,000 USD (2006). Let's say you get to keep 1/2 of the 60,000 per year over that for rent. That's easily 2,500 extra rent to cover living close to Manhattan / San Francisco over the national average and you probably don't need a car. The secret is to avoid Starbucks and other expensive things that are not part of the normal middle class lifestyle but seem so important to yupp…

That's a gross oversimplification. Drink a $5 cup of Starbucks every working day, and you've added $100 to your budget. Cut that expense; congratulations, you've saved 3% of your college loan payment. (Can you tell I've had this argument with Erin before?) The big-ticket items I don't trust you're considering: * Child care will cost between $1000-$2000/month. * Commute will add $300-$500; parking $500-$900 (plus car…

You are doing it wrong. Commute in manhattan (one of the cities Retric mentioned) is $81/month.

http://www.mta.info/metrocard/mcgtreng.htm#30day

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