Is College Still Worth It? The New Calculus of Falling Returns [pdf](stlouisfed.org)
stlouisfed.org
Is College Still Worth It? The New Calculus of Falling Returns [pdf]
https://www.stlouisfed.org/~/media/files/pdfs/hfs/is-college-worth-it/emmons_kent_ricketts_college_still_worth_it.pdf
360 comments
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 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.
I went to university in a country with a Gini coefficient of .35, and now live in a country with a Gini coefficient of .39 (See OECD link below)
The funny thing is, my student loan is one of the highest out of my American friend group† (although very normal amongst my NZ peers). Unlike the US, there was a lot less much in the way of financial aid/scholarships available, so sticker price was what people actually paid.
https://data.oecd.org/inequality/income-inequality.htm
† For people with undergraduate degrees
The funny thing is, my student loan is one of the highest out of my American friend group† (although very normal amongst my NZ peers). Unlike the US, there was a lot less much in the way of financial aid/scholarships available, so sticker price was what people actually paid.
https://data.oecd.org/inequality/income-inequality.htm
† For people with undergraduate degrees
Interesting. I knew NZ was pretty messed up but I didn't realise it was that bad.
The friend bit is anecdata.
Looks like NZ avg debt is $28k NZD [1]
USA is $29 USD [2]
So USA is 50% more expensive, on avg (NZDUSD 1.5). IMHO both are a disgrace, but that's another thing.
1: https://en.wikipedia.org/wiki/Student_loans_in_New_Zealand#S...
2: https://studentloanhero.com/student-loan-debt-statistics/
The friend bit is anecdata.
Looks like NZ avg debt is $28k NZD [1]
USA is $29 USD [2]
So USA is 50% more expensive, on avg (NZDUSD 1.5). IMHO both are a disgrace, but that's another thing.
1: https://en.wikipedia.org/wiki/Student_loans_in_New_Zealand#S...
2: https://studentloanhero.com/student-loan-debt-statistics/
$29k is not that much is it? That is about what I ended up with for my degree in Sweden where higher education is free but you borrow for living expenses. I repay it with about $100 per month for 25 years.
Perhaps the biggest difference is the interest rate which is government backed and around maybe 1-2%. According to first result on Google the interest rates on US student loans seems to be around 6-8%.
Perhaps the biggest difference is the interest rate which is government backed and around maybe 1-2%. According to first result on Google the interest rates on US student loans seems to be around 6-8%.
$29k is a decent chunk of change of you don't have a high paying job. It'll take you many years to pay off because of all your other expenses (housing, transportation, healthcare, food, clothing, etc.).
Yes, but think of it as someone else lent you money to be housed, fed, and clothed for four years while you earned no income. That’s going to cost money anywhere in the world, before a single book is purchased or lecture paid for.
4.5% for US gov't subsidized loans.
Yes, but you get the 6-8% as a tax deduction if you can pay it as long as the loan is from the govt.
Yeah it's not great!
There's fairly decent financial aid available to cover your living costs if you're from a low income family, but that cuts off pretty quickly, and unlike the US, there isn't really a culture of paying for your children's education, so there's a lot of kids (like me) who grew up upper-middle class but didn't get much help through university.
Overall, I'd equate the USD = NZD as realtively equivalent, even though there is a currency difference. The average American is graduating into a job paying $51k USD, whereas NZ grads are often starting at $50-55k NZD.
[1] https://www.shrm.org/resourcesandtools/hr-topics/compensatio...
There's fairly decent financial aid available to cover your living costs if you're from a low income family, but that cuts off pretty quickly, and unlike the US, there isn't really a culture of paying for your children's education, so there's a lot of kids (like me) who grew up upper-middle class but didn't get much help through university.
Overall, I'd equate the USD = NZD as realtively equivalent, even though there is a currency difference. The average American is graduating into a job paying $51k USD, whereas NZ grads are often starting at $50-55k NZD.
[1] https://www.shrm.org/resourcesandtools/hr-topics/compensatio...
Sure, I used the FX rate in your case as you are paid USA wages but your debt was NZD.
Oh yeah, it's a great deal for me. What I meant was Americans who studied and then work in America end up paying roughly the same (when you take into account average earnings) as Kiwis who study and then stay in NZ.
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.
The good thing too is if you get really sick you can go back home for the free healthcare.
The US really benefits from immigrants that were trained by poorer countries. I too moved here, my chronically ill relative is still at home.
The US really benefits from immigrants that were trained by poorer countries. I too moved here, my chronically ill relative is still at home.
Moving overseas is the top benefit of having a relevant (not just any) degree IMO. I'm grateful that American cities are still the best places in the world to work as a software engineer, but that could always change. I'm hoping a non-STEM degree combined with 6+ years of experience will still let me move around easily.
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?)
The Opportunity Cost would have been incurred while they were in college, not 30+ years after. There are too many variables in play when projecting that far out in the future, but you can make good estimates as to what would have happened in the past as an alternative to the 4 years spent in college.
I didn't get compensated as if I had 4 YoE when I had 0.
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.
Alright. I probably would have taken a similar job to the one I actually took 3 years earlier and followed a similar career path the whole time. That is, I wouldn't add 3 additional years of entry level IC work, I would add 3 additional years of senior IC work or better. Right now I'm working for half of prevailing wages for senior ICs in exchange for living in a civilized country, so half of prevailing wages * 3 years - taxes is around $400,000. If I ever move back to the US or get promoted it will be pretty easy to get to an opportunity cost of seven figures of post-tax money for 3 years of math degree.
> Grad school, in general, seems to be a rip off
Grad school is often much better for immigration scoring than a bachelors. Especially if you can manage to do the graduate degree in the country you want to immigrate to.
Grad school is often much better for immigration scoring than a bachelors. Especially if you can manage to do the graduate degree in the country you want to immigrate to.
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 fees that aren't abnormal. Here too your second point rings true, either you pay a lot of money for a good rep (e.g. if you go into BigLaw, assuming you don't burn out, it gives a high return rate), or you pay little for a no-name university, and then I feel grad school absolutely does come at a premium. Compared to a 3-4 year Bachelor's degree, it's usually a relatively quick program with potentially bigger upside, especially if paid for by your employer.
I think what most students underestimate is just how many of them fail to finish the standard path. Almost half of students don't finish their bachelor's within six years due to delays and changing paths, and a lot of them quit entirely. I think college makes sense if you know what you're looking to study, why, are dedicated to completing it, and able to.
A lot of students go into fields of study as a teenager, literally never having had a 5 minute conversation with a person actually working in the field, having spent no time looking at the income tables, or indeed not actually considering the field at all, but just wanting to become a college student. It's these students who probably drag down the stats quite a lot. I've seen fairly unimpressive people go into a business course, work their ass off, do various internships, and land high-paying jobs. And I've seen smart kids start the same business course, muck around, graduate after 6-7 years and land a mediocre job that doesn't really require any particular degree. At the end of the day the student is still the most important factor here, and by the time they head to college, it's often already 'too late' for institutions to turn an B student into an A student, without the intrinsic motivation. There's lots more room in primary/secondary school for that, that's really where it's at. What college you head to after is less important in my opinion.
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 fees that aren't abnormal. Here too your second point rings true, either you pay a lot of money for a good rep (e.g. if you go into BigLaw, assuming you don't burn out, it gives a high return rate), or you pay little for a no-name university, and then I feel grad school absolutely does come at a premium. Compared to a 3-4 year Bachelor's degree, it's usually a relatively quick program with potentially bigger upside, especially if paid for by your employer.
I think what most students underestimate is just how many of them fail to finish the standard path. Almost half of students don't finish their bachelor's within six years due to delays and changing paths, and a lot of them quit entirely. I think college makes sense if you know what you're looking to study, why, are dedicated to completing it, and able to.
A lot of students go into fields of study as a teenager, literally never having had a 5 minute conversation with a person actually working in the field, having spent no time looking at the income tables, or indeed not actually considering the field at all, but just wanting to become a college student. It's these students who probably drag down the stats quite a lot. I've seen fairly unimpressive people go into a business course, work their ass off, do various internships, and land high-paying jobs. And I've seen smart kids start the same business course, muck around, graduate after 6-7 years and land a mediocre job that doesn't really require any particular degree. At the end of the day the student is still the most important factor here, and by the time they head to college, it's often already 'too late' for institutions to turn an B student into an A student, without the intrinsic motivation. There's lots more room in primary/secondary school for that, that's really where it's at. What college you head to after is less important in my opinion.
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.
• 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.
Agree with most of this comment (couldn't read article due to blocking or something). Can confirm the blacklist on no degree. I had one that had like 10 years experience in and perfect fit. When HR found out that he did not finish his degree it was over with no recourse.
Also Masters (MBA is different) is useless in most fields unless used to get a visa or something. Usually you are foregoing wages with few additional benefits. Might be slightly easier to get first job.
Not sure source of degree matters as long as accredited. Certainly there can be upside like same alma mater but I rarely care but will admit to negative bias to Univ of Phoenix but interview and work history trump everything.
Having said that BS or BE have merit if the student actually takes it seriously. I learned a whole lot that I'm not sure I would have learned through self study alone (a least around that time).
Also Masters (MBA is different) is useless in most fields unless used to get a visa or something. Usually you are foregoing wages with few additional benefits. Might be slightly easier to get first job.
Not sure source of degree matters as long as accredited. Certainly there can be upside like same alma mater but I rarely care but will admit to negative bias to Univ of Phoenix but interview and work history trump everything.
Having said that BS or BE have merit if the student actually takes it seriously. I learned a whole lot that I'm not sure I would have learned through self study alone (a least around that time).
You can look at it as a positive too. Having no degree as a programmer means that overly bureaucratic workplaces are filtered out and your chances of ending up at a workplace that has a minimum of BS are increased.
Only works for programmers though. Everybody else should obviously get degrees.
Only works for programmers though. Everybody else should obviously get degrees.
Grad school is often funded in the U.S. (PhD at least, masters not so much)
Even then, depending on your speciality the economic return from a PhD is iffy since you're losing 5+ years of industry wages and experience.
Few people pursuing PhDs are doing so to maximize earning potential.
Disregarding the mental toll of a PhD (one problem being that too many people want to be paid to think than there are available positions), I totally disagree with the parent poster's claim that graduate school is a rip-off. Just being in an an academic environment, being able to take classes, & studying around really smart people and doing research at the highest academic level is a really great experience & makes the stress worth it.
Disregarding the mental toll of a PhD (one problem being that too many people want to be paid to think than there are available positions), I totally disagree with the parent poster's claim that graduate school is a rip-off. Just being in an an academic environment, being able to take classes, & studying around really smart people and doing research at the highest academic level is a really great experience & makes the stress worth it.
> Just being in an an academic environment, being able to take classes, & studying around really smart people and doing research at the highest academic level is a really great experience & makes the stress worth it.
I guess your mileage may vary. The best description I've heard about grad school is that it's a self induced neurosis. That was certainly my experience at the time I did it.
I guess your mileage may vary. The best description I've heard about grad school is that it's a self induced neurosis. That was certainly my experience at the time I did it.
The argument you put forward doesn't make sense. It's not a ripoff to make close to minimum wage for a number of years (and possibly take on high levels of student loan debt), all to work in a field where there is an oversupply of labour that depresses wages?
Ok...
Ok...
My experience is the work in academia is more interesting and intellectually stimulating than my high paying tech jobs. That would be one motivation to go the academia route instead of the tech route.
If you come out the other end of a PhD, then you have the opportunity for best of both worlds: high paying job to work on the problems you find intellectually stimulating.
Also, it is cliche, but doing a PhD does train a person in a way to think that you don't necessarily pick up in a normal job.
If you come out the other end of a PhD, then you have the opportunity for best of both worlds: high paying job to work on the problems you find intellectually stimulating.
Also, it is cliche, but doing a PhD does train a person in a way to think that you don't necessarily pick up in a normal job.
Having a PhD is a bar raiser, it automatically disqualifies you from a lot of jobs that don’t have intellectually stimulating problems to work on. This is all fine and dandy if your area overlaps with a hot field, but not if it doesn’t (or is then but isn’t now). Right now, 95% of the CS industry jobs for PhDs are in AI.
The thinking advantage of a PhD is really valuable, its like an extended apprenticeship with your advisor. Also, it gives you time to look at things you find interesting (well, it should, sometimes not).
The thinking advantage of a PhD is really valuable, its like an extended apprenticeship with your advisor. Also, it gives you time to look at things you find interesting (well, it should, sometimes not).
Yeah fair points. I was sick of studying by the time I graduated - I enjoyed my experience at University, but I wanted to get into the private sector (probably worth mentioning that I studied business at the undergrad level, so I think a lot of that 'postgrad research' in marketing for example is suspect at best).
It's an economic ripoff, his oiubt is that people still want to do it, for reasons other than €€.
I did my Ph.D. to get access to the interesting work that I wanted to do. This work was / is actually less well paid than a standard CS career (in the UK this is IT contracting in the City of London/Finance sector - rapidly £600 a day, often much more). But, if I had done that I think I would probably have had to quit after 10 years, and I would probably have ended up doing something like teaching. This would arguably have been a social good (depending on how good a teacher I might have been) but in terms of pay back I think that the fact that I've managed more than 20 years and am still going is clearly a good bet financially. The seniority that I have in the industry now means that I am able to command good remuneration and the work is as interesting as ever, but more stressful!
Even though the college premiums might be declining, I don’t think your logic is supported by this article at all. The stats in this article show postgraduate degree holders earning 3x what non-graduates earn, and accumulating 5-10x the wealth.
Good point, I was more thinking Med school / Law school / MBA / masters level study.
>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 opportunity cost. You could have been working at the time, earning $XXk/year.
You also need to take into account the opportunity cost. You could have been working at the time, earning $XXk/year.
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.
[deleted]
What are you talking about? Otago is what dreams are made of!
Otaaaaaaaagoooooo! Wouldn’t change it for the world.
Local undergrad is way more sensible. If you want to be elite, kill it locally then do a masters at Oxbridge or whatever.
Local undergrad is way more sensible. If you want to be elite, kill it locally then do a masters at Oxbridge or whatever.
[deleted]
> • Grad school, in general, seems to be a rip off
In usa they are used as a path to immigration. 90% of grad students are foreigners.
In usa they are used as a path to immigration. 90% of grad students are foreigners.
> 90% of grad students are foreigners.
Nowhere near that in total over all fields and even in STEM where the percentage is the highest it is about 80%.
https://www.nytimes.com/2017/11/03/education/edlife/american...
Nowhere near that in total over all fields and even in STEM where the percentage is the highest it is about 80%.
https://www.nytimes.com/2017/11/03/education/edlife/american...
What you are portraing is your exploitation of your countries education system for your own benefit. The NZ tax payer invested in yours for your future ROI into NZ and you put this ROI in your sack.
The possibility of migrating to richer countries causes greater investment in education.
https://appam.confex.com/appam/2018/webprogram/Paper27374.ht...
> Using a new administrative dataset combining the universe of permanent migrant departures from the Philippines with the universe of institution-level post-secondary enrollment and graduation, we show that enrollment and graduation in nursing programs increased in response to demand from abroad for nurses. The supply of nursing programs increased to accommodate this. The increase in nursing enrollment and graduation during the period was much larger than the increase in nurse migration and contributed to a brain gain
https://appam.confex.com/appam/2018/webprogram/Paper27374.ht...
> Using a new administrative dataset combining the universe of permanent migrant departures from the Philippines with the universe of institution-level post-secondary enrollment and graduation, we show that enrollment and graduation in nursing programs increased in response to demand from abroad for nurses. The supply of nursing programs increased to accommodate this. The increase in nursing enrollment and graduation during the period was much larger than the increase in nurse migration and contributed to a brain gain
Uh, that's the Philippines.
Their economy runs on remittances, and the population is mostly under 18, so the government wants graduates to emigrate and send money home.
They even have the OFW department to monitor treatment of their emigrant workers, and provide a parallel immigration office.
Possibly the worst citation ever. :)
Their economy runs on remittances, and the population is mostly under 18, so the government wants graduates to emigrate and send money home.
They even have the OFW department to monitor treatment of their emigrant workers, and provide a parallel immigration office.
Possibly the worst citation ever. :)
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 factor, as is the declining return on capital gains over successive generations. Limited financial literacy and predatory lending seem to be hurting recent grads too.
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. You have three parties: schools, financial institutions, and teenagers. So uneducated teenagers are expected to know whether or not their choice in school, degree, expenses, and personal background will make their education worth it? When the other parties have all the data and experience? And if it turns out everybody was wrong, the now barely-employed twenty-something is least prepared to absorb the burden. More importantly, the least susceptible to incentives to improve this endemic situation for other future students. It creates a moral hazard which drives schools to overprice courses of education that are higher risk, and removes any incentive for lenders to educate borrowers on expected returns from different choices.
Policy circles are hotly debating right now how to overhaul the entire system. Maybe we should acknowledge the policy changes that helped break everything in the first place, and reverse those as soon as possible.
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 factor, as is the declining return on capital gains over successive generations. Limited financial literacy and predatory lending seem to be hurting recent grads too.
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. You have three parties: schools, financial institutions, and teenagers. So uneducated teenagers are expected to know whether or not their choice in school, degree, expenses, and personal background will make their education worth it? When the other parties have all the data and experience? And if it turns out everybody was wrong, the now barely-employed twenty-something is least prepared to absorb the burden. More importantly, the least susceptible to incentives to improve this endemic situation for other future students. It creates a moral hazard which drives schools to overprice courses of education that are higher risk, and removes any incentive for lenders to educate borrowers on expected returns from different choices.
Policy circles are hotly debating right now how to overhaul the entire system. Maybe we should acknowledge the policy changes that helped break everything in the first place, and reverse those as soon as possible.
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.
Non-dischargability is a reasonable feature given the other aspect of federal student loans: they offer income-based repayment. Under Obama’s REPAYE, your loan payments are capped at 15% of your discretionary income.
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.
Non-dischargability is a reasonable feature given the other aspect of federal student loans: they offer income-based repayment. Under Obama’s REPAYE, your loan payments are capped at 15% of your discretionary income.
> 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.
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.
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.
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.
Productivity isn’t the metric that determines whether the government recoups student loan defaults, income is. And the income of graduates is still multiples that of non-graduates, as shown by the data in this article.
Individually, yes. But that doesn’t mean that people are making more money in the aggregate by more people going to college. If the government subsidizes college and that results in more people going to college, but employers just respond by taking previously non-college jobs and making them require college degrees, there isn’t actually more money in the economy as a result to justify the government expenditure.
You’re moving your own goal post. You complained about the government’s relatively small outputs from the student loan program, which is absolutely recouped many times over by today’s income premium, in the form of income taxes, regardless of whether the economy grows.
Your hypothetical isn’t the way things are actually playing out, so I don’t feel like it needs to be argued. Degree holders are generating value on average, so the economy does, in fact, have more money as a result of education. And the government also makes money on it’s investment in education on top of that.
Your hypothetical isn’t the way things are actually playing out, so I don’t feel like it needs to be argued. Degree holders are generating value on average, so the economy does, in fact, have more money as a result of education. And the government also makes money on it’s investment in education on top of that.
