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

#601

Post by lodi » Mon, Jun 05, 2017, 5:06 PM UTC

Steeeve wrote: post #525

MagnumOpus wrote: post #494

Earlier quoted context omitted.

You are building strawmen. The suggestion was to "invest into the stock market", not to "gamble on the single riskiest stock you can find". If an amateur invests their money into a passive index fund or even a diversified equity fund like, say, Fidelity Magellan, they would have done well over any 20-year span. Nuff said.

Both of the investments I referenced were solid until they weren't. My adult life has seen 3 major market crashes and a terrible recession. I've watched neighborhoods go into foreclosures on 80% of their homes. I've had friends go unemployed for over a year. When I see people spread investment advice as if there's no downside, I have to shake my head. There's money to be made in the market, but it's not without risk.…

> Both of the investments I referenced were solid until they weren't.

No they weren't, not even close. Investing all your money in one company (whether Pets.com, McDonald's, or any other) is not, and has never been, "solid". Also, the words "leveraged hedge fund" should tip you off that that wasn't a low-risk investment.

> When I see people spread investment advice as if there's no downside...

Seriously? No true scotsman... err investor... would imply that the stock market is risk-free. Of course there's risk! It's literally the second-most risky/lucrative investment you can make (next to options trading). But the argument is that investing passively in a well-diversified index shifts most of that risk away from total loss--as in your examples--and into more manageable risks, e.g. waiting for the market to recover.

> The S&P 500 declined 57% from its high in the housing crash.

Sure, and then it grew 232% in five years to restore itself.

> You didn't want to spend anything during this presidential cycle anyways.

That's right, we're talking specifically about long-term savings; money that you're not planning to use in the next 5, maybe 10 years. If you're buying pets.com stock with next month's rent money, that's on you. Stock market isn't for everyone; buy T-bills if you want a safer investment.

And by the way, in the context of this thread, money spent on tuition is also money that you can't spend in this presidential cycle, or the next! The break-even on something like med-school could easily take three presidencies or more.

> The Dow lost more than 5% in a single day at least 5 times in 2008. The next time one of the major indexes drops 700 points in a day look around and tell people "you'll be fine if you don't panic sell.

This literally happened a few weeks ago. I "lost" 9% in a day on news of a possible Trump impeachment, proceeded to not panic, and then watched my funds restore themselves.

You can't use people doing the exact opposite of what they're advised to do as an example of the advice not working.

> Where was the index fund advice in '98? Where were all the people who had well balanced / well hedged portfolios in '07-'09?

I guess it was with all the people that still had green grass on their lawns? The ones that actually followed the advice?

> There was an army of day-traders once upon a time not all that long ago that blew all kinds of sunshine up people's asses about investments.

They're still there, and they're still blowing, but that's not the advice we're talking about in this thread. We're literally talking about sitting on a passive index for 24 years.

> But by all means, keep shilling the passive investment advice...

Who are we shilling for? Big Passive Investment? Am I getting commissions off your money?

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By the way, I'm interested to know what you propose I do with, say, an unexpected year-end bonus. Put it in a bank account earning -2% real interest?

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

#602

Post by ruste » Mon, Jun 05, 2017, 5:13 PM UTC

thefourthchime wrote: post #431

PretzelFisch wrote: post #425

Earlier quoted context omitted.

Without a degree the job market is a desert, since the hr filters ignore your resume. I have met many people with degrees who have less understanding and ability. But that paper always buys them an in, I don't have.

That's b.s. If you contributed to a creditable open source project you'll blow paste the guys with degrees.

It took me longer than I'd like to admit to figure out "blow paste" was a typo. Thanks for brightening my day with accidentally colorful language.

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

#603

Post by astrodev » Mon, Jun 05, 2017, 5:14 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.

If that's the case, then I don't understand why the student loans are said to be such a big burden. It's just another tax, I wish more taxes were voluntary like that.

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

#604

Post by MisterBastahrd » Mon, Jun 05, 2017, 5:14 PM UTC

pixl97 wrote: post #495

ggchappell wrote: post #467

Earlier quoted context omitted.

