71–80 of 111 posts
Where is medicine and law in these diagrams? Arts?
Pre-med is typically science (biology). Pre-law is typically political science or psychology. Those strike me as more likely arts here, though you'd need to look at the source study's classifications.
The data actually support the exact opposite conclusion from the headline: if the IRR of a degree is constant, then the payoff is proportional to the cost (i.e. the amount you invest). More selective schools tend to be more expensive. So pay N times more for tuition, expect to earn N times more in the long run.
That doesn't mean your entire income will be N times higher.
For example if you spent $100k on your tuition in year 0, and the rate of return from that degree is 10% per year, and assuming you spend the returns rather than reinvest them, then your degree is adding $10k/year to your income.
But you're not living on $10k/year, you're earning $80k/year, $10k of which is attributable to your degree.
So to complete the exericse, if you had spent 2x on your education, you would be making $90k/year. Not $160k.
It seems to say that where you studied matters if it's not a STEM degree. For me, the explanation is that it's relatively harder to determine whether someone has learned their stuff if it's Math or Science, but quite hard if it's creative writing or history. There's an xkcd about this. That's why something like an online coding test might work: someone clueless will not be able to write that palindrome quiz. You can…
> compare the career earnings of graduates with the present-day cost of a degree at their alma maters, net of financial aid Woah, what? So a degree that cost $1 but raised your career earnings by $100 would be at 100%? 1000%? Not sure how they're doing the math, but it completely dwarfs the rest. And shows how obviously flawed the measure itself is. One of the key things left out is the baseline cost of time. A few y…
> One of the key things left out is the baseline cost of time. A few years of your life is not free and probably makes for a pretty high baseline cost. Hm, wouldn't that already be accounted for in using 'lifetime earnings'? If someone doesn't go to college and earns $1m, and another person goes to college and earns $1.1m, then the extra 4 working years apparently didn't compensate enough. Plus, college can be a lot…
Neither majors nor schools are randomly assigned to students, so I don't think that there's actually much to take away from this.
As for what people can do differently: if you have equal chances of succeeding at the most selective arts and humanities college, or the least selective engineering, choosing engineering will net you better 20 year salaries. Especially relevant if you're considering humanities as a law degree path -- the LSAT has logical reasoning test, and if you can hack that, you can probably do okay in engineering math / CS classes.
The data actually support the exact opposite conclusion from the headline: if the IRR of a degree is constant, then the payoff is proportional to the cost (i.e. the amount you invest). More selective schools tend to be more expensive. So pay N times more for tuition, expect to earn N times more in the long run.
I was with you up until the very end. Pay N times more for tuition, expect to earn N times more _on_your_degree_investment_ in the long run. That doesn't mean your entire income will be N times higher. For example if you spent $100k on your tuition in year 0, and the rate of return from that degree is 10% per year, and assuming you spend the returns rather than reinvest them, then your degree is adding $10k/year to y…
Yes, it's true that N times spent on tuition does not equal N times more money in an absolute sense because the baseline income for spending zero on tuition is not zero.
However, the article said that the ROI on tuition was 12% annualized, which means that you're not reinvesting the proceeds. If you reinvest the proceeds, then that is additional return on top of the 12%.
But the details are not really relevant. What matters is that the headline is wrong. Where you do to school does matter.
Not how I think about it. It's looking at ROI. And the cost of education typically correlates with quality and long-term earnings. (Put your pitch forks down, not all schools, just generally.) So, if I think about this on a 20 year horizon. I have a $50K degree program at a state school vs a $200K degree from Harvard (numbers rounded). Lets just use 10% as the ROI. At 10% over 20 years, the return on the state school…
Because there is a big selection bias in university education, it's hard to say that Harvard caused someones income to go up using your math. I prefer this post from last year which tries to calculate value-added. http://www.economist.com/blogs/graphicdetail/2015/10/value-u...
If you want to get a job based on what you learn at college, you can do that at a lot of places. If you want to get a job because your roommate started a billion-dollar tech company, or inherited a billion-dollar company, or has a parent who is the President of a foreign country, you had best go to Harvard (or maybe a Princeton/Stanford type).
The big thing for me with top schools is the "baseline quality of the degree". I didn't go to a top school, but spent my time studying everything math and CS related I could, and managed to get an awesome education. At the same time, I am fully cognizant of the fact that peers who were less driven likely were more easily able to skate by, for the most part. So when a resume comes across my desk from a guy from my alm…