I feel like you're talking past a lot of the other commenters in this thread. I'll try to frame it another way:
Generating value is synonymous with growing the economy and being more productive. You can't inflate incomes without either increasing productivity or printing money. If degree holders command higher incomes without offering higher productivity, it comes at the expense of non-degree holders earning lower wages than they would have without the degree holders around.
In my opinion, much of the income premium comes from employers using degrees as a filter (similar to a standardized test). Doing well on the SAT doesn't make you more productive, but does give you a leg up over your peers.
Generating value is synonymous with growing the economy and being more productive. You can't inflate incomes without either increasing productivity or printing money. If degree holders command higher incomes without offering higher productivity, it comes at the expense of non-degree holders earning lower wages than they would have without the degree holders around.
In my opinion, much of the income premium comes from employers using degrees as a filter (similar to a standardized test). Doing well on the SAT doesn't make you more productive, but does give you a leg up over your peers.
I totally agree that a big factor in income differences is due to cultural biases that favor degree holders. I don’t think degrees are economically zero value though, for example patents are primarily held by inventors with postgraduate degrees, and more businesses are started by degree holders.
I’m not really sure how to answer your first part, I’m not trying to talk past anyone, but I feel like people are responding to my point that the income premium is what matters to the student loan program by repeating the conclusion of the paper that the wealth premium is going to zero.
The income premium and the wealth premium in this paper are two different things, and even though people with degrees might end up having net zero additional wealth accumulation at the end of their lives, that doesn’t mean the student loan program is also net zero, or that people with and without degrees have the same lifestyle.
The student loan program gets to make it’s money back before degree holders get to save the money, so the income premium matters to the government more than the wealth premium, when figuring out whether forgiving loans is worth it or not.
I’m not really sure how to answer your first part, I’m not trying to talk past anyone, but I feel like people are responding to my point that the income premium is what matters to the student loan program by repeating the conclusion of the paper that the wealth premium is going to zero.
The income premium and the wealth premium in this paper are two different things, and even though people with degrees might end up having net zero additional wealth accumulation at the end of their lives, that doesn’t mean the student loan program is also net zero, or that people with and without degrees have the same lifestyle.
The student loan program gets to make it’s money back before degree holders get to save the money, so the income premium matters to the government more than the wealth premium, when figuring out whether forgiving loans is worth it or not.
Right, so the issue with the income premium without economic growth argument is that the government would have collected those incomes anyway, just from different people (unless the student loans are structured as a % of future earnings, in which case I apologize for my ignorance).
Of course, degrees aren't zero value, but the subsidies for education (student loans) could still be distorting supply in a way that results in a net loss for the government. For example, a self-taught engineer or entrepreneur spends years in school instead of inventing or starting businesses. This is a poor allocation of investment and human capital which results in a net economic loss (including a loss for the government).
Of course, degrees aren't zero value, but the subsidies for education (student loans) could still be distorting supply in a way that results in a net loss for the government. For example, a self-taught engineer or entrepreneur spends years in school instead of inventing or starting businesses. This is a poor allocation of investment and human capital which results in a net economic loss (including a loss for the government).
Why do you believe that school years take away from invention and business? There’s no evidence of that, and a lot of evidence in the other direction. Right now, both inventing and starting businesses are strongly correlated with degrees. The evidence we have suggests not only that student loans are a very good investment, it suggests the investment is so good that the government would make almost as much money back if they subsidized education completely, if they paid for education and didn’t ask for the money back. The evidence in countries like Norway and Finland seems to back this up as well. They subsidize education, and their economies are strong, and their education systems out-rank the US globally.
So, if in the aggregate a higher percentage of people have degrees in recent decades (true), but the productivity growth per employee hasn't gone up (also true), then the economy as a whole hasn't benefited (economically, anyway) from having more people go to college.
The example of patents looks a lot more like "people with advanced degrees are more likely to be in jobs where filing for patents is encouraged by the employer" than it does like "people with advanced degrees invent more". To be honest, the fact that our current patent situation is so obviously a net negative might be skewing my judgement on this, but if you thought that bringing up patents was a way to make it sound convincing that college degrees enhance productivity, well it doesn't for me anyway. I even have a patent, or my employer got one from my work anyway, and I still think our patent system is value-destructive.
The example of patents looks a lot more like "people with advanced degrees are more likely to be in jobs where filing for patents is encouraged by the employer" than it does like "people with advanced degrees invent more". To be honest, the fact that our current patent situation is so obviously a net negative might be skewing my judgement on this, but if you thought that bringing up patents was a way to make it sound convincing that college degrees enhance productivity, well it doesn't for me anyway. I even have a patent, or my employer got one from my work anyway, and I still think our patent system is value-destructive.
I feel like the point I’m trying to make is being repeatedly ignored in favor of the thing you want to talk about. I have not been arguing that college benefits the economy as a whole. It doesn’t take benefitting the economy as a whole for the government to make back it’s money on student loans, specifically because the government gets the first cut of the income, even before the student does. Is it clear at this point that the current income premium and the wealth premium are separate things, and that the wealth premium is the only one currently disappearing?
Maybe the government part is confusing here. Imagine student loans coming strictly from for-profit banks. It is possible for the banks to make their money back, while students lose money, right? This happens to restaurant owners and poor families all the time. It doesn’t matter if the loans stimulate the economy, or if a percentage of loans default, the bank still makes it’s money.
Anyway, I’ll play along with the other arguments, just for fun. So by what metric are you declaring that productivity is not growing per employee? The US per-capita GDP has been growing steadily. How do you back up your claim that productivity hasn’t gone up?
Even if it were true, I don’t think it’s clear or true that you can declare the economy as not having benefitted from education in the past. The paper we’re commenting on has data that shows a net positive economic value in the past, even though the wealth premium is disappearing. And BTW do you really believe that - that the education system has done zero economically? Is that what you’re implying?
People with advanced degrees do invent more, in part because people with advanced degrees are more likely to be in jobs where invention and patents are encouraged, yes. Also because people who are prone to inventing are more likely to choose to do a PhD. How does this demonstrate that people would be inventing more if they chose not to go to college? People can already choose not to go to college, and choose to invent, and by and large that is not happening - what’s really stopping all the non-degree holders from inventing right now? You’re saying it’s just jobs keeping inventors out? There’s no education requirement on submitting a patent, so if college does nothing, why aren’t high school graduates already the majority of applications?
Maybe the government part is confusing here. Imagine student loans coming strictly from for-profit banks. It is possible for the banks to make their money back, while students lose money, right? This happens to restaurant owners and poor families all the time. It doesn’t matter if the loans stimulate the economy, or if a percentage of loans default, the bank still makes it’s money.
Anyway, I’ll play along with the other arguments, just for fun. So by what metric are you declaring that productivity is not growing per employee? The US per-capita GDP has been growing steadily. How do you back up your claim that productivity hasn’t gone up?
Even if it were true, I don’t think it’s clear or true that you can declare the economy as not having benefitted from education in the past. The paper we’re commenting on has data that shows a net positive economic value in the past, even though the wealth premium is disappearing. And BTW do you really believe that - that the education system has done zero economically? Is that what you’re implying?
People with advanced degrees do invent more, in part because people with advanced degrees are more likely to be in jobs where invention and patents are encouraged, yes. Also because people who are prone to inventing are more likely to choose to do a PhD. How does this demonstrate that people would be inventing more if they chose not to go to college? People can already choose not to go to college, and choose to invent, and by and large that is not happening - what’s really stopping all the non-degree holders from inventing right now? You’re saying it’s just jobs keeping inventors out? There’s no education requirement on submitting a patent, so if college does nothing, why aren’t high school graduates already the majority of applications?
Correlation does not equal causation. There's a very broad spectrum of people who do not have degrees. It's very likely that if you took those same people earning degrees and had them enter the workforce instead, they'd have equal or greater pay.
That isn’t supported by the data we actually have. Please take a look at Figure 3 on page 39.
That data doesn't reference the point I'm making. What I'm saying is that it's very possible that if the same people that got bachelor degrees instead entered the workplace, they'd have equal or greater lifetime earnings.
To put it another way, earnings are correlated with an individual's talent and drive. Currently, many of those people end up getting degrees. It's a correlation, it's not the degrees that are causing the jump in earnings, it's the individual's skills.
To put it another way, earnings are correlated with an individual's talent and drive. Currently, many of those people end up getting degrees. It's a correlation, it's not the degrees that are causing the jump in earnings, it's the individual's skills.
You’re right, figure 3 doesn’t answer your question. But your point/topic is not addressing my original point. My point above was that income before taxes alone is what you need to evaluate whether the student loan program offsets the student loan default rate. The financial return on investment of the student loan program is determined solely by the increase in income, not the wealth premium.
To address your separate point directly, there are studies that attempt to directly answer the question you’re asking. For example: http://conference.iza.org/conference_files/CoNoCoSk2011/gens...
However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.
One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.
To address your separate point directly, there are studies that attempt to directly answer the question you’re asking. For example: http://conference.iza.org/conference_files/CoNoCoSk2011/gens...
However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.
One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.
That doesn't say anything about which is cause and which is effect, which is what is relevant for an increase in college education to make a more productive workforce.
In fact, the labor productivity growth rate does not seem to have significantly changed at all, even as the percentage which is college educated has gone up a lot: https://stats.oecd.org/Index.aspx?DataSetCode=PDYGTH
In fact, the labor productivity growth rate does not seem to have significantly changed at all, even as the percentage which is college educated has gone up a lot: https://stats.oecd.org/Index.aspx?DataSetCode=PDYGTH
Again, I wasn’t talking about productivity, that is orthogonal to my point. I was talking about the income taxes that the government extracts from the workforce, and the income taxes the government gets are higher on average from college grads. Productivity is subjective, and while it matters indirectly to whether the economy is growing, it has no direct bearing on whether the government recoups it’s investment in student loans after losses from defaults. Income taxes directly offset those losses. Productivity... who knows, it depends heavily on your agenda and point of view.
To address your point directly, I don’t personally believe that non-grad programmers are as economically productive as grads on average. I would totally believe that non-grads are as productive at building UI widgets and CRUD apps and stuff like that. However, inventions and patents are absolutely dominated by people with postgraduate degrees. It’s not a matter of hourly output, it’s a matter of yearly compound interest, and the compound interest in computer programming is generated by research. It is overwhelmingly PhDs who are developing neural networks and AI methods right now, overwhelmingly postgraduates who are the architects of new hardware and of new software methods. These are the things making the computer industry grow larger in fundamental ways.
To address your point directly, I don’t personally believe that non-grad programmers are as economically productive as grads on average. I would totally believe that non-grads are as productive at building UI widgets and CRUD apps and stuff like that. However, inventions and patents are absolutely dominated by people with postgraduate degrees. It’s not a matter of hourly output, it’s a matter of yearly compound interest, and the compound interest in computer programming is generated by research. It is overwhelmingly PhDs who are developing neural networks and AI methods right now, overwhelmingly postgraduates who are the architects of new hardware and of new software methods. These are the things making the computer industry grow larger in fundamental ways.
Having done my master's degree in neural networks in the 90's, I reluctantly have to admit that they are not all that productive in the great majority of cases where they are used (although there are exceptions). The reality is that the vast majority of what AI or neural networks are used on, is buzzword bingo.
I agree with you there! But... the buzzword bingo is generating big business right now, even if it’s a fad or doesn’t work well or poorly applied.
> Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively
The original paper that this whole discussion is happening in the context of literally says that the college premium is very low, and for non whites practically zero. The whole issue is that society-wide, college education doesn’t increase the wages of people. Yes, the college educated people make much more than those without a degree, but the question is how much they’d make on average if those same people didn’t get a degree, and as the paper argues, only a little less if at all.
The original paper that this whole discussion is happening in the context of literally says that the college premium is very low, and for non whites practically zero. The whole issue is that society-wide, college education doesn’t increase the wages of people. Yes, the college educated people make much more than those without a degree, but the question is how much they’d make on average if those same people didn’t get a degree, and as the paper argues, only a little less if at all.
No, income taxes are extracted before the premium is calculated. I’m not talking about the wealth premium that a degree gives you, I’m talking about the income taxes that the government extracts from people who have degrees, which is completely unaffected by the recent downward trend in the wealth premium that this paper is calculating. This is a case where the absolute, uncontrolled data is very important to differentiate from the adjusted, controlled data.
I’m sorry, but what you’re saying here doesn’t make sense. If, after controlling, college premium is zero, it means that if nobody at all went to college, the wages and thus also the tax receipts would be the same. It could be that in that scenario different people would make these wages than now, as the distortionary effect of college wouldn’t then deprive them of it in favor of some graduate from better school, but from the taxman point of view, it doesn’t really matter.
Education only adds value to the society if it allows graduates to do jobs that otherwise couldn’t be done without education. For example, surgeons require lots of education to do their jobs. If nobody educated surgeons, those jobs wouldn’t be done. Thus, educating surgeons does increase tax receipts.
On the other hand, education obtained in an MBA degree isn’t really obligatory to do the job that MBAs typically do. If nobody got MBA, those management positions would be filled anyway, potentially by different people. This way, MBA is zero sum and has no benefit for society, though it does benefit the individuals who obtain it. Government doesn’t earn extra tax from educating MBAs, MBA programs just determine who will be paying that tax.
Education only adds value to the society if it allows graduates to do jobs that otherwise couldn’t be done without education. For example, surgeons require lots of education to do their jobs. If nobody educated surgeons, those jobs wouldn’t be done. Thus, educating surgeons does increase tax receipts.
On the other hand, education obtained in an MBA degree isn’t really obligatory to do the job that MBAs typically do. If nobody got MBA, those management positions would be filled anyway, potentially by different people. This way, MBA is zero sum and has no benefit for society, though it does benefit the individuals who obtain it. Government doesn’t earn extra tax from educating MBAs, MBA programs just determine who will be paying that tax.
> If, after controlling, college premium is zero, it means that if nobody at all went to college, the wages and thus also the tax receipts would be the same.
No, that’s not true, you’re missing a very important point. Taxes come out of income, they aren’t extracted after you control for everything, they are extracted on your income, and the income for 4-year degree holders is 2x the income of non-degree holders on average.
No, that’s not true, you’re missing a very important point. Taxes come out of income, they aren’t extracted after you control for everything, they are extracted on your income, and the income for 4-year degree holders is 2x the income of non-degree holders on average.
You keep missing what I’m saying. Sure, the degree holders make much more, but the real question is, why they make more.
Do they make more because they learned valuable skills allowing them to do valuable jobs that otherwise wouldn’t be done? Then yes, the government extracts part of the extra productivity they generate that wouldn’t have been generated but for the education.
Or maybe do they make more because the college degree certifies them as quality people, which signals their value as good workers, leading to employers choosing them over other people? In that case, college education doesn’t make the workers any more productive. No extra value is produced because of college education. However, the college educated workers in that world still make more than not educated workers. All college does then is to determine who gets to do the higher income jobs. If nobody went to college in that world, those exact same jobs would be done anyway, it’s just employers would have to use different signals for employee quality than college degree.
I believe that our world is much closer to the latter than to the former. College is mostly quality certification to signal value, and it’s not building human capital through teaching people skills that make them more productive. This is shown by papers like above, where they find that after controlling for other explanatory variables, college premium is zero or close to zero, but also by common sense: a typical college graduate forgets 95% of the material in class, and the remaining 5% is often not likely to be used anyway, since most degrees are not teaching any practical work skills anyway (except for the job of being a college professor), and on top of that a lot of people don’t even work in a job they have a degree for.
Do they make more because they learned valuable skills allowing them to do valuable jobs that otherwise wouldn’t be done? Then yes, the government extracts part of the extra productivity they generate that wouldn’t have been generated but for the education.
Or maybe do they make more because the college degree certifies them as quality people, which signals their value as good workers, leading to employers choosing them over other people? In that case, college education doesn’t make the workers any more productive. No extra value is produced because of college education. However, the college educated workers in that world still make more than not educated workers. All college does then is to determine who gets to do the higher income jobs. If nobody went to college in that world, those exact same jobs would be done anyway, it’s just employers would have to use different signals for employee quality than college degree.
I believe that our world is much closer to the latter than to the former. College is mostly quality certification to signal value, and it’s not building human capital through teaching people skills that make them more productive. This is shown by papers like above, where they find that after controlling for other explanatory variables, college premium is zero or close to zero, but also by common sense: a typical college graduate forgets 95% of the material in class, and the remaining 5% is often not likely to be used anyway, since most degrees are not teaching any practical work skills anyway (except for the job of being a college professor), and on top of that a lot of people don’t even work in a job they have a degree for.
There are two separate “premiums” calculated in the paper. One of them is income, and one of them is wealth (accumulated savings).
Only the wealth premium is going to zero, the income premium is currently still quite high and is stable.
Only the income premium matters to income taxes, the wealth premium that is going to zero does not affect income taxes directly in the short term.
The only premium that the student loan program cares about in the short term is the income premium, and the income premium has not gone down.
The question of why this all happens is indeed interesting and important, however not relevant to what I’ve been talking about here, that student loans are on balance repaid by the college income premium.
In short, the college premium from the point of view of the government’s income is not the same as the college premium to the student. It’s possible for the government to see a favorable financial return on student loans at the same time the student sees negative value in their degree.
Only the wealth premium is going to zero, the income premium is currently still quite high and is stable.
Only the income premium matters to income taxes, the wealth premium that is going to zero does not affect income taxes directly in the short term.
The only premium that the student loan program cares about in the short term is the income premium, and the income premium has not gone down.
The question of why this all happens is indeed interesting and important, however not relevant to what I’ve been talking about here, that student loans are on balance repaid by the college income premium.
In short, the college premium from the point of view of the government’s income is not the same as the college premium to the student. It’s possible for the government to see a favorable financial return on student loans at the same time the student sees negative value in their degree.
What the “other” side is arguing is that if you’re using these income taxes as justification for the government backed loans because those loans allow the attendance of college, then it matters whether or not those same people going directly into the workforce, starting working 4 years earlier, and using their talent and ambition would end up paying a similar or greater amount of income tax. In short, you’re saying only the outcome matters and they’re saying the outcome might not be caused by college attendance.
I’m not saying that only the outcome matters, I’m saying that the government’s financial investment on the student loan program is seeing high positive returns right now, despite the default rate on those loans.
Because you’re calculating that the income levels attained (and income taxes paid) by the specific cohort who attended college are caused by their attendance, rather than merely correlated with it. If they’re caused, the program should take credit for the returns on that investment.
If that cohort of people (generally more ambitious, societal/educational rule following, and possibly more intelligent [at least more “book smart”] than the national median of college non-attendees) would have earned enough to pay the same income tax anyway, those gains cannot be ascribed to the government student lending.
If that cohort of people (generally more ambitious, societal/educational rule following, and possibly more intelligent [at least more “book smart”] than the national median of college non-attendees) would have earned enough to pay the same income tax anyway, those gains cannot be ascribed to the government student lending.
I’m not arguing causation, and I’d be happy rephrasing to say that the investment sees returns precisely because higher income taxes are strongly correlated with degrees. What causes attendance is important to the question of whether investment in college is a return from the point of view of the student, but it’s not particularly important from the point of view of the government and whether the student loan program is paying off today. Whether the government is seeing returns is not a causation vs correlation issue, it’s just a fact.
I’m looking at the raw data, not through the lens of a model that discounts absolute income & savings differences to try to answer a hypothetical question about what college is worth to the individual.