> I never figured out what most of the administration did besides irritate the better teachers. As a teacher who has experienced that irritation, I hear you. But I also know that multitudes of administrators are a necessity in the modern world. There are a number of reasons for this; one of the biggest is regulatory burden . Pick your favorite downtrodden group. Some politician makes a speech about how Group X has go…

But they also come at a cost. And much of that cost is administrative. T.I.N.S.T.A.F.R There is no such thing as free regulation. Some people tend to forget that when they say "We should make a law that says..."

No, but the flip side is that if you don't want to enforce reasonable assurances on quality or efficacy, then you don't have the right to complain when people don't act in the manner you want them to. Most people would rather have the assurances.

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

#605

Post by Retric » Mon, Jun 05, 2017, 5:16 PM UTC

kchoudhu wrote: post #374

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…

Doesn't explain what's happening in private higher education though.

Sure it does, if stake school is X, then private schools need to cost more than X to seem exclusive.

Further, financial aid makes nameplate number less meaningful. If someone has rich parents or wins a full ride then schools want to milk that for as much as possible. Otherwise they can always add discounts down to whatever someone can pay.

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

#606

Post by Fomite » Mon, Jun 05, 2017, 5:18 PM UTC

m-j-fox wrote: post #587

twotwotwo wrote: post #246

Earlier quoted context omitted.

And college got expensive partly through policy choices. Offering easy loans tends to make people price insensitive, so tuitions go up and a lot of that money goes to things like increasingly fancy buildings and making textbook publishers' shareholders rich. Meanwhile often less is going to state schools that, with low in-state tuitions, were historically a way up for a lot of people. (An older friend went to Berkele…

I can't understand the paradox that as tuition increased, tenured professor jobs became more scarce and other professor jobs lower paying. I guess fancy facilities and less gov't subsidy helps explain. It's gotten to the point that you might consider the alternative of starting a higher education co-op to hire associate professors and frustrated, underemployed phds while minimizing tuition by meeting in un-fancy loca…

The increase in tuition (and fees) make up for budget shortfalls everywhere (fancy facilities are actually not all that big of a deal if you crunch the numbers).

At the same time, getting rid of tenured positions is a decent means of cutting costs to try to address the same shortfall.

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

#607

Post by MisterBastahrd » Mon, Jun 05, 2017, 5:20 PM UTC

vowelless wrote: post #68

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…

On the other hand, one should wonder why college is so expensive in the US in the first place. Even without any subsidies, non-American tuition is a fraction of the cost of the big universities in the US. Why? Why are book so expensive here? Why is so much money spent on buildings, stadiums and hiring football coaches? The highest paid public employee in 39 states in the US is a college sports coach! [1] Throwing mor…

Well, for one, college sports is a GREAT selling point to students and alumni, who in turn stay involved and donate back to the universities.

For another, there are quite a few college athletics programs that fund themselves through ticket sales, televised game revenue, televised show revenue, and private donors.

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

#608

Post by mywittyname » Mon, Jun 05, 2017, 5:22 PM UTC

bcheung wrote: post #591

One of the other things that will start entering the social consciousness is that a lot of the information (lectures, books) is available online for free. This is especially true for computer science / programming. Unless you need hands on access to equipment or to physically interact with people for your chosen field of study, the college format is a very inefficient means learning. The "Cone of Learning" states the…

I remember doing all but the first in college.

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

#609

Post by lovich » Mon, Jun 05, 2017, 5:25 PM UTC

learc83 wrote: post #567

lovich wrote: post #558

Earlier quoted context omitted.

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.

Is that current or always? I went to college 2007-2011 and the first two years everyone I knew got 5.5k and 6.5k loans from the government and then private loans for the rest. After the great recession no one could get private loans anymore and the government filled in the rest

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

#610

Post by Fomite » Mon, Jun 05, 2017, 5:25 PM UTC

yourapostasy wrote: post #573

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,…

"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?"

Investing implies that the tuition increases are not to make up for current budget shortfalls. This is often not the case. Many states, for example, cut the budget for higher education in 2008-2009 by the high double digits, with no real way for the universities in question to make that up.

"Or allocate to competitively recruit and retain proven professors with observable education outcomes (or invest in establishing metrics to identify such outcomes)?"

Honestly, because if they were doing it strategically to make up for the shortfall, they'd be competitively recruiting and retaining proven professors with a track record of funded research projects. Which is what they're doing, but that too is becoming more difficult as federal research budgets stagnate.