In the case of income & taxes, it’s important in this particular case (that of student loans and income taxes) to look at the raw unadjusted income, because that is what the government sees. It doesn’t matter if tuition is cutting into graduates’ savings, because the government gets it’s income taxes before people get a chance to save (or even spend!).
Your second point is hypothetical, since studies trying to control for IQ and parents’ education and all the other factors we can think of are still showing positive economic returns for college graduates. This paper is asking the question, ‘how can we calculate the return on investment in college’ from the point of view of a student, and trying to rule out factors that give you more income without going to college. However, that is not the same thing as asking ‘what would happen if everyone stopped going to college?’.
I’m looking at the raw data, not through the lens of a model that discounts absolute income & savings differences to try to answer a hypothetical question about what college is worth to the individual.
In the case of income & taxes, it’s important in this particular case (that of student loans and income taxes) to look at the raw unadjusted income, because that is what the government sees. It doesn’t matter if tuition is cutting into graduates’ savings, because the government gets it’s income taxes before people get a chance to save (or even spend!).
Your second point is hypothetical, since studies trying to control for IQ and parents’ education and all the other factors we can think of are still showing positive economic returns for college graduates. This paper is asking the question, ‘how can we calculate the return on investment in college’ from the point of view of a student, and trying to rule out factors that give you more income without going to college. However, that is not the same thing as asking ‘what would happen if everyone stopped going to college?’.
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.
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.
> The non-dischargability of student loans protects the government from further losses.
This one feels like a "true in theory, but not practice." Since the change was recent, we don't know how it will turn out, but it seems _very_ likely that some percentage of folks will die with outstanding student loans. If tuition keeps rising, it will be a non-trivial amount of money.
This one feels like a "true in theory, but not practice." Since the change was recent, we don't know how it will turn out, but it seems _very_ likely that some percentage of folks will die with outstanding student loans. If tuition keeps rising, it will be a non-trivial amount of money.
> 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?
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?
> The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth.
Is it? Permit this armchair economist a theory:
People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.
To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.
Is it? Permit this armchair economist a theory:
People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.
To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.
Some things cost the same nationwide, for example the MSRP of a new truck. A college degree means higher income and certain higher expenses (e.g, housing), but not others. Your college debt balance is the same regardless if you earn $70,000 in an entry level Software Engineering job in Philadelphia or $120,000 in SFBA. That creates room for some arbitrage and wealth building.
Why do you specify degree-holding entrepreneurs instead of simply degree-holders? That might hide some survivorship bias.
You have three parties: schools, financial institutions, and teenagers.
You have four - parents. Students can’t get a loan without filling out FAFSA which requires their parents involvement. Parents could guide children in the right direction.
You have four - parents. Students can’t get a loan without filling out FAFSA which requires their parents involvement. Parents could guide children in the right direction.
The teenagers in this party have no way of making sure their parents are savvy enough to guide them in the right direction- unless of course they themselves are clever enough to know.
Only if they're financially literate, AND their experience (often from their era) applies to their kids.
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>Policy circles are hotly debating right now how to overhaul the entire system.
No guaranteed federal loans would fix everything. This means tuition loans could then be discharged and the lender would be more discerning about loaning to a student heading to some boutique private college with sky-high tuition and ending up with a humanities degree.
No guaranteed federal loans would fix everything. This means tuition loans could then be discharged and the lender would be more discerning about loaning to a student heading to some boutique private college with sky-high tuition and ending up with a humanities degree.
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?
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 schools, community colleges and state schools. What's wrong with that?
>Guess who is statistically unlikely to get loans in that scenario?
People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
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 schools, community colleges and state schools. What's wrong with that?
>Guess who is statistically unlikely to get loans in that scenario?
People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
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.
>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
That's not what it means at all. College is not a binary option. There many schools with varying tuition. And even in a world where college tuition is much higher than it should be due to the distortion of subsidized and guaranteed federal loans, a student can make a decision that balances their financial situation and academic goals. That may involve choosing a less prestigious state school closer to home, working in the summers, or working part-time, or going to school part-time, etc.
I also don't really understand your point. The requirement for consignment of a loan is because the loaner cannot afford the loan. That doesn't change if the loan is simply guaranteed as in the present system.
>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)
Why wouldn't that be incorporated into the loan application, i.e. the ability of the loaner to graduate and join a competitive field. That's the argument I'm making. The people who are most screwed by school debt are those that went to expensive schools to get non-competitive degrees that won't enable them to pay back their debt. Nobody is crying for doctors who may carry a large debt, but also make very good money.
>because the first group is driving up prices.
Funny you should reference market mechanics now ....
That's not what it means at all. College is not a binary option. There many schools with varying tuition. And even in a world where college tuition is much higher than it should be due to the distortion of subsidized and guaranteed federal loans, a student can make a decision that balances their financial situation and academic goals. That may involve choosing a less prestigious state school closer to home, working in the summers, or working part-time, or going to school part-time, etc.
I also don't really understand your point. The requirement for consignment of a loan is because the loaner cannot afford the loan. That doesn't change if the loan is simply guaranteed as in the present system.
>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)
Why wouldn't that be incorporated into the loan application, i.e. the ability of the loaner to graduate and join a competitive field. That's the argument I'm making. The people who are most screwed by school debt are those that went to expensive schools to get non-competitive degrees that won't enable them to pay back their debt. Nobody is crying for doctors who may carry a large debt, but also make very good money.
>because the first group is driving up prices.
Funny you should reference market mechanics now ....
Very. They may very well take into account your grades and SAT score to determine feasibility of repayment.
You act as if the SAT score is a predictive of future success. Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly? Ask me how I know.
They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that?
So only the rich should go to the good schools?
People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
Student loans are or should be based on the ability to pay back loans based on future earnings. Most loans are based on credit, prior repayment history and income - three things that students don’t have.
You act as if the SAT score is a predictive of future success. Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly? Ask me how I know.
They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that?
So only the rich should go to the good schools?
People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
Student loans are or should be based on the ability to pay back loans based on future earnings. Most loans are based on credit, prior repayment history and income - three things that students don’t have.
College Board suggests that going from 0 to “6-8 hours” of prep is good for about 90 points and to 20 hours is good for only an additional 25 points.
It would seem folly to take the test with 0 prep and there’s a Khan Academy free prep course that you could use for the 20 hours of prep.
Given that, I’m not so sure that intensive prep is going to boost someone’s score significantly beyond basic prep.
It would seem folly to take the test with 0 prep and there’s a Khan Academy free prep course that you could use for the 20 hours of prep.
Given that, I’m not so sure that intensive prep is going to boost someone’s score significantly beyond basic prep.
Again of course the College Board has every reason to perpetuate the myth that the SAT is about college readiness and not about how much access you have to tutorials.
Do you really think some free online tutorials are as good as $100/hour private tutor who is a college professor that we got for my son or in my case having a mother who was not only a high school Math teacher but also taught SAT tutorials? Do you really think the latter had no bearing on me having to highest SAT score in my school and the second highest in the district with 800 seniors?
I’m not bragging. I didn’t exactly live in a top ranked school system in the small town south.
Do you really think some free online tutorials are as good as $100/hour private tutor who is a college professor that we got for my son or in my case having a mother who was not only a high school Math teacher but also taught SAT tutorials? Do you really think the latter had no bearing on me having to highest SAT score in my school and the second highest in the district with 800 seniors?
I’m not bragging. I didn’t exactly live in a top ranked school system in the small town south.
Both my parents were math teachers. I qualified for SMPY/SET (and came from a rural high school where only ~10% went on to four-year colleges).
I am fairly convinced that outcome was likely from years of math education in daily life, on car trips, doing math puzzles with my parents, etc. We’re doing the same with our kids now. My daughter just scored perfect on the SSAT practice math test and finished in half the allotted time. My total extent of “dedicated” prep was under an hour. Our total extent of informal prep was thousands of hours over nearly a decade. (That test isn’t nearly as difficult as the SAT, of course.)
I suspect your mom had more to do with your outcome based on years than the expensive tutor did in a few dozen hours. (I’ll also not hesitate to do that if I think it’s needed.)
I am fairly convinced that outcome was likely from years of math education in daily life, on car trips, doing math puzzles with my parents, etc. We’re doing the same with our kids now. My daughter just scored perfect on the SSAT practice math test and finished in half the allotted time. My total extent of “dedicated” prep was under an hour. Our total extent of informal prep was thousands of hours over nearly a decade. (That test isn’t nearly as difficult as the SAT, of course.)
I suspect your mom had more to do with your outcome based on years than the expensive tutor did in a few dozen hours. (I’ll also not hesitate to do that if I think it’s needed.)
Doesn’t that kind of make my point? That kids who either grow up in an environment where they have affluent parents with access to resources or in my case, highly educated parents teaching me what ended up being 11th grade math in 8th grade is advantageous? That still doesn’t make the SAT unbiased.
Well, the question is whether you were simultaneously prepared for the SAT and for college by 18 years of daily reinforcement of the value of education and practical subject matter drilling? I believe I was, far more than someone whose parents were equally loving and caring, but who worked in a factory or a trade.
If your upbringing was causal in preparation for both, it seems the college board might be correct in claiming that the SAT measures college readiness.
If your upbringing was causal in preparation for both, it seems the college board might be correct in claiming that the SAT measures college readiness.
>You act as if the SAT score is a predictive of future success.
It's a predictor of your odds of graduating from University.
>Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly?
Children of Parents who care about their education will do well. News at 11.
>So only the rich should go to the good schools?
That's not what I said at all. There are lots of good schools providing good education out there. State universities, by and large, are phenomenal, frequently with a good tuition for in-state students. You don't need a boutique humanities degree from a high priced private college. You can leave those to the rich.
>Student loans are or should be based on the ability to pay back loans based on future earnings
Sure. I don't disagree with that. It's why nobody complains about doctor school debt load, because their field pays well.
What's disgusting is giving a non-affluent student tens of thousands per year in debt to get a humanities degree.
And that's the problem .... we're not discriminating enough by the chosen degree. Federal loans should discriminate by the program.
>Most loans are based on credit, prior repayment history and income - three things that students don’t have.
You're still operating within the current system where tuition has been distorted due to massive injection of federally guaranteed loans into the system.
There is no reason why you shouldn't be able to choose a good school and work part-time or do school part-time and pay your way (at least mostly). This is possible today even in the distorted market.
And finally, are you really arguing that loans should be given to individuals who cannot afford them and will not afford them with the degree they will get??
It's a predictor of your odds of graduating from University.
>Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly?
Children of Parents who care about their education will do well. News at 11.
>So only the rich should go to the good schools?
That's not what I said at all. There are lots of good schools providing good education out there. State universities, by and large, are phenomenal, frequently with a good tuition for in-state students. You don't need a boutique humanities degree from a high priced private college. You can leave those to the rich.
>Student loans are or should be based on the ability to pay back loans based on future earnings
Sure. I don't disagree with that. It's why nobody complains about doctor school debt load, because their field pays well.
What's disgusting is giving a non-affluent student tens of thousands per year in debt to get a humanities degree.
And that's the problem .... we're not discriminating enough by the chosen degree. Federal loans should discriminate by the program.
>Most loans are based on credit, prior repayment history and income - three things that students don’t have.
You're still operating within the current system where tuition has been distorted due to massive injection of federally guaranteed loans into the system.
There is no reason why you shouldn't be able to choose a good school and work part-time or do school part-time and pay your way (at least mostly). This is possible today even in the distorted market.
And finally, are you really arguing that loans should be given to individuals who cannot afford them and will not afford them with the degree they will get??
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.
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.
- The others are trying to tell you, in good faith, why they think such a move would be politically intractable. Grandstanding rhetoric doesn't help your argument.
- Not requiring your parents to be rich is otherwise known as intergenerational upward mobility. If the effect of the current system is to externalize the costs of upward mobility on the rest of the society, then that's probably worth paying (to a point). The bigger problem is that government-issued loans suppress market pressure on colleges to operate efficiently.
- Not requiring your parents to be rich is otherwise known as intergenerational upward mobility. If the effect of the current system is to externalize the costs of upward mobility on the rest of the society, then that's probably worth paying (to a point). The bigger problem is that government-issued loans suppress market pressure on colleges to operate efficiently.
You are expected to pay student loans based on future income not based on whether your parents are affluent enough to pay them.
>You are expected to pay student loans based on future income
Sure. Let's go with that. Even under that assumption, there are multitudes of reasons why a bank would require cosigners, all coming down to you being a risk factor. For example, your grades may be low (risk of not graduating), you may be choosing an expensive art college with high tuition, or a degree wit no guarantee of reasonable income.
Again, loans are not gifts. You do not do anyone a favour by giving them a loan they cannot afford.
Sure. Let's go with that. Even under that assumption, there are multitudes of reasons why a bank would require cosigners, all coming down to you being a risk factor. For example, your grades may be low (risk of not graduating), you may be choosing an expensive art college with high tuition, or a degree wit no guarantee of reasonable income.
Again, loans are not gifts. You do not do anyone a favour by giving them a loan they cannot afford.
Agreed. So I assume you’d be opposed to a policy that has the effect of requiring parental co-signing and discriminates in part based on the income and affluence of the parents?
Of course I’m opposed to that.
My apologies. I crossed your upthread content with another poster’s.
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 always provide grants to make things more equitable.
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 always provide grants to make things more equitable.
>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.
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.
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and once profitability gets in the lenders' equation you'll see lot of art colleges and similar reduce their tuition costs to match their value in the job market
Loans aren't federally guaranteed anymore. They are made directly by the government.
Ooof. That's worse, but the equation is the same. The lender does not evaluate the value of degree given the loan amount. That's the market distortion taking place, and why administrative costs (and consequently cost of education) has skyrocketed.
>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.
>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.
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.
Student loans typically cannot be discharged through bankruptcy:
https://www.creditkarma.com/advice/i/student-loans-in-bankru...
https://www.creditkarma.com/advice/i/student-loans-in-bankru...
Prior to the law change it was much more common to get them discharged in bankruptcy. That’s why the law was changed.
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.
The reason is the same that they can enlist in the military, that is something desired by the people making the laws because it has some utility.
Funny, every time I hear these stories about the declining value of college I always think why that is. Is the premium declining because so many people can at least have a chance to finance an education now? Is that really bad?
Whenever I hear someone say they don't need to go to college, I remind them Mark Zuckerberg was at Philips Exeter (2019 tuition 49k), Bill Gates and Paul Allen at Lakeside School (2019 tuition 36k), Reid Hoffman attended Putney School (2019 tuition and boarding 56k). Many of the people that make pronouncements about college not being a necessity came from wealthy backgrounds or went to the upper crust of private high schools in America. In fact whenever someone makes these crazy suggestions I suggest you look up their background and it will usually be wealthy family/private high school.
I will grant Bezos and Thiel being the exception to private schools but still they came from upper middle class / wealth backgrounds...
These individuals could do without college. The hard work and preparation at their high schools put them through a grueling curriculum. If they have enough discipline to graduate from these high schools they would have been a success with or without college.
Unless you are in similar situation, please go to college and graduate. Specific degrees do not really matter just graduate so you don't get sidelined late in your career.
I still hear people say it is not necessary. It probably isn't really necessary for most IT roles but once youthful enthusiasm runs out, every employer will look to replace you. Do not think they will value your experience and loyalty.
Another counterpoint, if it was the case a college education is not necessary to succeed at Silicon Valley, why do these firms have a difficult time hiring black or hispanic employees... Sure college may be useless for some but please don't peddle this garbage in the face of reality.
So either the Silicon Valley firms are racist and are OK with having employees that never went to college as long as they look a certain way or this is all bunk in an effort to hire young enthusiastic employees that have no room to negotiate after a certain age...
As we just saw many wealthy families bribe their children into an Ok college... I bet all the wealthy people above will make sure their children attend college. I will bet all their wives and friends went to college. I will bet they never shared a beer with friends that never went to college.
Please don't be stupid. Finish college, learn something that interest you, give back to society.
Maybe all these policy discussions are bunk and every child in America should expect the same quality of education a student at Exeter would demand.
Whenever I hear someone say they don't need to go to college, I remind them Mark Zuckerberg was at Philips Exeter (2019 tuition 49k), Bill Gates and Paul Allen at Lakeside School (2019 tuition 36k), Reid Hoffman attended Putney School (2019 tuition and boarding 56k). Many of the people that make pronouncements about college not being a necessity came from wealthy backgrounds or went to the upper crust of private high schools in America. In fact whenever someone makes these crazy suggestions I suggest you look up their background and it will usually be wealthy family/private high school.
I will grant Bezos and Thiel being the exception to private schools but still they came from upper middle class / wealth backgrounds...
These individuals could do without college. The hard work and preparation at their high schools put them through a grueling curriculum. If they have enough discipline to graduate from these high schools they would have been a success with or without college.
Unless you are in similar situation, please go to college and graduate. Specific degrees do not really matter just graduate so you don't get sidelined late in your career.
I still hear people say it is not necessary. It probably isn't really necessary for most IT roles but once youthful enthusiasm runs out, every employer will look to replace you. Do not think they will value your experience and loyalty.
Another counterpoint, if it was the case a college education is not necessary to succeed at Silicon Valley, why do these firms have a difficult time hiring black or hispanic employees... Sure college may be useless for some but please don't peddle this garbage in the face of reality.
So either the Silicon Valley firms are racist and are OK with having employees that never went to college as long as they look a certain way or this is all bunk in an effort to hire young enthusiastic employees that have no room to negotiate after a certain age...
As we just saw many wealthy families bribe their children into an Ok college... I bet all the wealthy people above will make sure their children attend college. I will bet all their wives and friends went to college. I will bet they never shared a beer with friends that never went to college.
Please don't be stupid. Finish college, learn something that interest you, give back to society.
Maybe all these policy discussions are bunk and every child in America should expect the same quality of education a student at Exeter would demand.
A person in our family is a specialized nurse. Two years of school, then some more training. $60hr any hour they "wish" to work. Saturdays/Sundays are $90hr, so is any hour after 8 hours. The demand is so high he just rejects work. If he wants to work in American Samoa or Miami: hired. I hired a person to install a garage door. $900 for an hour of work. My plumber wont show up for a 30 minute $300 job. I will call again, tomorrow fingers crossed. Get your brakes replaced - look at that bill. Try outsourcing that.
Everyone I meet that works at starbucks has a masters AND 90k in student debt. Bankruptcy doesn't make student loans go away.
I think things are about to start swinging in the "non-college" direction.
Everyone I meet that works at starbucks has a masters AND 90k in student debt. Bankruptcy doesn't make student loans go away.
I think things are about to start swinging in the "non-college" direction.
You need some better contractors. I have multiple plumbers with same day service for $95 service calls. My garage door was installed for $400 and it took an afternoon.
Obviously prices vary.
I can make a living with a trade skill, but data shows I’m more likely to make a lot more with a college degree. You have billionaire dropouts and baristas with phds. But on average, degree nets you a lot of lifetime income.
Maybe that will change.
Obviously prices vary.
I can make a living with a trade skill, but data shows I’m more likely to make a lot more with a college degree. You have billionaire dropouts and baristas with phds. But on average, degree nets you a lot of lifetime income.
Maybe that will change.
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 overpriced useless degrees to people who can't be bothered to do some due diligence before getting a loan. Those degrees won't pay off and despite sharing the "college" name, I wouldn't average between the 2 groups.
Aside from those 2 examples there are plenty of colleges with a business model of selling overpriced useless degrees to people who can't be bothered to do some due diligence before getting a loan. Those degrees won't pay off and despite sharing the "college" name, I wouldn't average between the 2 groups.
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.
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.
30 years ago, I was trying to decide what to study. I wanted to go to medical school and my parents said that I should study electrical engineering. The reason, if I decided not to go to medical school a biology BS degree was almost useless and it was just as easy to get into medical school with an engineering degree as a biology degree.
I ended up getting a microbiology degree and an EE, went to medical school (MD PhD) but dropped out. I was able to get a great job doing programming, so Im relatively sure they were right.
With my kids Im using the same approach.
With regards to grad school, my parents' philosophy was if you could not get grad school funded by an RA or TA, then you had no business going.
I ended up getting a microbiology degree and an EE, went to medical school (MD PhD) but dropped out. I was able to get a great job doing programming, so Im relatively sure they were right.
With my kids Im using the same approach.
With regards to grad school, my parents' philosophy was if you could not get grad school funded by an RA or TA, then you had no business going.
I have friends with stem phds who aren’t making tons of money. But, I think in general, stem degrees pay well.
I try to use reliable data sets [0] to help understand because anecdotes are hard for me to make decisions. The data are almost always a few years old so they aren’t perfect and could miss a new trend. But it’s the best I know how to use.
[0] figure 4 shows stem 3rd highest after health and management https://www2.ed.gov/policy/highered/reg/hearulemaking/2011/c...
I try to use reliable data sets [0] to help understand because anecdotes are hard for me to make decisions. The data are almost always a few years old so they aren’t perfect and could miss a new trend. But it’s the best I know how to use.
[0] figure 4 shows stem 3rd highest after health and management https://www2.ed.gov/policy/highered/reg/hearulemaking/2011/c...
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.
That’s why they need to see the placement and salary stats to understand what their up against. Once they understand a French Comparative Literature degree has approximately no economic value, then they can make that decision knowingly. Papering over that by pointing out the one leader that happens to have that degree does more harm than good.
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.
That’s why they need to see the placement and salary stats to understand what their up against. Once they understand a French Comparative Literature degree has approximately no economic value, then they can make that decision knowingly. Papering over that by pointing out the one leader that happens to have that degree does more harm than good.
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).
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).
If that friend is himself an actor, or someone else who can influence hiring decisions, then I would say go for it!
At the end of the day, people hire you. Not data. After all, who says that a teenager can tell apart badly interpreted data any better than poor anecdotes?
At the end of the day, people hire you. Not data. After all, who says that a teenager can tell apart badly interpreted data any better than poor anecdotes?
At the end of the day, data reflects what all those people hiring people do. Anecdotes are randomly useful for predicting because maybe you luck out and find the right person, but probably you won’t.
Teenagers should be able to understand data by the time they pick a college or career.
Teenagers should be able to understand data by the time they pick a college or career.
Even in the engineering field, pay is massively different for different types of engineers. Civil and mechanical engineers generally aren't making anywhere near what software engineers make in top markets, for example. Similar story with chemists working in biotech vs. physicists doing fundamental research.
“Software engineering” is not a recognized engineering discipline.
Who cares, though. It's known what is meant by that phrase.
Kinda? What exactly is the difference between software engineering and programming?
IEEE would disagree.
http://www.cs-tcse.org/
http://www.cs-tcse.org/
Not a single jurisdiction in the US licenses software engineers.
Did Texas recently secede from the US? Because it looks like they offer PE licensing for Software Engineering.
https://engineers.texas.gov/downloads/eb17.htm
https://engineers.texas.gov/downloads/eb17.htm
the NCEES is discontinuing Software PE exams
https://ncees.org/ncees-discontinuing-pe-software-engineerin...
Fair enough, I didn't know that.
It's really just the engineering degrees that pay off.
The sciences degrees are only obviously worth it if you then go on to become a doctor, but that's more schooling and the undergrad degree isn't a strict requirement anyway.
Most of my friends with degrees in math, physics, etc., just ended up being software engineers anyway. So the degree "paid off" for them in the same way a CS degree would, but they would've been better served just going CS.
The sciences degrees are only obviously worth it if you then go on to become a doctor, but that's more schooling and the undergrad degree isn't a strict requirement anyway.
Most of my friends with degrees in math, physics, etc., just ended up being software engineers anyway. So the degree "paid off" for them in the same way a CS degree would, but they would've been better served just going CS.
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.
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.
I think large demographic averages are still useful, but certainly you can look at more specific lifetime earnings for specific degrees. I’m just aware of general “all bachelor” data that’s from reputable sources like the US SSA [0].
I’m talking about averages as there are certainly schools that suck. I would take my statement to mean that every single college is a net benefit. But as a general guidance, no other information available, a degree will net me more money over my lifetime.
If I were giving advice to someone thinking about schools, I would have them review the particular school, keep costs low, and study with a particular career in mind, stem/medicine a good target.
[0] https://www.ssa.gov/policy/docs/research-summaries/education...
I’m talking about averages as there are certainly schools that suck. I would take my statement to mean that every single college is a net benefit. But as a general guidance, no other information available, a degree will net me more money over my lifetime.
If I were giving advice to someone thinking about schools, I would have them review the particular school, keep costs low, and study with a particular career in mind, stem/medicine a good target.
[0] https://www.ssa.gov/policy/docs/research-summaries/education...
Interesting that billionaire dropouts often send their children to college & donate heavily to public education
Their kids aren't going to have the same motivation to work as hard as the previous generation moving from whatever class they were in to the elite.
Zuckerberg and Gates would have been elite if they’d never worked a day in their lives. Lots of people who come from money do something that doesn’t pay that well, like working in acting or the arts. Others don’t, and work as executives or found their own businesses even though there’s no danger of running out of money.
> Zuckerberg and Gates would have been elite if they’d never worked a day in their lives.
What do you mean by that? Zuckerberg and Gates are indisputably elite because they're two of the richest people in the world.
But I wouldn't call them elite beforehand, and definitely not if they didn't work a day in their lives. Their parents' money seems to come from being a lawyer, a dentist, and a psychiatrist. That's not "elite", that's something any family can achieve in two generations.
What do you mean by that? Zuckerberg and Gates are indisputably elite because they're two of the richest people in the world.
But I wouldn't call them elite beforehand, and definitely not if they didn't work a day in their lives. Their parents' money seems to come from being a lawyer, a dentist, and a psychiatrist. That's not "elite", that's something any family can achieve in two generations.
Gates' family was in banking, Zuckerberg attended Phillips Exeter. Neither were hardly "Middle Class".
I didn't call them "Middle Class". I said they weren't elite. While elite people are in banking and elite people go to Phillips Exeter, it doesn't follow that everyone who does those things is elite.
You could argue a much lower threshold for elite, which is fine, but then it's quite a bait and switch to lead with Zuckerberg and Gates for that category.
You could argue a much lower threshold for elite, which is fine, but then it's quite a bait and switch to lead with Zuckerberg and Gates for that category.
I will just link to this.
https://philip.greenspun.com/bg/
https://philip.greenspun.com/bg/
Zuckerberg and Gates would have been elite if they’d never worked a day in their lives.
Perhaps it's just me, but in the Zuckerberg case specifically, I'd think quite a bit of luck and timing had to do with it. If Zuckerberg had been born 10 years later after the obvious social network ideas were already created? Or if he had gone to a no-name college (or none whatsoever) and Facebook had never taken off the way it did at Harvard?
Or maybe you meant they were born elite, in which case, I don't know anything about that.
Perhaps it's just me, but in the Zuckerberg case specifically, I'd think quite a bit of luck and timing had to do with it. If Zuckerberg had been born 10 years later after the obvious social network ideas were already created? Or if he had gone to a no-name college (or none whatsoever) and Facebook had never taken off the way it did at Harvard?
Or maybe you meant they were born elite, in which case, I don't know anything about that.
The point is that Zuck and Gates had capacity to take on risk. There’s no guarantee that their risk would have paid off, but the other side of the coin wasn’t starvation and destitution. They basically had a heads I win tails I don’t lose type of situation.
This is the big idea here - being born in the right situation gives you the ability to bear risk where a lower middle class kid can’t bear that risk because if things don’t work out, that kid is going to be homeless. When you can take a lot of risk with little downside, it almost always pays off in the long run.
This is the big idea here - being born in the right situation gives you the ability to bear risk where a lower middle class kid can’t bear that risk because if things don’t work out, that kid is going to be homeless. When you can take a lot of risk with little downside, it almost always pays off in the long run.
They seems obvious to you now but they weren't at that time. Not that I am a Zuck fan at all but he deserve credit for that and that probably demonstrate some creativity and vision from him. No ?
MySpace existed. Facebook didn’t really add much beyond that to think that others wouldn’t have come up with the same idea in Zuck’s absence. In fact, the lawsuits from the Winklevos twins would seem to imply just that.
I would have said the same thing.
I think the main value add - looking back on how I perceived FB when it came out and why a lot of us started using it - was branding and a cleaner, fresh design. And the newsfeed was a new concept...
I think the main value add - looking back on how I perceived FB when it came out and why a lot of us started using it - was branding and a cleaner, fresh design. And the newsfeed was a new concept...
"with same day service for $95 service calls"
That means they show up for $95. No work right? When they actually do something there is another charge right? Where you are? So confused.
That means they show up for $95. No work right? When they actually do something there is another charge right? Where you are? So confused.
The plumber is not making $95 an hour even if he owns the business. I worked for a contracting company and we charged $118 an hour for most service calls, our technicians ranged from $20 to $35 per hour. That looks like robbery but you factor in taxes, management, logistics, vehicle maintenance and management, rent, benefits, office staff to take calls, and you get up to that $118 very quickly. Unfortunately that’s just the nature of business in the trades.
The Guys doing the work make a fraction of the hourly rate, anywhere from 15 to 35 percent (not counting benefits). The rest goes to the house.
The Guys doing the work make a fraction of the hourly rate, anywhere from 15 to 35 percent (not counting benefits). The rest goes to the house.
A service call is either something simple. For example, to unclog a toilet is just the fee. If it goes over an hour it costs extra. I had to have a 80 foot line snaked out and a camera run to see what the problem was and that was $180.
Right! I need actual work done. I understand it is $95 - to flush a toilet. But like, actual work, with tools, actually doing a job for 30 minutes. It is very expensive.
> My plumber wont show up for a 30 minute $300 job.
You brought up a 30 minute job. So I shared what it costs for me for a 30 minute (or more) job. And that it’s easy to get someone to come quickly for such a job.
I’m saying that if the problem can be solved in an hour, it’s $95. This is called a “service call.” Basically coming out and fixing what can be fixed without buying parts.
Any extra labor would cost more. This is a much better situation than yours since you can’t even get a plumber to help you flush a toilet for $300. That’s unfortunate.
Thus my suggestion from me that you could get better contractors. I think it’s reasonable that you should be able to pay $100 for a 30 minute job and be satisfied. Rather than be willing to pay $300 and being unsatisfied.
You brought up a 30 minute job. So I shared what it costs for me for a 30 minute (or more) job. And that it’s easy to get someone to come quickly for such a job.
I’m saying that if the problem can be solved in an hour, it’s $95. This is called a “service call.” Basically coming out and fixing what can be fixed without buying parts.
Any extra labor would cost more. This is a much better situation than yours since you can’t even get a plumber to help you flush a toilet for $300. That’s unfortunate.
Thus my suggestion from me that you could get better contractors. I think it’s reasonable that you should be able to pay $100 for a 30 minute job and be satisfied. Rather than be willing to pay $300 and being unsatisfied.
You are right. I can't get home depot to throw something off the truck for less than $200 broken. (And deny it showed up). So, where you are, where you live, I envy it. I imagine a world of nice plumbers and helper people. Canada????
Don't use services with a "name" and multiple trucks that have a bunch of employees doing work under their umbrella along with a staffed office. Search for independent contractors who do their own work. And don't do what other people in this thread are doing by assuming that plumbers and other tradesmen are making big bucks because your bill is large. The umbrella companies charge a fortune and the actual workers make jack. The workers do it so they don't have to be bothered with the business end of things. I use independent contractors who know what they're doing, don't do more work than what is needed, and charge reasonable fees. I live in an average small town in the US. And yes: our main contractor is a nice young guy who actually loves helping old people who've been shafted by those big companies.
I’m in one of the top 10 metro areas. But I guess I’m just lucky. I do avoid the marketplace services (I think Home Depot’s used to be called RedBeacon) and go for independent operators as I think they have more experience and more money goes in their pocket.
I live in a smaller town and I had a very nice plumber show up in like 10 minutes for a simple job for $150.
[deleted]
$60 or even $90/hour isn’t that great if its all 1099 income. It isn’t bad either, but the extra payroll taxes and the need to buy an individual plan (if your partner doesn’t get you into a group plan) make it pretty normal.
Suddenly makes you feel very bad for all the people out there making $15-20ish an hour.
Not sure you understand. 1099 income means they aren’t an employee. That’s not the arrangement for people making $15-20. Those folks are regular employees so they receive that income after benefits, payroll taxes, etc.
As a 1099 employee you need to be clearing at least double the equivalent employee hourly wage because there is so much overhead. Remember, a contractor doesn’t get a single day of paid vacation.
As a 1099 employee you need to be clearing at least double the equivalent employee hourly wage because there is so much overhead. Remember, a contractor doesn’t get a single day of paid vacation.
No, I understand perfectly fine and I’ve been in both situations. I’m just saying, it sucks to be a contractor with overhead and make a decent amount without accounting for the additional expense, but it REALLY sucks to be at the bottom of the income totem pole and make peanuts (in an expensive American city).
benefits only run about 30%. So a contractor wage should be about 130% of a salaried employees wage.
This does not count when a salaried employee works more than 40 hours.
My plumber charges 150/hour.
Contractors around here bill by the job. I had bids for $5000 for a 1 day job for 2 people when incorporated into a GC bid. The GC was getting 25% on top of the 5000.
This does not count when a salaried employee works more than 40 hours.
My plumber charges 150/hour.
Contractors around here bill by the job. I had bids for $5000 for a 1 day job for 2 people when incorporated into a GC bid. The GC was getting 25% on top of the 5000.
I’m sure I’ve missed a few things, but 30% doesn’t begin to cover the costs that are normally borne by a larger company and factor into the “house” premium.
You have to factor in not only benefits, but also:
* federal-level taxes (there’s no employer to pay the other half, so the contractor bears the whole portion)
* tools (you buy your own tools, stock your own spares, do your own maintenance on your dime — non-billable)
* learning and mandated certifications (same as above — non-billable)
* liability insurance (non-billable)
* vehicle maintenance, taxes, tolls, and fees (non-billable)
* transit time to and from not only contracted job sites, but also estimates that may ultimately result in no revenue (non-billable)
* marketing/lead generation (Angie’s List and HomeAdvisor are free to you, not to contractors — non-billable)
* material storage (you have the keep the customer’s plywood dry if the weather changes, or if the customer has a family emergency and needs to reschedule)
You have to factor in not only benefits, but also:
* federal-level taxes (there’s no employer to pay the other half, so the contractor bears the whole portion)
* tools (you buy your own tools, stock your own spares, do your own maintenance on your dime — non-billable)
* learning and mandated certifications (same as above — non-billable)
* liability insurance (non-billable)
* vehicle maintenance, taxes, tolls, and fees (non-billable)
* transit time to and from not only contracted job sites, but also estimates that may ultimately result in no revenue (non-billable)
* marketing/lead generation (Angie’s List and HomeAdvisor are free to you, not to contractors — non-billable)
* material storage (you have the keep the customer’s plywood dry if the weather changes, or if the customer has a family emergency and needs to reschedule)
In this specific case, hospitals do tend to offer good health care plans.
Further I don't believe it is possible for a hospital with all its specialized equipment to 1099 its nurses (doesn't pass the IRS '20 questions' test on contracting).
Further I don't believe it is possible for a hospital with all its specialized equipment to 1099 its nurses (doesn't pass the IRS '20 questions' test on contracting).
Look up agency nurses [0]. When they're paid hourly being begged for work (as OP mentioned), it's usually for a nurse who has specialized skills that can hop between hospitals/ER/offices. Essentially, they're contractors of the agency, and the hospital pays the agency. Can't recall if they're W2 or 1099 though
[0] https://allnurses.com/what-quot-agency-nursing-quot-t441525/
[0] https://allnurses.com/what-quot-agency-nursing-quot-t441525/
> The demand is so high he just rejects work.
I think as we advance in the information age, maybe degrees are less about helping you actually get the job done, and more about serving as a mean for companies (and countries) to roughly filter high surplus of candidates. Add the fact its easier today to apply for job posts, its very hard for recruiters to filter intelligently at reasonable time. My guess is if everyone would have first degree, the recruiters will require a second degree.
This has less weight on jobs short in candidates (i.e specialized nurse, plumber, welder, proven AI expert, or whatever is hot right now).
I think as we advance in the information age, maybe degrees are less about helping you actually get the job done, and more about serving as a mean for companies (and countries) to roughly filter high surplus of candidates. Add the fact its easier today to apply for job posts, its very hard for recruiters to filter intelligently at reasonable time. My guess is if everyone would have first degree, the recruiters will require a second degree.
This has less weight on jobs short in candidates (i.e specialized nurse, plumber, welder, proven AI expert, or whatever is hot right now).
There is a reason there is a shortage of nurses. Not everyone finds excitement in dealing with sick people all day. Also, most highly paid nurses do have a B.S. in Nursing.
Nursing is also a field which is infamously feast or famine for demand and willingness to pay.
>I hired a person to install a garage door. $900 for an hour of work. My plumber wont show up for a 30 minute $300 job.
For those prices just do it yourself. Is this hyperbole or did you really pay $900 for an hour job? How complicated could it have been if it only took an hour?
For those prices just do it yourself. Is this hyperbole or did you really pay $900 for an hour job? How complicated could it have been if it only took an hour?
It seems doubtful that your guy spends 40 hrs/wk installing garage doors.
Skilled manual work. Cannot be outsourced.
> Skilled manual work. Cannot be outsourced.
But it can be dramatically diluted through lenient immigration policies (and that's exactly what happened).
Bottom line, you have to be clever stay on your toes to make it in today's economy, and even then you need lots of luck and excellent health. UBI would result in a much more just society.
But it can be dramatically diluted through lenient immigration policies (and that's exactly what happened).
Bottom line, you have to be clever stay on your toes to make it in today's economy, and even then you need lots of luck and excellent health. UBI would result in a much more just society.
UBI would just feed directly into rents because that's how prices are set.
UBI would require land value tax to ensure the public value is capture for public spending. UBI alone is a land speculator wet dream and Yang is totally wrong to be pushing it without LVT. Yes in the middle of nowhere it can help, but most people are in cities and rents will rise there to current rent + UBI amount.
UBI would require land value tax to ensure the public value is capture for public spending. UBI alone is a land speculator wet dream and Yang is totally wrong to be pushing it without LVT. Yes in the middle of nowhere it can help, but most people are in cities and rents will rise there to current rent + UBI amount.
Yang is willing to adjust policy positions if the data supports it. If property prices are being raised due to UBI, then I'm sure he'd support something like LVT.
That's the difference with Yang. He's the most data-driven politician I've ever seen.
Other politicians seem mostly ideological, and I don't think they'd adjust their policies even in the face of overwhelming data it's not working. Like if Warren used Antitrust law to break up Amazon and it didn't change any relevant metrics, I think she would still call the policy a success. Ideological politicians like that are way more dangerous than someone who wants to try new ideas and is willing to adjust if they don't work.
That's the difference with Yang. He's the most data-driven politician I've ever seen.
Other politicians seem mostly ideological, and I don't think they'd adjust their policies even in the face of overwhelming data it's not working. Like if Warren used Antitrust law to break up Amazon and it didn't change any relevant metrics, I think she would still call the policy a success. Ideological politicians like that are way more dangerous than someone who wants to try new ideas and is willing to adjust if they don't work.
Holding onto UBI at this point is ideological for him. There is no evidence that $10k/year is near enough to alleviate people from having to take terrible jobs. $10k/year is about the equivalent of making $5/hr full time, which is below minimum wage and way into poverty.
At this point his proposal is just a really expensive handout for people that already have jobs. And what critical social services are going to be cut to foot that bill?
At this point his proposal is just a really expensive handout for people that already have jobs. And what critical social services are going to be cut to foot that bill?
I can't know how Warren would adapt her beliefs in the face of contradictory data in the future, but she's done that in the past [0]. She believed in a self-correcting and fair market that would be harmed by many regulations, but then she did a study of bankruptcy claims. The results contradicted what she expected to find, and she changed her beliefs instead of her interpretation of the data.
[0] https://www.npr.org/2019/12/10/786314251/elizabeth-warrens-j...
[0] https://www.npr.org/2019/12/10/786314251/elizabeth-warrens-j...
I totally agree UBI would just be a way to transfer money to landlords. Heck you could consider SV wages as UBI; salaries are high but that income is often spent on rent or mortgages. Stock money is spent on real estate.
I agree that a significant LVT would be extremely welcome. Perhaps even more so than UBI.
I'm open to suggestions, but we've passed the point we were in from 1950 to 2000 where any mediocre person could work hard and be guaranteed a middle-class life. And that's wrong, not to mention very threatening to our democracy.
I'm open to suggestions, but we've passed the point we were in from 1950 to 2000 where any mediocre person could work hard and be guaranteed a middle-class life. And that's wrong, not to mention very threatening to our democracy.
I'm sure that by some economic measurement, any mediocre person today could still work hard and earn enough to afford the same standard of living as the middle class of 1950. The main problem is that this isn't actually possible to pull off, since it costs 10x as much for things like housing and medicine that aren't necessarily 10x better. There just isn't the option to buy the crappy version from 70 years ago.
Medicine from 70 years ago can be superior to modern medicine. Which would you prefer if you couldn't breathe on your own, an iron lung or a tube jammed down your throat?
By what authority and rationale do you feel so strongly about intubation, I wonder? Could it be that the entire medical profession is wrong and you are right?
There are obvious reasons that have nothing to do with quality of care.
Iron lungs are physically large and heavy. They are expensive and difficult to move. Health insurance doesn't want to pay extra for your comfort.
With an iron lung you can talk and eat. There is minimal difficulty; simply time your sentences or swallows to match the action of the iron lung. There is also no danger of tubes damaging your vocal cords.
The choice of technology is obvious, depending on how much patient comfort is valued. It is clear that the modern system doesn't give a damn if patients are miserable.
Iron lungs are physically large and heavy. They are expensive and difficult to move. Health insurance doesn't want to pay extra for your comfort.
With an iron lung you can talk and eat. There is minimal difficulty; simply time your sentences or swallows to match the action of the iron lung. There is also no danger of tubes damaging your vocal cords.
The choice of technology is obvious, depending on how much patient comfort is valued. It is clear that the modern system doesn't give a damn if patients are miserable.
>from 1950 to 2000 where any mediocre person could work hard and be guaranteed a middle-class life.
This is a fantasy.
I personally know a lot of mediocre hard working people, mostly baby boomers. None had or have a "guaranteed" middle class lifestyle, and many don't have a middle class lifestyle at all, even now. One moved to a retirement community to "retire" and had to get a job. Another is currently without heat.
This is a fantasy.
I personally know a lot of mediocre hard working people, mostly baby boomers. None had or have a "guaranteed" middle class lifestyle, and many don't have a middle class lifestyle at all, even now. One moved to a retirement community to "retire" and had to get a job. Another is currently without heat.
I always wondered about that. I used to rent in a city with a relatively tight supply of rentals and thought that a UBI would fall right through to the landlords. Any good links to read about the land value tax component?
From your reply you are obviously not stuck at the "rents are the cost to the landlord + 10%". Good!
Have a look at this 10 minute video:
https://www.youtube.com/watch?v=gD_dZvPwAj0
Have a look at this 10 minute video:
https://www.youtube.com/watch?v=gD_dZvPwAj0
The rent thing is a bad argument against UBI, because you can make the same argument about any program that benefits the poor - even if all the UBI money goes back into rent, UBI would equalise housing spend along the way, from rich to poor and from worker to non-worker, vastly reducing poverty.
Even for people not in poverty it would help even out their income over their life cycle - more money when they have kids, find themselves temporarily unemployed, or in retirement.
Certainly land rents are totally unjust and a huge problem, and land value tax/public housing/public land ownership would be great, but the case for UBI is compelling even without any of that.
Even for people not in poverty it would help even out their income over their life cycle - more money when they have kids, find themselves temporarily unemployed, or in retirement.
Certainly land rents are totally unjust and a huge problem, and land value tax/public housing/public land ownership would be great, but the case for UBI is compelling even without any of that.
> because you can make the same argument about any program that benefits the poor
Yes, I think many things go straight back into land.
The UK has 'housing benefit'. It's 'landlord benefit', because it subsidises unpayable rents.
Yes, I think many things go straight back into land.
The UK has 'housing benefit'. It's 'landlord benefit', because it subsidises unpayable rents.
> even if all the UBI money goes back into rent, UBI would equalise housing spend along the way, from rich to poor and from worker to non-worker, vastly reducing poverty
How would that be? If your rent goes up $1000 regardless of what you're paying now, someone who earns $0 and can't afford a $600 apartment now collects $1000 and can't afford a $1600 apartment while the guy who could afford the $600 apartment by earning $1500 now has a monthly income of $2500 and a $1600 apartment.
How would that be? If your rent goes up $1000 regardless of what you're paying now, someone who earns $0 and can't afford a $600 apartment now collects $1000 and can't afford a $1600 apartment while the guy who could afford the $600 apartment by earning $1500 now has a monthly income of $2500 and a $1600 apartment.
For the poor person on $0, they can now afford to share a place or be less stress on their family financially.
For the person on the margin of affordability they can now afford an apartment.
Those on the highest incomes don't gain in a raw sense because they pay in more than they get, but still benefit from income smoothing.
For the person on the margin of affordability they can now afford an apartment.
Those on the highest incomes don't gain in a raw sense because they pay in more than they get, but still benefit from income smoothing.
I think UBI is a step too far. What we really need (in my opinion, obviously) is dramatic restructuring of the healthcare system. There is absolutely no reason that the single largest expense in my life should be insuring against the possibility that my family catches some terrible illness.
> But it can be dramatically diluted through lenient immigration policies (and that's exactly what happened
In the US ? Where you can’t immigrate legally as a skilled manual worker ?
In the US ? Where you can’t immigrate legally as a skilled manual worker ?
[deleted]
What prevents the MSc baristas from picking up a trade? Then they'd be highly educated and making some money.
Pride I'd guess. Or possibly coming from a background where they don't realize that skilled labor is an option. Many people seem to think that doing physical labor is "below" them. Nevermind the fact that being a barista / waiting tables / etc. is no walk in the park either.
One thing I don't see talked about a lot is the risk involved in going to college.
All the frequently-cited studies about college look at the incomes of college graduates versus the incomes of non-college graduates, and then compare that to the cost of education, and that generally looks fairly positive.
But of students who enroll in 4-year programs, only 60% graduate within 6 years[1]. For these students, college has actively harmed them: they're saddled with crippling debt, but don't get the benefits of a college degree. Also consider that they aren't working as many hours, if any, during college, so they lose even more in wages they could have earned.
The EV if starting and finishing college is coming into question, but the EV of starting college is clearly negative if you have only a 60% chance of finishing.
[1] https://nces.ed.gov/fastfacts/display.asp?id=40
All the frequently-cited studies about college look at the incomes of college graduates versus the incomes of non-college graduates, and then compare that to the cost of education, and that generally looks fairly positive.
But of students who enroll in 4-year programs, only 60% graduate within 6 years[1]. For these students, college has actively harmed them: they're saddled with crippling debt, but don't get the benefits of a college degree. Also consider that they aren't working as many hours, if any, during college, so they lose even more in wages they could have earned.
The EV if starting and finishing college is coming into question, but the EV of starting college is clearly negative if you have only a 60% chance of finishing.
[1] https://nces.ed.gov/fastfacts/display.asp?id=40
The 6 year graduation heavily differs based upon selectivity of the university in question. From one of the related tables linked in your source [0]:
> Graduating within 6 years after start, males and female
> 2011 starting cohort: 60.4%
> Open admissions: 30.7%
> >=90% accepted: 42.3%
> 75-89.9% accepted: 57.8%
> 50-74.9% accepted: 62.0%
> 25-49.9% accepted: 70.3%
> <25% accepted: 86.9%
[0]: https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.a...
> Graduating within 6 years after start, males and female
> 2011 starting cohort: 60.4%
> Open admissions: 30.7%
> >=90% accepted: 42.3%
> 75-89.9% accepted: 57.8%
> 50-74.9% accepted: 62.0%
> 25-49.9% accepted: 70.3%
> <25% accepted: 86.9%
[0]: https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.a...
Yes, this is one of the problems: many schools are letting in students who are unlikely to succeed without extra help, and not providing that help.
Many students who enter college lack the prerequisite knowledge to complete even introductory college classes, and are placed in remedial classes. These classes don't count for college credit, but cost the same as college classes there's a limited pool of financial aid available to a student, and typically this pool is smaller for remedial students, who are less likely to qualify for merit-based aid. The results are devastating: only 9.5% of remedial students graduate from two year programs within three years, and only 35.1% of remedial students graduate from four year programs within six years.
[1] https://postsecondary.gatesfoundation.org/remedial/
Many students who enter college lack the prerequisite knowledge to complete even introductory college classes, and are placed in remedial classes. These classes don't count for college credit, but cost the same as college classes there's a limited pool of financial aid available to a student, and typically this pool is smaller for remedial students, who are less likely to qualify for merit-based aid. The results are devastating: only 9.5% of remedial students graduate from two year programs within three years, and only 35.1% of remedial students graduate from four year programs within six years.
[1] https://postsecondary.gatesfoundation.org/remedial/
Bingo
Or they got a job before graduating. Tech companies actively hire people from universities, those 40% are not inherently negative.
If we're talking anecdotal experience, I'm one of the people who you're talking about, and if I could go back in time, I'd a) not have done any internships and b) not have quit college. But let's not discuss anecdotes, because that's not how policy should be determined. Let's keep the focus on data.
What you're describing happens, but it's enough of an outlier that it doesn't tip the median outcomes to the positive. People with some college but no degree still have above-median unemployment and below-median earnings. In fact an associates degree only gets you below-median unemployment: it still doesn't allow you to reach median earnings.
What you're describing happens, but it's enough of an outlier that it doesn't tip the median outcomes to the positive. People with some college but no degree still have above-median unemployment and below-median earnings. In fact an associates degree only gets you below-median unemployment: it still doesn't allow you to reach median earnings.
I can't find the citation now but the biggest argument against college I've seen is that once you control for family income, life success is way more correlated to SAT scores/the college's you apply for than the ones you actually attend. This would imply that college success stats merely indicate that they are selective in who they choose to enroll.
EDIT: Its not the one I'm looking for, but I found a good one. http://conference.iza.org/conference_files/CoNoCoSk2011/gens... shows that if you control for IQ, the average person makes $100k more over the course of their whole working life by getting a bachelor's.
- This doesn't even account for the four years of work you lose by going to college instead of working.
- Its based on data from people who mostly graduated before the year 2000, and by all accounts the value of college is becoming less, not more. It's also based on a calculation when college was much cheaper.
EDIT: Its not the one I'm looking for, but I found a good one. http://conference.iza.org/conference_files/CoNoCoSk2011/gens... shows that if you control for IQ, the average person makes $100k more over the course of their whole working life by getting a bachelor's.
- This doesn't even account for the four years of work you lose by going to college instead of working.
- Its based on data from people who mostly graduated before the year 2000, and by all accounts the value of college is becoming less, not more. It's also based on a calculation when college was much cheaper.
I don't think your first dash is correct. It looks like they just integrate the curve in figure 4, multiplied by a 5% discount. This includes both tuition cost and missed work during college. Also, it's not really fair to represent this as a difference in lifetime income because of the discount rate: the college attendee makes significantly more than $100k more over their life, but the gains accrue later in life while the cost accrues earlier, so the discount rate makes the benefit smaller.
Noted, everyone ignore the first dash. Thanks!
Those studies say something more like "UW Madison/U Washington/UIUC really do give you as good an education as the ivies" and quite a bit less like "college doesn't matter/is just a signal".
I have read that study, but I'm actually digging for a separate study now. I remember it split SAT score, educational attainment, and average salary into separate variables. For people with high SAT scores, average salary 10 years post graduation was basically the same regardless of level of education.
Ivy League matters if you want to be in finance or white shoe consulting.
Everything else, you just work hard at your first job and nobody gives a shit. I went to a big SUNY school and was a mediocre student. We all made out fine.
Everything else, you just work hard at your first job and nobody gives a shit. I went to a big SUNY school and was a mediocre student. We all made out fine.
Agreed on the Ivy League part. I work with a guy that went to Princeton. I went to a public University in Florida.
Sure he learned a lot more and had to do a thesis for his undergrad, but we have the same job now.
He has no more leverage than me when it comes to that.
Sure he learned a lot more and had to do a thesis for his undergrad, but we have the same job now.
He has no more leverage than me when it comes to that.
And when that guy’s roommate strikes it big, who gets the call to join the rocketship?
Steve Ballmer was Bill Gates’ roommate. You are getting free networking lottery tickets with high achievers at an Ivy.
Steve Ballmer was Bill Gates’ roommate. You are getting free networking lottery tickets with high achievers at an Ivy.
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 story, it shows people with college degrees earning 20-50k per year, on average, after taxes. That will sum to more than $100k over a lifetime.
The actual data shown in that reference seems to tell a different story, it shows people with college degrees earning 20-50k per year, on average, after taxes. That will sum to more than $100k over a lifetime.
The 100k is a net present value calculation, which includes a 5% per year discount, which is quite steep. 1/1.0515<0.5, 0.9530<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.
They account for that plus a lot of other factors in the 100k number. Basically the conclusion is, for people born from 1920 to 1980, college was net value add accounting for everything else, but not a huge one.
Yes, I know they account for that. Why does that make sense to account for IQ? That is explicitly discounting for college!
The 100k number is a fictional number, it’s trying to answer the question of assuming the same person didn’t go to college, is it possible to calculate the true value of college.
We could argue whether they actually calculated that number correctly, but what is absolutely true -- my point -- is that the actual people who had actual degrees actually earned a lot more than 100k extra over their lives, on average. The differences in wealth, illustrated by the data in that paper (see figure 1), are 2x-3x in annual income and accumulated savings much higher than 100k.
The 100k number is a fictional number, it’s trying to answer the question of assuming the same person didn’t go to college, is it possible to calculate the true value of college.
We could argue whether they actually calculated that number correctly, but what is absolutely true -- my point -- is that the actual people who had actual degrees actually earned a lot more than 100k extra over their lives, on average. The differences in wealth, illustrated by the data in that paper (see figure 1), are 2x-3x in annual income and accumulated savings much higher than 100k.
Yeah, but those people could have earned that much without going to college. If you just take the correlation between college and income, all it tells you is that colleges skim the top percent of society, which we knew already. The question we're trying to answer is that if you have the choice to go to college or not, should you?
I believe I understand the question & goal, and maybe this is the right way to go about it, but I’m not sure. It somewhat strikes me as the wrong question -- people don’t choose college equally at all income & IQ levels, and some of the factors that (statistically) lead people into to choosing to go are already accumulating before they’re even born. As a result, the hypothetical solution that hides the factors that lead to that choice in the first place in the data might not be fairly or adequately answering the question of whether someone should invest in college, given the choice, right?
Under this model, you could have someone with a higher IQ and a degree earning more money than a non-degree holder, but have a ‘negative’ return. Does that accurately reflect the situation, should the advice be to skip college, even though the absolute financial returns might be positive?
And what does this answer tell someone who has a low IQ or a low socioeconomic status? How should they try to evaluate this choice? Does discounting high IQ and high family education give an accurate picture of the benefits of post-secondary education to poorer families?
Under this model, you could have someone with a higher IQ and a degree earning more money than a non-degree holder, but have a ‘negative’ return. Does that accurately reflect the situation, should the advice be to skip college, even though the absolute financial returns might be positive?
And what does this answer tell someone who has a low IQ or a low socioeconomic status? How should they try to evaluate this choice? Does discounting high IQ and high family education give an accurate picture of the benefits of post-secondary education to poorer families?
Controlling for IQ here is difficult because the higher your IQ is, the more you would be attracted to learning for learning’s sake in the first place.
Exactly!
They have a really good discussion of this in the middle of the study, admitting it erodes predictive power.
They point out that much of your lifetime earnings are predicted by your parents' level of education.
They point out that much of your lifetime earnings are predicted by your parents' level of education.
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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 or Bloomberg writes a book about how the decline of the American middle class is due to a plumbing conspiracy, you're just not bourgeois. Sorry.
The issue is that trades don’t scale like all of the things you mention. Even if you own a very successful plumbing company, your ability to scale is constrained by geography, labor costs and finding people you can trust to manage your company. Not to mention, there are market forces working against the plumber trying to scale, and the plumber’s ability to affect policy is proportional to the ability to scale.
Anecdotally, plumbers charge more per hour in some cases than many lawyers make. Their income, however, is limited by their ability to book many jobs and actually carry them out. The opportunity cost of one job is exactly another job. So comparing to other wage earners their income is high, but compared to a banker that can make several loans in the course of a day where the opportunity cost is only capital (which they have practically unlimited access to being that theyre a banker) changes the situation quite drastically.
Anecdotally, plumbers charge more per hour in some cases than many lawyers make. Their income, however, is limited by their ability to book many jobs and actually carry them out. The opportunity cost of one job is exactly another job. So comparing to other wage earners their income is high, but compared to a banker that can make several loans in the course of a day where the opportunity cost is only capital (which they have practically unlimited access to being that theyre a banker) changes the situation quite drastically.
> The issue is that trades don’t scale like all of the things you mention.
The UK famously has a plumber worth $100 million - Charlie Mullins.
The UK famously has a plumber worth $100 million - Charlie Mullins.
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 and service performed."
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 and service performed."
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.
The point I was trying to make was that the trades don’t scale like tech or banking do. It’s clear that this guy, who did manage to scale a trade, has a net worth of about 100mm after almost 40 years of scaling, whereas the most successful tech entrepreneurs have multiples of that in a quarter (or less) of a timeframe. This guy is an exception, but still sort of exemplifies what I’m trying to say. It’s worth noting that this guy may be the most successful plumber in the world (or at least on a short list of the most successful plumbers in the world). If we made a list of people in tech or finance, the people would be younger and richer by several orders of magnitude in some cases which is saying something when we’re talking about 100mm bucks.
My argument wasn’t that the trades don’t scale at all (this would be an asinine argument as I know contractors that do scale and this guy is clearly an exception to that argument), but rather that the trades don’t scale the same way tech or finance do.
My argument wasn’t that the trades don’t scale at all (this would be an asinine argument as I know contractors that do scale and this guy is clearly an exception to that argument), but rather that the trades don’t scale the same way tech or finance do.
Wow. I didn’t know that. Certainly an exception to my statement.
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.
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.
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Because the value a roofer adds is obvious and the value an attorney adds is questionable.
Bankers have the luxury of taking big risks with your pension fund, losing all of it and still getting their yearly bonus when market forces are unexpected.
https://www.theguardian.com/books/2018/feb/22/skin-in-the-ga...
> Bankers are in the “Bob Rubin trade”, named after the former secretary of the US Treasury, who “collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any cheque – he invoked uncertainty as an excuse.
I'll save the doctors, lawyers and techbros for someone else. But there are equal examples you can find.
https://www.theguardian.com/books/2018/feb/22/skin-in-the-ga...
> Bankers are in the “Bob Rubin trade”, named after the former secretary of the US Treasury, who “collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any cheque – he invoked uncertainty as an excuse.
I'll save the doctors, lawyers and techbros for someone else. But there are equal examples you can find.
"The rate of underemployment—working in a job that does not require a college degree—was 42.5 percent among recent graduates."
Wow. That, plus debt, is a huge hit.
The big item that analysis doesn't consider is the commonality of college education. "Between 2000 and 2018, the percentage of people 25 years and older who had completed a bachelor's degree or higher increased by 9 percentage points, from 25.6 percent to 35.0 percent." - Census Bureau[1]. That's for the entire population, so it lags changes for young people.
How did the St. Louis Fed miss that?
[1] https://www.census.gov/library/stories/2019/02/number-of-peo...
Wow. That, plus debt, is a huge hit.
The big item that analysis doesn't consider is the commonality of college education. "Between 2000 and 2018, the percentage of people 25 years and older who had completed a bachelor's degree or higher increased by 9 percentage points, from 25.6 percent to 35.0 percent." - Census Bureau[1]. That's for the entire population, so it lags changes for young people.
How did the St. Louis Fed miss that?
[1] https://www.census.gov/library/stories/2019/02/number-of-peo...
Their familial controls don't make much sense to me.
An actuary's kid will have an easier time becoming an actuary. Same for lawyers and doctors. That doesn't mean that college is a non causal factor in those students lifetime earnings... Quite the opposite. You're not becoming any of those things without college.
The student went to college precisely because they understand viscerally and precisely how college sets them up for a life of higher than average earnings. And what they need to do at college to tap into that potential.
Similarly, I'm not sure I believe the claim that there's no obvious causal link between education and financial acumen.
The big difference seems to be "do you know WHY you are at college?" And in cases where the answer is yes, it's still a good choice.
An actuary's kid will have an easier time becoming an actuary. Same for lawyers and doctors. That doesn't mean that college is a non causal factor in those students lifetime earnings... Quite the opposite. You're not becoming any of those things without college.
The student went to college precisely because they understand viscerally and precisely how college sets them up for a life of higher than average earnings. And what they need to do at college to tap into that potential.
Similarly, I'm not sure I believe the claim that there's no obvious causal link between education and financial acumen.
The big difference seems to be "do you know WHY you are at college?" And in cases where the answer is yes, it's still a good choice.
> Their familial controls don't make much sense to me.
There's a lot of recent evidence that, all else being equal (controlling for educational attainment, test scores, and grades) parental income/social class has a huge impact on income.
That is, if you come from a lower social class, you can expect a lower income increase from college than someone coming from a higher social class.
There's significant policy implications here-- our long-standing goal of getting lower income kids to take college loans and go to college may not have a positive expected return for them.
There's a lot of recent evidence that, all else being equal (controlling for educational attainment, test scores, and grades) parental income/social class has a huge impact on income.
That is, if you come from a lower social class, you can expect a lower income increase from college than someone coming from a higher social class.
There's significant policy implications here-- our long-standing goal of getting lower income kids to take college loans and go to college may not have a positive expected return for them.
no, that’s completely wrong. You are confusing averages and conditional probabilities. On average, those from higher classes may do better - that doesn’t mean that a kid from s lower social class should take that as guidance. It means we should try to erase or lessen differences of opportunities between classes.
Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably also smart. Some, but most are due to informational deficiencies and networking effects.
> no, that’s completely wrong. You are confusing averages and conditional probabilities. On average, those from higher classes may do better - that doesn’t mean that a kid from s lower social class should take that as guidance.
??? You're saying that someone should not consider the outcome distribution of people similarly situated to themselves when making a choice? Isn't that completely rejecting empiricism?
If, from a public policy standpoint, our effort has been to get to the poor to college to end poverty; and the educated poor do do better with education, but not nearly as well as their middle-class cohort; and the present-value of education is smaller than the present-value of their lifetime wage increases-- one has to question whether the policy is well informed.
If you're asserting that the picture is unduly distorted by those at the very highest spread of the income distribution-- you're right. But the effect is still when we look at median outcomes.
> Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably also smart.
Presumably we'd be able to measure this and control for this.
> Some, but most are due to informational deficiencies and networking effects.
Yes, and various kinds of cultural cues about class of upbringing that persist after education and act to limit opportunity.
??? You're saying that someone should not consider the outcome distribution of people similarly situated to themselves when making a choice? Isn't that completely rejecting empiricism?
If, from a public policy standpoint, our effort has been to get to the poor to college to end poverty; and the educated poor do do better with education, but not nearly as well as their middle-class cohort; and the present-value of education is smaller than the present-value of their lifetime wage increases-- one has to question whether the policy is well informed.
If you're asserting that the picture is unduly distorted by those at the very highest spread of the income distribution-- you're right. But the effect is still when we look at median outcomes.
> Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably also smart.
Presumably we'd be able to measure this and control for this.
> Some, but most are due to informational deficiencies and networking effects.
Yes, and various kinds of cultural cues about class of upbringing that persist after education and act to limit opportunity.
“??? You're saying that someone should not consider the outcome distribution of people similarly situated to themselves when making a choice? Isn't that completely rejecting empiricism?“
No, what I’m saying is presence of a statistical pattern in a whole population is not evidence that we shouldn’t make policy to change it. Statistically, those who live in Miami are more tan than those who live in Wisconsin, on average. But if you expose a Wisconsin resident to the same amount of sun, on average they will be just as tan.
No, what I’m saying is presence of a statistical pattern in a whole population is not evidence that we shouldn’t make policy to change it. Statistically, those who live in Miami are more tan than those who live in Wisconsin, on average. But if you expose a Wisconsin resident to the same amount of sun, on average they will be just as tan.
??? We're comparing the income difference (and ratio) between (poor background + college education) and (poor background + no college education) to the income difference between (non-poor background + college education) and (non-poor background + no college education).
In your example, you'd expect the Wisconsin guy to increase in tan more when you put him in the Bahamas and give him a dose of sun than the guy who started out in Miami and was given an equivalent further dose of sun.
But we've measured the opposite-- the guy in Wisconsin (poor background) does get more tan, but doesn't increase in tan (increase in income) nearly as much as the guy who started in Miami (non-poor backgrounds).
In your example, you'd expect the Wisconsin guy to increase in tan more when you put him in the Bahamas and give him a dose of sun than the guy who started out in Miami and was given an equivalent further dose of sun.
But we've measured the opposite-- the guy in Wisconsin (poor background) does get more tan, but doesn't increase in tan (increase in income) nearly as much as the guy who started in Miami (non-poor backgrounds).
No, because we haven’t done nearly enough for the poor guy. It’s not the case that we’ve done everything possible for the poor and they still didn’t improve much. That’s false.
We're measuring the effect of one thing-- getting a poor person to college-- composed with all the other interventions that are spread through the population.
We measure the value of this-- getting to college-- as very small and even possibly negative.
We also measure interventions and their values / impacts on earnings much higher.
Going "la la la but college would be much better and itself a win if we did 50 other supportive things" is all great, but it's fundamentally handwaving in the absence of evidence.
We measure the value of this-- getting to college-- as very small and even possibly negative.
We also measure interventions and their values / impacts on earnings much higher.
Going "la la la but college would be much better and itself a win if we did 50 other supportive things" is all great, but it's fundamentally handwaving in the absence of evidence.
No, we don’t measure this. The study in question tries to make college wage premium go away using questionable control variables. Sure, some skilled trades can make more money than liberal arts grads. But very few people want to be plumbers or work on an oil rig and for good reason.
One of the costs that is often excluded, if you go the "not college" route, is the toll of physical labor on one's body. Medical expenses can be substantial and you didn't earn as much as an office job may have paid.
> One of the costs that is often excluded, if you go the "not college" route, is the toll of physical labor on one's body
That's why, for people interested in technology, software development is an incredible blessing. If you're clever about it, and plan ahead in HS, you can easily skip college and come out making $100,000/yr within 3-4 years, even in small markets.
I've never taken a single computer science class, make well over $100,000 in a highly-challenging software development job, and no one has ever asked me about a college degree (with the exception of one job that I regretted accepted and which I quit in 8 months).
There are other similar routes available to people without college degrees. Several wealthy people my parents know started out in construction, but rapidly moved into flipping houses and real estate, and made a fortune. Their physical labor was over by their late 20s.
There are many paths that skip college and don't end up working physical labor after a decade or two. But you have to be clever and proactive (if you're on HN, I'm going to assume you're at least the former).
That's why, for people interested in technology, software development is an incredible blessing. If you're clever about it, and plan ahead in HS, you can easily skip college and come out making $100,000/yr within 3-4 years, even in small markets.
I've never taken a single computer science class, make well over $100,000 in a highly-challenging software development job, and no one has ever asked me about a college degree (with the exception of one job that I regretted accepted and which I quit in 8 months).
There are other similar routes available to people without college degrees. Several wealthy people my parents know started out in construction, but rapidly moved into flipping houses and real estate, and made a fortune. Their physical labor was over by their late 20s.
There are many paths that skip college and don't end up working physical labor after a decade or two. But you have to be clever and proactive (if you're on HN, I'm going to assume you're at least the former).
Same for marketing. College degrees in marketing are useless. Real work experience can get you pretty good jobs much quicker
Coming from a small town in Indonesia, went to Singapore to study. Will end up with about 30k SGD (~22k USD) in student loan. Fresh graduate pay for software engineering in Singapore ranges mostly from 60-100k.
I think the decision worth it* because it opens up horizon, opportunities to working overseas (not just Singapore) and much better living standard.
I didn't even know what a CS degree will do after graduation and just randomly chose it because I like Math back in HS. I guess the real benefit of a degree is the pointers and community you get. Surely this can be replaced with a good mentorship, but that requires a good network beforehand.
*the quality of education in Singapore University IMHO is far from the quality of the content I found in the publicly shared course content in US universities.
I think the decision worth it* because it opens up horizon, opportunities to working overseas (not just Singapore) and much better living standard.
I didn't even know what a CS degree will do after graduation and just randomly chose it because I like Math back in HS. I guess the real benefit of a degree is the pointers and community you get. Surely this can be replaced with a good mentorship, but that requires a good network beforehand.
*the quality of education in Singapore University IMHO is far from the quality of the content I found in the publicly shared course content in US universities.
The first two paragraphs of page 23.
- Usury ceilings eliminated
- Costs ballooning
A proper title would be Is College Still Worth It [Financially]? Evaluating an education purely on economic terms is the wrong move to make, but unfortunately an increasingly common one.
What other terms should be included? I can think of a few:
* Life experience
* Knowledge gained
* Friends made
But what would you add?
* Life experience
* Knowledge gained
* Friends made
But what would you add?
Those three categories are pretty broad and essentially cover everything, but my own personal addition would be: becoming aware of "unknown unknowns". A proper university education exposes you to knowledge and worldviews that you previously had no idea even existed.
This is the fundamental problem with self-education: you tend to get stuck in local loops based on your current interests, motivations and knowledge. Sure, the information is out there, but without a proper introduction by an expert, real-world peers learning the same material, and the overarching school structure, it may as well be written in hieroglyphics. External education, when properly designed, should broaden the mind and prepare it for self-education, but without it, you often end up with a fairly limited view of the world shaped by whatever you personally find interesting.
This is the fundamental problem with self-education: you tend to get stuck in local loops based on your current interests, motivations and knowledge. Sure, the information is out there, but without a proper introduction by an expert, real-world peers learning the same material, and the overarching school structure, it may as well be written in hieroglyphics. External education, when properly designed, should broaden the mind and prepare it for self-education, but without it, you often end up with a fairly limited view of the world shaped by whatever you personally find interesting.
Agree with the unknown-unknowns, the problem is (at least from my pov) that University nowadays mostly familiarizes you with unknown-unknowns that are kind of boring, i.e. stuff that will potentially bring you (the University atendee) financial and societal returns further down the road (I get why they do that, I’m not criticizing them for it, just exposing what I think happens).
Again, from my pov most of the interesting and not-boring stuff that can be studied does not have that many financial or societal benefits further down the road, and as such self-education seems one of the few ways of gaining knowledge about that stuff.
Again, from my pov most of the interesting and not-boring stuff that can be studied does not have that many financial or societal benefits further down the road, and as such self-education seems one of the few ways of gaining knowledge about that stuff.
University was the start of my professional network. Sometimes a good contact or referral from a respected professor is pretty valuable.
On the life experience front, university for me was like a halfway house as far as independence goes. I went from living with my family getting all the support I could ask for, then to university where I had to do more stuff for myself, to complete independence after graduation.
But I think the biggest win for me was really learning how to learn and finding out that I love learning things. High school was pushing me in exactly the opposite direction.
On the life experience front, university for me was like a halfway house as far as independence goes. I went from living with my family getting all the support I could ask for, then to university where I had to do more stuff for myself, to complete independence after graduation.
But I think the biggest win for me was really learning how to learn and finding out that I love learning things. High school was pushing me in exactly the opposite direction.
I think there is a societal benefit to the average person having more education. If we're being honest, many jobs don't even require a high school education.
I would have paid hundreds of thousands for my Physics degree if they'd have loaned me it.
The thing is that it makes sense if the degree leads to a dramatically higher income and you actually use the chance.
If I'd stayed in my hometown instead of moving to London, it'd still be worth it, but probably to the tune of 100-200K.
All of these numbers are probably lower than the benefit I'm likely to derive over my working life but 18 year old me would have risk adjusted.
Across the population of course, the balance changes dramatically, because huge numbers of people are terminally skint, working unskilled jobs, etc.
Most people probably shouldn't get a degree.
Who actually wants to be 'most people' when they're an 18 year old?
The thing is that it makes sense if the degree leads to a dramatically higher income and you actually use the chance.
If I'd stayed in my hometown instead of moving to London, it'd still be worth it, but probably to the tune of 100-200K.
All of these numbers are probably lower than the benefit I'm likely to derive over my working life but 18 year old me would have risk adjusted.
Across the population of course, the balance changes dramatically, because huge numbers of people are terminally skint, working unskilled jobs, etc.
Most people probably shouldn't get a degree.
Who actually wants to be 'most people' when they're an 18 year old?
Regardless of any opinions on either side, I don't understand why we have made degree a social prestige?
Someone in the comments said degree values will degrade and they are probably right as it happened with lower education as more and more people got in. Maybe there are lack of jobs or companies are exploiting people by making them grind more in an artificial constraint environment or some people are hogging off the resources and causing major inequality in pay gaps?
I have no doubt education is valuable and so is experience but why does that have to compress or translate into a paper? Should we really be running on an old feudal model of producing workers in 2020?
I have a lot of questions. I dropped out of school recently due to the toxic culture degrading my health to the point I am severely antisocial and definitely depressed enough for no reason.
The competitive grind is worse in countries with overpopulation and the quality is just outrageous.
I just wanted to work on something cool, become a surgeon but that route was sealed at 10. No money, no family prospects, grinding is too difficult and being a drug addict and die young seems a better option if you had a non functional childhood due to the whole burden later on.
I thought life would improve with vast improvements in productivity and industrial revolution but what we got in the end seems to be mostly cosmetic for the past 20 years. Yes, having the ability to order food or communicate is nice but that was doable before too. Taxi on demand? Well, we had numbers before (even though I was born in 00s), my dad has stories of it.
Fancy animated avatar on social platforms seems cosmetic. What else really changed in life quality?
I have a degree from a state school in chemistry, it's been worth it for me. In part because the GI Bill paid for it, but it also landed me several jobs writing software where domain knowledge is required and not so easy to come by without formal education.
College isn't worth it, but that's the whole point. It's becoming what economists call a Giffen Good, that is, something people consume even more of the more expensive it becomes.
The biggest value factor of all is Metcalfe's Law of network effects, where the almost universal availability of higher education means that not pursuing it places your starting position in life on the outer long tail of the success curve. Not going to college is like being a business that decided to just never bother getting on the internet, or a person who doesn't know how to drive. Unless you move to some isolated backwater that isn't subject to the network or are some kind of extreme outlier, you are at a huge disadvantage.
Notable that these articles about the doubtful value of a university degree are written exclusively by people who have one.
The wider availability of education (via cheap debt) and downward mobility means a degree (all things equal) is no longer as distinguishing and does not have the same impact on life outcomes as it once might have. Even previously, the people who went to college had such a huge social head start anyway, it would be difficult to control for education as the determining factor in success.
University is starting to resemble a "radical monopoly," (Ivan Illich, summarized here: https://twitter.com/fietsprofessor/status/112207372586260070...) where there is nothing discretionary about it.
Outside of STEM, I'd argue modern colleges offer students very little more than a tribal affiliation, which is the elephant in the room for articles like these. If you told kids why they need to go to college, it would devalue the degree even further as they re-tribalized around other rites of passage. This doesn't mean don't go to college, it means do absolutely everything in your power to graduate college, because the arbitrary biases and disadvantages of the alternative defy all reason and make anyone with an IQ above 90 insane.
When you look at college as a Giffen Good, which people need for participation in a radical monopoly over the labour market, created by a network effect from its debt fueled availability, of course it seems like a college education is not worth it - but it's only ever not worth it to people who already have one.
I'd like a mainstream platform to write that view and put these "is college worth it?" navel gazer articles to rest. If only there were an institution to affiliate with...
The biggest value factor of all is Metcalfe's Law of network effects, where the almost universal availability of higher education means that not pursuing it places your starting position in life on the outer long tail of the success curve. Not going to college is like being a business that decided to just never bother getting on the internet, or a person who doesn't know how to drive. Unless you move to some isolated backwater that isn't subject to the network or are some kind of extreme outlier, you are at a huge disadvantage.
Notable that these articles about the doubtful value of a university degree are written exclusively by people who have one.
The wider availability of education (via cheap debt) and downward mobility means a degree (all things equal) is no longer as distinguishing and does not have the same impact on life outcomes as it once might have. Even previously, the people who went to college had such a huge social head start anyway, it would be difficult to control for education as the determining factor in success.
University is starting to resemble a "radical monopoly," (Ivan Illich, summarized here: https://twitter.com/fietsprofessor/status/112207372586260070...) where there is nothing discretionary about it.
Outside of STEM, I'd argue modern colleges offer students very little more than a tribal affiliation, which is the elephant in the room for articles like these. If you told kids why they need to go to college, it would devalue the degree even further as they re-tribalized around other rites of passage. This doesn't mean don't go to college, it means do absolutely everything in your power to graduate college, because the arbitrary biases and disadvantages of the alternative defy all reason and make anyone with an IQ above 90 insane.
When you look at college as a Giffen Good, which people need for participation in a radical monopoly over the labour market, created by a network effect from its debt fueled availability, of course it seems like a college education is not worth it - but it's only ever not worth it to people who already have one.
I'd like a mainstream platform to write that view and put these "is college worth it?" navel gazer articles to rest. If only there were an institution to affiliate with...
The classic example of a Giffen good is a staple food like bread:
As Mr. Giffen has pointed out, a rise in the price of bread makes so large a drain on the resources of the poorer labouring families and raises the marginal utility of money to them so much that they are forced to curtail their consumption of meat and the more expensive farinaceous foods: and, bread being still the cheapest food which they can get and will take, they consume more, and not less of it.
https://en.wikipedia.org/wiki/Giffen_good
As Mr. Giffen has pointed out, a rise in the price of bread makes so large a drain on the resources of the poorer labouring families and raises the marginal utility of money to them so much that they are forced to curtail their consumption of meat and the more expensive farinaceous foods: and, bread being still the cheapest food which they can get and will take, they consume more, and not less of it.
https://en.wikipedia.org/wiki/Giffen_good
Nitpick: Veblen good, not giffen
Was going to go with Veblen because of status signalling, but when the price elasticity of demand gets inverted, it was Giffen.
Isn't that true for Veblen too?
If I remember F&D correctly, Veblen was more of a back fitted narrative construct around luxury goods, where Giffen was the "impossible," artifact of inverting the price elasticity of demand. They are related, but Veblen didn't write that a wave of debt would cause leisure consumption, whereas the wave of debt fueled demand is just the distortion that would make Giffen goods possible.
> Notable that these articles about the doubtful value of a university degree are written exclusively by people who have one.
Why is it notable?
Why is it notable?
I have some kids and college is about a decade away for them, so this is pretty timely. I remember reading a post in the 2000s about whether the internet (or, more precisely, some application built on the internet) would do the same thing to colleges as Craigslist did to the newspapers. Peel off the valuable bits and by doing so disaggregate and destroy/heavily damage the institution.
Still waiting for this to happen, but maybe lambda school and bootcamps are the start. I expect credentialing of schools and the longer engagement with colleges to make the transition longer. Bit I don't see how colleges avoid being unbundled.
Still waiting for this to happen, but maybe lambda school and bootcamps are the start. I expect credentialing of schools and the longer engagement with colleges to make the transition longer. Bit I don't see how colleges avoid being unbundled.
I have a degree, but not in CS, and after seven years in the industry I still occasionally come across recruiters who treat me like I must have no idea what I'm doing, or interviewers acting like I must be a genius for solving easy problems. It's got to be worse if you have no degree at all. I'd tread carefully.
When my coworker discovered the other week that I didn't have a degree, he straight up told me a couple of years ago, the company wouldnt have even thought about hiring me.
Hint to paper writers: you can put your figures inline instead of all at the end.
What a dismal reading experience, skimming from pages of text to the end to see what the cited figure(s) actually show, then back to the text again.
Who sanctions this sort of thing?
What a dismal reading experience, skimming from pages of text to the end to see what the cited figure(s) actually show, then back to the text again.
Who sanctions this sort of thing?
For digital publishing, sure. In academic publishing, for print, or if the same file is used for both digital and print copies, colour pages are often clustered together to reduce the production cost. If you have 20 pages of mostly black and white text each with a small colour figure, you have to print 20 colour pages. If you cluster them together, you can print 18 black and white pages and 2 colour pages instead.
This practice will go away as all publishing moves to digital formats. But as long as there is a print version for purchase as well, it will be more cost-efficient to organize papers like this.
This practice will go away as all publishing moves to digital formats. But as long as there is a print version for purchase as well, it will be more cost-efficient to organize papers like this.
There is a line of thinking that college tuition should rise until the ROI on higher education drops to zero, using some twisted Pareto logic. I would consider such an outcome to be neither optimal nor efficient.
This is happening with education, healthcare and housing.
It's a logical mechanism of near unlimited credit creation to absorb all productivity gains for capture by rentiers.
It's a logical mechanism of near unlimited credit creation to absorb all productivity gains for capture by rentiers.
I don't have a degree and am constantly told in rejections by potential employers, and my own employer when applying for advancement, that they are looking for degree holders. Many job listings also flat out state a 4-year degree is a minimum.
A degree would absolutely, positively, beyond any shadow of a doubt improve my chances of increasing my income. At my current job only about 7%.
But the tens of thousands of dollars of debt I'd have to take on to get that degree at 4.5-7% interest (or higher)... yeah thanks but no thanks.
So, anecdotally at least, I can agree that there are pretty diminishing returns to getting a degree. While I'd be all but guaranteed to increase my income, I'd be paying out more though:
a 20k 10-year loan at 6.8% (finaid.org suggested this %) interest means I'm paying 27,619.31
a 40k 10-year loan at 6.8% interest means I'm paying 55,238.63
At my current income the 20k loan, bumping up one position and considering our raises inside a position are limited to less than 3.5% annually based on a rather arbitrary 'merit review'. It would be 7-10 years of my increased pay just to cover the loan, assuming no taxes were taken on the increase but also factoring in insurance increases. That means in 14 years I could start keeping more money from that 4 year degree if I could manage a 20k$ degree.
Ha!
A degree would absolutely, positively, beyond any shadow of a doubt improve my chances of increasing my income. At my current job only about 7%.
But the tens of thousands of dollars of debt I'd have to take on to get that degree at 4.5-7% interest (or higher)... yeah thanks but no thanks.
So, anecdotally at least, I can agree that there are pretty diminishing returns to getting a degree. While I'd be all but guaranteed to increase my income, I'd be paying out more though:
a 20k 10-year loan at 6.8% (finaid.org suggested this %) interest means I'm paying 27,619.31
a 40k 10-year loan at 6.8% interest means I'm paying 55,238.63
At my current income the 20k loan, bumping up one position and considering our raises inside a position are limited to less than 3.5% annually based on a rather arbitrary 'merit review'. It would be 7-10 years of my increased pay just to cover the loan, assuming no taxes were taken on the increase but also factoring in insurance increases. That means in 14 years I could start keeping more money from that 4 year degree if I could manage a 20k$ degree.
Ha!
It deeply depends on your field.
I saw a developer position recently that required at least a four-year degree and it genuinely surprised me because of how infrequent that requirement appears on developer job postings. The vast majority of posts I see are "four years degree or equivalent experience"
I've worked in software shops before where less than half of the staff had a 4-year degree completed—but it is noteworthy y that everyone had at least some college.
>and my own employer when applying for advancement
That I have seen before, but in higher-ed, where it is kind of a given as it is sort of an eating-your-own-dog-food requirement. If your top employees don't have a degree, and you sell degrees, it can tarnish your appearance.
I saw a developer position recently that required at least a four-year degree and it genuinely surprised me because of how infrequent that requirement appears on developer job postings. The vast majority of posts I see are "four years degree or equivalent experience"
I've worked in software shops before where less than half of the staff had a 4-year degree completed—but it is noteworthy y that everyone had at least some college.
>and my own employer when applying for advancement
That I have seen before, but in higher-ed, where it is kind of a given as it is sort of an eating-your-own-dog-food requirement. If your top employees don't have a degree, and you sell degrees, it can tarnish your appearance.
A dirty secret of higher education is that few people actually pay the sticker price. A lot of people get some degree of funding via pseudo-automatic scholarships.
The government is heavily involved in the student loan industry. Consequently, the entire market is heavily distorted. One of the largest programs is the Direct/Stafford loan program [0]. Essentially the student (and only the student; no cosigners allowed) directly borrows money from the federal government at a fairly cheap interest rate (in the last decade [1], it has ranged from 3.4% to 5.05%). In some cases, the student is not liable for interest accrued while they're in school (see the following paragraph for details if you're interested). The loan limit is $31k for dependent students and $57.5k for independent students.
There's two variants to direct loans: subsidized (where the government pays for the interest while the student is in school) and unsubsidized (no qualification necessary). Anyone can take out unsubsidized loans, limited to the COA (cost of attendance: the amount a college declares it would cost to attend; inclusive of tuition, fees, books, room & board, etc.). Anyone who's EFC (expected family contribution: the amount the government expects the student/their parents to pay annually based upon their income and assets) is less than COA can take out up to the shortfall in subsidized loans (but no more than the specified limit which varies by dependent-status and year in school).
[0]: https://studentaid.gov/understand-aid/types/loans/subsidized...
[1]: https://studentaid.gov/understand-aid/types/loans/interest-r...
The government is heavily involved in the student loan industry. Consequently, the entire market is heavily distorted. One of the largest programs is the Direct/Stafford loan program [0]. Essentially the student (and only the student; no cosigners allowed) directly borrows money from the federal government at a fairly cheap interest rate (in the last decade [1], it has ranged from 3.4% to 5.05%). In some cases, the student is not liable for interest accrued while they're in school (see the following paragraph for details if you're interested). The loan limit is $31k for dependent students and $57.5k for independent students.
There's two variants to direct loans: subsidized (where the government pays for the interest while the student is in school) and unsubsidized (no qualification necessary). Anyone can take out unsubsidized loans, limited to the COA (cost of attendance: the amount a college declares it would cost to attend; inclusive of tuition, fees, books, room & board, etc.). Anyone who's EFC (expected family contribution: the amount the government expects the student/their parents to pay annually based upon their income and assets) is less than COA can take out up to the shortfall in subsidized loans (but no more than the specified limit which varies by dependent-status and year in school).
[0]: https://studentaid.gov/understand-aid/types/loans/subsidized...
[1]: https://studentaid.gov/understand-aid/types/loans/interest-r...
my gf just finished her nurse practitioner degree and while she increased her salary from 60k to 90k, her student loan payments, with some loans being 10% !, eat up all of her increased income. She's happier, but after all the bills, she has the same left over. So from an economic standpoint, she got an advanced degree that benefitted her school and the bank.
That is only true if student loan payments are for a lifetime, but mine were only ten year loans if I paid the bare minimum. You're also ignoring her future pay, salary increases are cumulative.
Will she never pay them off and then reap the benefit? Is happiness not something she benefits from?
Aren't you contradicting yourself somewhat here? The alternate universe version of you wouldn't have the same job - as you say in paragraph 1 you'd work somewhere else.
People on here earn top percentile salaries which warp the calculus, myself included, but $50K is approximately one year of the UK median income (I imagine the US figure is similar).
I'd be worried about making back hundreds of thousands in a low paid field. But a 50K degree in a well paid field is a no brainer to me.
Earnings increases are cumulative. I'm almost certainly 200% over what I'd have without my undergrad, and not just due to the piece of paper.
People on here earn top percentile salaries which warp the calculus, myself included, but $50K is approximately one year of the UK median income (I imagine the US figure is similar).
I'd be worried about making back hundreds of thousands in a low paid field. But a 50K degree in a well paid field is a no brainer to me.
Earnings increases are cumulative. I'm almost certainly 200% over what I'd have without my undergrad, and not just due to the piece of paper.
UK median income in 2018 was GBP 28,400 which is at today's rate about USD 36,600. I don't see why you made the comparison though? The person deciding to start a 4 year degree can't assume they personally have an opportunity cost of 4*annual median earnings.
My claim is roughly that making back ~1 median wage is not a high bar to meet. Over a working career I'd consider it below the error margin; it's 2-3% of lifetime earnings if you only earn median.
Like, flubbing a single negotiation on any job could have a higher impact than that over the rest of your career.
Like, flubbing a single negotiation on any job could have a higher impact than that over the rest of your career.
Would you be willing to name names? Outside of government and defense contractors I personally have not run into any blocks from not having a degree, but I am in the SV bubble where up is down so I have a heavy bias.
>Would you be willing to name names?
Most major, publicly-traded, corporations want a degree beyond entry-level positions. Some companies won't even touch you without a degree (including many startups): for example, Flexport turned me down for the job I'd already done for over a decade, longer than they've been a company, for not having a 4-year degree, this is a direct copy-paste from the rejection email when I applied:
>You obviously have many of the skills we're looking for. However, for the Customs Brokerage role we require a BA/BS degree as well as previous experience in a broker role doing entries and customs classifications.
At the time of that email rejection I'd been doing the job for 12 years and 1 month at my current employer.
Even postings at places like YC have degree requirements for stuff that shouldn't (like assistants).
Most major, publicly-traded, corporations want a degree beyond entry-level positions. Some companies won't even touch you without a degree (including many startups): for example, Flexport turned me down for the job I'd already done for over a decade, longer than they've been a company, for not having a 4-year degree, this is a direct copy-paste from the rejection email when I applied:
>You obviously have many of the skills we're looking for. However, for the Customs Brokerage role we require a BA/BS degree as well as previous experience in a broker role doing entries and customs classifications.
At the time of that email rejection I'd been doing the job for 12 years and 1 month at my current employer.
Even postings at places like YC have degree requirements for stuff that shouldn't (like assistants).
Not OP, I applied to a Wells Fargo job in Charlotte that wouldn't even let me continue the application after entering that I did not have a degree. This was about maybe 3 or so years ago. I had talked to several recruiters about jobs at various companies (from consulting firms to small businesses) which cut communication after learning I dont have a degree. Most recently was a few months back when I talked to a recruiter about a job I was "perfect for" in Atlanta, he called me back later that day to say he couldnt submit me because "the position required a degree". I work at a fortune 500 company, and one of my coworkers straight up admitted the company wouldnt have hired me a few years ago.
These are just the example I could remember at the moment, I'm sure there have been more.
These are just the example I could remember at the moment, I'm sure there have been more.
> that wouldn't even let me continue the application after entering that I did not have a degree.
I've had gobs and gobs of jobs found via indeed do this to me as part of the 'pre-qualification'. They want to know where you got your degree, sometimes your GPA etc.
I've had gobs and gobs of jobs found via indeed do this to me as part of the 'pre-qualification'. They want to know where you got your degree, sometimes your GPA etc.
> Would you be willing to name names? Outside of government and defense contractors I personally have not run into any blocks from not having a degree,
There are _so_ many places where a degree is a must that it's better to ask which institution will happily accept you without a degree without complications (besides the obvious Google and Tesla).
But to give you an answer: lots of hospitals, lots of defense contractors. Me, I was hired by a hospital as a researcher, but there were a great many complications about the pay (my boss said he wanted to pay me more but couldn't).
And, suppose you wanted to emigrate somewhere, say Belgium. It turns out it's just easier to do it if you have a degree than not. You encounter these issues in places you'd least expect them. Just for convenience sake I'm considering getting one.
There are _so_ many places where a degree is a must that it's better to ask which institution will happily accept you without a degree without complications (besides the obvious Google and Tesla).
But to give you an answer: lots of hospitals, lots of defense contractors. Me, I was hired by a hospital as a researcher, but there were a great many complications about the pay (my boss said he wanted to pay me more but couldn't).
And, suppose you wanted to emigrate somewhere, say Belgium. It turns out it's just easier to do it if you have a degree than not. You encounter these issues in places you'd least expect them. Just for convenience sake I'm considering getting one.
> we find that controlling for the education of one’s parents reduces our estimates of college and postgraduate income and wealth premiums by 8 to 18 percent. Controlling also for measures of a respondent’s financial acumen—which may be partly innate—, our estimates of the value added by college and a postgraduate degree fall by 30 to 60 percent. Taken together, our results suggest that college and post-graduate education may be failing some recent graduates as a financial investment
There is no doubt in my mind that someone’s parents’ status and education, and someone’s financial acumen, are both leading to higher incomes and wealth.
Why does it make sense to “control” for these things? Doesn’t this lead to a distorted view, where large real differences in income between two people are factored away?
Sure, financial acumen might be partly innate, or correlated with IQ or family status, but some people surely gain financial acumen precisely by going to college? Sure, parent’s education is a great predictor or ‘own education’, but does that really imply the alternative- that when the professor’s kid is a high school dropout that the kid is better off than other dropouts? Is that supported by the data? Maybe yes, because daddy prof has more money to support his kid, but what happens with the dropout’s kids and future generations?
I’m not arguing that the premium isn’t going down, it’s true that tuition is out of control, but I’m not sure I understand how the methodology here isn’t painting a starker picture than reality. Discounting 50% for ‘acumen’ is a huge influence on the numbers, and when you don’t discount for parents and acumen, the reality is that people with college degrees are earning a lot more actual money.
There is no doubt in my mind that someone’s parents’ status and education, and someone’s financial acumen, are both leading to higher incomes and wealth.
Why does it make sense to “control” for these things? Doesn’t this lead to a distorted view, where large real differences in income between two people are factored away?
Sure, financial acumen might be partly innate, or correlated with IQ or family status, but some people surely gain financial acumen precisely by going to college? Sure, parent’s education is a great predictor or ‘own education’, but does that really imply the alternative- that when the professor’s kid is a high school dropout that the kid is better off than other dropouts? Is that supported by the data? Maybe yes, because daddy prof has more money to support his kid, but what happens with the dropout’s kids and future generations?
I’m not arguing that the premium isn’t going down, it’s true that tuition is out of control, but I’m not sure I understand how the methodology here isn’t painting a starker picture than reality. Discounting 50% for ‘acumen’ is a huge influence on the numbers, and when you don’t discount for parents and acumen, the reality is that people with college degrees are earning a lot more actual money.
Look, I'm studying undergraduate philosophy with no intention other than why not. Would I say I could learn the material on my own w/o college? Absolutely but I like the organized structure of college w/ professors, peers, etc. Am I getting into debt? A fair bit. Is it worth the trade off? I certainly think so. Will I say that five years from now? Most likely. Because here's the thing: education as a means to an end is not what it's all about, and so many of us subscribe to this fiction―to this warm stupor of society's fictions―that we forget what it is truly about. College will always be worth it such that you have an endless curiosity or enjoy erring in the direction of learning which is deeply rooted into failing, or rather, not understanding, over and over again.
> Look, I'm studying undergrad philosophy...Am I getting into debt? A fair bit.. Is it worth the trade off? I certainly think so. Will I say that five years after I graduate? Not sure but most likely.
Spoiler. Been there, done that. Unless you're at an Ivy, if you're majoring in philosophy, you'll not think it was worth it in five years. My sin was Classics, but similar outcome.
Assuming you're on HN because you're teaching yourself programming, the sting will be somewhat lessened (that's the route I took), since you'll at least be able to get a job.
But it'll still sting to make those massive loan payments knowing that nothing you learned is helping you with your professional life, and that things like philosophy, mathematics, and languages (and computer science!) can be learned just as easily with discipline, YouTube, and a few good textbooks.
It's very easy to delay the pain of loan payments when you're in school, but they'll be there waiting for you, inevitably, through sickness and health, marriage and divorce.
If you have endless curiosity, college is even less worth it. Instead, being loan-free gives you the freedom to work in areas that truly intrigue you, and to work in very low-paying internships while you're learning.
But I know I won't convince you. Likely no one could have convinced me at the time (although only one person tried, once).
Edit: if this were the 1970s or earlier, when you could pay for college classes from waiting tables or a $10,000 loan (inflation adjusted!), I'd absolutely say go for it. But taking out even $50,000 in debt at age 18 for anything less than a guaranteed job with a good income (physician assistant, nursing, accounting) is mortgaging your future. Taking out $200,000, which is the going rate for most [edit: should read "many, private", and is probably closer to $100,000] liberal arts 4-year-degrees, is insanity, but between culture BS about degrees and "academic counselors", I know it may not seem that way to you right now.
Spoiler. Been there, done that. Unless you're at an Ivy, if you're majoring in philosophy, you'll not think it was worth it in five years. My sin was Classics, but similar outcome.
Assuming you're on HN because you're teaching yourself programming, the sting will be somewhat lessened (that's the route I took), since you'll at least be able to get a job.
But it'll still sting to make those massive loan payments knowing that nothing you learned is helping you with your professional life, and that things like philosophy, mathematics, and languages (and computer science!) can be learned just as easily with discipline, YouTube, and a few good textbooks.
It's very easy to delay the pain of loan payments when you're in school, but they'll be there waiting for you, inevitably, through sickness and health, marriage and divorce.
If you have endless curiosity, college is even less worth it. Instead, being loan-free gives you the freedom to work in areas that truly intrigue you, and to work in very low-paying internships while you're learning.
But I know I won't convince you. Likely no one could have convinced me at the time (although only one person tried, once).
Edit: if this were the 1970s or earlier, when you could pay for college classes from waiting tables or a $10,000 loan (inflation adjusted!), I'd absolutely say go for it. But taking out even $50,000 in debt at age 18 for anything less than a guaranteed job with a good income (physician assistant, nursing, accounting) is mortgaging your future. Taking out $200,000, which is the going rate for most [edit: should read "many, private", and is probably closer to $100,000] liberal arts 4-year-degrees, is insanity, but between culture BS about degrees and "academic counselors", I know it may not seem that way to you right now.
I majored in one of the STEM fields that doesn't pay any money (chemistry), and now I do the computer stuff for a living and to make money. Given how I did the whole "do STEM and you'll never be wrong route" and it was wrong... Well, I wish I had spent those 4 years at college reading philosophy works and studying the classics. I'd probably still be in the same place I am now, but at least I wouldn't have spent 1000+ hours in a lab to get here.
My point wasn't about STEM vs liberal arts. I actually agree with you. Unless you're going to an elite school where you'll network with highly influential people, taking out massive loans for anything less than a totally professionally-focused degree (physician assistant, accounting, nursing) or a software-industry favored degree (computer science, math or physics) is a huge mistake.
Also, my only remaining loans are from me going back and doing a "professional" degree that proved to be fairly useless. I had thought I did my research but failed to crunch the numbers carefully enough or account for future family decisions (most employment opportunities in the field required extended foreign residence/travel). So I sympathize with taking out loans for a "responsible" degree and still coming out financially screwed.
Also, my only remaining loans are from me going back and doing a "professional" degree that proved to be fairly useless. I had thought I did my research but failed to crunch the numbers carefully enough or account for future family decisions (most employment opportunities in the field required extended foreign residence/travel). So I sympathize with taking out loans for a "responsible" degree and still coming out financially screwed.
Philosophy is a good undergrad choice if you're planning on going to law school.
>Taking out $200,000, which is the going rate for most liberal arts 4-year-degrees
The average student loan balance is $29,800 upon graduation. https://www.cnbc.com/2019/05/20/how-much-the-average-student...
>Taking out $200,000, which is the going rate for most liberal arts 4-year-degrees
The average student loan balance is $29,800 upon graduation. https://www.cnbc.com/2019/05/20/how-much-the-average-student...
"Average student loan balance" is not what I said. Average student loan balance includes:
1) Tons of scholarships, and
2) Non-liberal arts colleges (technical schools, professional schools, the scam schools advertised on TV, etc).
I also was thinking (although failed to specify) private liberal arts colleges. I stand by that figure. If you're taking out loans for a private liberal arts degree, it'll be over $100,000 and many will exceed $200,000.
Edit: Just read that it's supposedly $32,000 in loans for private 4-year degrees. I'm very skeptical of that Federal Reserve figure, since average tuition only for private 4-year degrees is somewhere around $35,000 per year. The Fed also has incentives to find ways to underplay this figure, just like they undercount unemployment. So I'm highly skeptical.
College Board estimates $14,610 per year is what students actually pay for tuition only. If you don't have wealthy or upper-middle-class parents, then you'll need to tack on living expenses and books. If you're not wealthy or upper-middle class, you'll take most of that out in loans, which will be well over $100,000 by graduation.
I know numerous students who have recently graduated with over $100,000 in loans from private 4-year colleges (no, not me, I graduated over 10 years ago, and all of my remaining loans are from a professional master's degree). I know several underemployed lawyers who have well over $200,000 in school loans that they'll likely never pay off.
1) Tons of scholarships, and
2) Non-liberal arts colleges (technical schools, professional schools, the scam schools advertised on TV, etc).
I also was thinking (although failed to specify) private liberal arts colleges. I stand by that figure. If you're taking out loans for a private liberal arts degree, it'll be over $100,000 and many will exceed $200,000.
Edit: Just read that it's supposedly $32,000 in loans for private 4-year degrees. I'm very skeptical of that Federal Reserve figure, since average tuition only for private 4-year degrees is somewhere around $35,000 per year. The Fed also has incentives to find ways to underplay this figure, just like they undercount unemployment. So I'm highly skeptical.
College Board estimates $14,610 per year is what students actually pay for tuition only. If you don't have wealthy or upper-middle-class parents, then you'll need to tack on living expenses and books. If you're not wealthy or upper-middle class, you'll take most of that out in loans, which will be well over $100,000 by graduation.
I know numerous students who have recently graduated with over $100,000 in loans from private 4-year colleges (no, not me, I graduated over 10 years ago, and all of my remaining loans are from a professional master's degree). I know several underemployed lawyers who have well over $200,000 in school loans that they'll likely never pay off.
https://en.wikipedia.org/wiki/Opportunity_cost
31% of students graduate with zero debt, that does not mean their tuition was free. Those balances also exclude loans taken out by parents to pay for collage.
31% of students graduate with zero debt, that does not mean their tuition was free. Those balances also exclude loans taken out by parents to pay for collage.
Thank you for the input. It's interesting, and hey, it might be the case down the road. But my main philosophy behind my seemingly naive post is this: I don't mind what happens. I'm of the opinion that it doesn't matter what is but how you think about what is that matters.
Edit: I saw your edit, and again, thank you for your input. I would just like to note that I'll be graduating with ~12k in debt - I went to a community college first while living with my parents and transferred to a UC, and California's higher education system supports low-income, first generation households fairly well - to which I owe great gratitude to.
Edit: I saw your edit, and again, thank you for your input. I would just like to note that I'll be graduating with ~12k in debt - I went to a community college first while living with my parents and transferred to a UC, and California's higher education system supports low-income, first generation households fairly well - to which I owe great gratitude to.
"I'm of the opinion that it doesn't matter what is but how you think about what is that matters."
That's a false dichotomy that will be difficult to fully adhere to when you spend your next decades as an adult. Yes, perspective matters; a LOT. But "what is" and "what was" can matter a lot too. Imagining that you can just think your way out of hard spots can lead to complacency about the choices that you make. Keeping a positive perspective can involve an enormous amount of mental effort that may have been mitigated by better choices.
That's a false dichotomy that will be difficult to fully adhere to when you spend your next decades as an adult. Yes, perspective matters; a LOT. But "what is" and "what was" can matter a lot too. Imagining that you can just think your way out of hard spots can lead to complacency about the choices that you make. Keeping a positive perspective can involve an enormous amount of mental effort that may have been mitigated by better choices.
I'm about to finish paying off about $65,000 dollars that I took out for my CS degree. I graduated 4 years ago and have a good paying job. So, I'm lucky to have to be paying it off early. However, even with my 6 figure income, paying off this large sum off money has been a huge burden and has majorly affected other choices in my life like investments, career (I.e. I had to take the high paying jobs), buying a house, etc etc. If I could go back and do it again I would avoid any student loans like the plague they are.
Edit: just saw your edit reply to above edit :) that is much more reasonable than the situation that I put myself into. Still, I would recommend doing everything you can to avoid the debt. Paying back 1000's of dollars is a large burden.
Edit: just saw your edit reply to above edit :) that is much more reasonable than the situation that I put myself into. Still, I would recommend doing everything you can to avoid the debt. Paying back 1000's of dollars is a large burden.
The $40k I had to pay back wasn't a burden to me at all because I went to a state school and took public loans.
I had the option of an income based repayment plan too, so if I wanted to take a low paying jobs my monthly payment would have just dropped.
The only reason it would have been a burden was if I felt like I had to pay it off in 4 years.
I had the option of an income based repayment plan too, so if I wanted to take a low paying jobs my monthly payment would have just dropped.
The only reason it would have been a burden was if I felt like I had to pay it off in 4 years.
~12,000 isn't too bad. You also did the smart thing by going to community college first.
So it's sounds like you're OK, or at least not financially ruined. Payments on $12,000 will be manageable.
I'm mostly talking about the folks taking out $50-200,000 in loans for an undergrad degree with some random major (with the upper end of that scale obviously being much worse than the lower end).
So it's sounds like you're OK, or at least not financially ruined. Payments on $12,000 will be manageable.
I'm mostly talking about the folks taking out $50-200,000 in loans for an undergrad degree with some random major (with the upper end of that scale obviously being much worse than the lower end).
You’re making choices for your future self that your future self probably won’t appreciate!
Thinking it’s a good idea is why so many people regret doing exactly what you’re doing.
The simple reality is collage class are incredibly shallow introductions to the subject matter and hardly worth the price of admission. That’s somewhat offset by credentials, but your comparison is high school which says more about how bad high school is than how great collage is.
No joke, at one point I tutoring my friends in some classes I had not taken. Your professors may have a deep understanding of the subject, but they need to dumb the material down so people can pick it up over ~15 weeks.
The simple reality is collage class are incredibly shallow introductions to the subject matter and hardly worth the price of admission. That’s somewhat offset by credentials, but your comparison is high school which says more about how bad high school is than how great collage is.
No joke, at one point I tutoring my friends in some classes I had not taken. Your professors may have a deep understanding of the subject, but they need to dumb the material down so people can pick it up over ~15 weeks.
I think you are taking an excellent route, but don't think you can't have both: a philosophy degree (spectacular!) and a decent living.
Analytic philosophy is very STEMish. Majoring in the logically rigorous courses sets you up for many monied disciplines (besides programming). Even better if you can minor in something like coding, accounting, or even a trade.
Doing ROTC can get you a scholarship, guaranteed job out of college, many opportunities beyond, and serving in the military is in itself a worthwhile endeavor.
Analytic philosophy is very STEMish. Majoring in the logically rigorous courses sets you up for many monied disciplines (besides programming). Even better if you can minor in something like coding, accounting, or even a trade.
Doing ROTC can get you a scholarship, guaranteed job out of college, many opportunities beyond, and serving in the military is in itself a worthwhile endeavor.
Do you think your opinion will change at all as time goes by and you’re left with a large debt to pay off, and a degree that you know will likely not have any impact on your earning potential? It’s great that you’re satisfying your intellectual needs. But a lot of people in your exact position eventually end up wanting other people to foot the bill.
Thank you for question! And no, I don't think so. I think the important thing here to note is that studying philosophy―particularly phenomenology, existentialism, and theology―feels all-encompassing true and real compared to that of anything else, at least for me personally, at the moment. And anyways, as I noted on another comment on this thread: I don't mind what happens. I don't mind working a blue collar job to repay my loans or in order to make a living. Even despite stemming from a first-gen, low-income household and sometimes having this strong, finger-aching yearning to take care of my parents financially, I don't mind what happens because things, I hold, work out in their own imperfect perfection. Again, as naive as this all may sound.
When signing up for my current job, I didn't even bother bringing them my master's degree. Too bad because it's from one of top two tech unis in the country. Not to downplay the benefits of higher education, but it's certainly not a prereq for good employment these days.
Acquiring the "college income premium" is not the reason for going to college. College and universities allow students relatively unfettered exploration of ideas and social interactions. While some of us manage to do that without the umbrella of academia, most of us fare better at a college.
Moreover, colleges and universities (especially the great research universities) provide a way to push back the boundaries of human knowledge and transfer concepts and technology to a new generation. College is where you meet friends and lovers.
Moreover, colleges and universities (especially the great research universities) provide a way to push back the boundaries of human knowledge and transfer concepts and technology to a new generation. College is where you meet friends and lovers.
Higher learning was is and will always be "worth it." Knowledge is good.
Bloatful College administrations not nearly as much. Funny how no one ever studies their utility/cost returns.
The last time I looked at this data (lifetime earnings) the difference was close to $1M on average for men and substantially lower for women. The opportunity cost of going to college is about 1/5 of that difference if you pay up front but substantially more if you take out loans. Here’s another thought that’s not discussed in any of the studies: what’s the impact of someone attending college later in life? Say in late 20s? I’d argue that the degree has greater impact on remaining future income under that scenario.
I made a very simple one spreadsheet model just yesterday after talking about this with a friend:
https://docs.google.com/spreadsheets/d/1KpmT8JdF-0CKyRk8_DL7...
Every student should do a cost/benefit analysis of what a degree from a given institution will be worth to them - too many students fall into massive debt they can never pay back.
https://docs.google.com/spreadsheets/d/1KpmT8JdF-0CKyRk8_DL7...
Every student should do a cost/benefit analysis of what a degree from a given institution will be worth to them - too many students fall into massive debt they can never pay back.
> Combined with a continuing surge in the number of new college graduates entering the labor market, this resulted in stagnating wages in those jobs along with a “cascade” of college graduates into lower-skill jobs. These underemployed college graduates, in turn, pushed some low-skilled workers out of the job market altogether.
Right ... yet, believe this paper when it says that those pushed-out-of-the-job-market low-skilled workers with no college degrees are not any worse off.
Right ... yet, believe this paper when it says that those pushed-out-of-the-job-market low-skilled workers with no college degrees are not any worse off.
I'd offer a much simpler explanation: education is mostly a competitive tool, when more people have it, it's value naturally declines right? As fraction of population with a college degree increased from about 4% in 1940 to about 30% today, obviously advantage offered by it, declined. And went to essentially zero if measured by wealth because wealth is something only top of population pyramid has, in general: fewer than 30%.
just want to add something that seems missing from much of the discussion of higher education; consider the question rephrased as, "is it worth learning to learn?" higher ed is not just job training. its exposure to ideas, opinions, people, and energy in an environment explicitly not tied to a profit motive. it should be cheaper, and more accessible, but..
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.
It's rent-seeking. This outcome was obvious.
Personally I feel like, one one of the variables that isn’t considered in the returns conversation is time. Lots of employers have reimbursement programs that can be used while working up even of you currently work in big retail or corporate food.
It will likely take much longer but will leave you in a more controllable financial situation in the interim.
It will likely take much longer but will leave you in a more controllable financial situation in the interim.
I wonder if HN is a good place to discuss this, because we have a pretty niche group of ppl here.
A big chunk of the HN crowd seems to be self-taught highly intelligent and highly motivated young guys who as a result became astronomically good in their craft. For those people, potential employers will go out of their way and bend their own corporate hiring rules to get the no-degree candidate past HR.
And then there's the normal people working normal jobs. For those, not having a degree will immediately disqualify them from 50%+ of the available job openings. But this crowd is only marginally represented on HN.
Since it's like the last thing where young people need to be disciplined, I'm sure many companies will treat a degree more like a proof that you're reliable enough than like the additional education that it was supposed to be.
That also explains why "degree" has become a HR checkbox where nobody cares about the specific skills that you supposedly learned.
So the correct question is: How do you prove your reliability (by getting a degree) in the cheapest way possible?
As for grad school, that's really only for people who are idealistic and value research higher than job security or having enough money to feed a family.
A big chunk of the HN crowd seems to be self-taught highly intelligent and highly motivated young guys who as a result became astronomically good in their craft. For those people, potential employers will go out of their way and bend their own corporate hiring rules to get the no-degree candidate past HR.
And then there's the normal people working normal jobs. For those, not having a degree will immediately disqualify them from 50%+ of the available job openings. But this crowd is only marginally represented on HN.
Since it's like the last thing where young people need to be disciplined, I'm sure many companies will treat a degree more like a proof that you're reliable enough than like the additional education that it was supposed to be.
That also explains why "degree" has become a HR checkbox where nobody cares about the specific skills that you supposedly learned.
So the correct question is: How do you prove your reliability (by getting a degree) in the cheapest way possible?
As for grad school, that's really only for people who are idealistic and value research higher than job security or having enough money to feed a family.
You seem to make a lot of assumptions about people who do and do not visit/participate on HN. Is it based on a feeling or is there some data available on that topic?
Sometimes data is not the only thing you need. Example: the statistical significance of a parachute to avoid death or trauma when jumping from a plane. “Conclusions: parachute use did not death or major trauma when jumping from a plane...”
https://www.bmj.com/content/bmj/363/bmj.k5094.full.pdf
https://www.bmj.com/content/bmj/363/bmj.k5094.full.pdf
Ignore the assumption. The question remains valid. If the assumption is wrong there are more people to answer it.
Three words. Income Sharing Agreement. Banks and insurance agencies have already calculated what a degree at a particular college is worth.
People just tend to get really butt hurt when they see that a degree in Tuba Performance from NYU is not valuable.
People just tend to get really butt hurt when they see that a degree in Tuba Performance from NYU is not valuable.
college provides such access to knowledge not available anywhere else (not legally to my knowledge). any progress is most likely to come from academia first due to that concentration of knowledge.
so if we are truly heading towards a collegeless future, i am hoping that anyone who can contribute to research can get access to that knowledge. money is a major concern, but if we can't make progress then we have a bigger issue.
so if we are truly heading towards a collegeless future, i am hoping that anyone who can contribute to research can get access to that knowledge. money is a major concern, but if we can't make progress then we have a bigger issue.
The internet changes this in a major way. However, colleges force students to learn what experts deem as important.
This is very important as students tend to want to learn what's interesting over what's fundamental and important.
In my mind, university is ALWAYS better then no university, the actual thing that puts this in question is... is the cost worth it?
This is very important as students tend to want to learn what's interesting over what's fundamental and important.
In my mind, university is ALWAYS better then no university, the actual thing that puts this in question is... is the cost worth it?
Why not study at a top German university instead? It's 100% free and you get a ton of international experience, learn a new language, and can still go to MIT/Harvard/Stanford/... for your master's or thesis
Wasn't worth it in the US when I went (graduated 10 years ago). If I could go back in time, I'd tell myself to go right into industry.
I work in software and I’m a high school dropout. I’ve never even been asked if I have a degree, I just leave that field blank.
College seems to be a thing to get done quickly, and cheaply. Probably even with the easiest courses. Why do I say that?
- The more time you spend, the more time you're not working and making money/experience. You're also in a quite restricted social group with only the professors providing contact with older, more experienced people.
- There really is nothing you can learn in college that isn't public knowledge. At best you get a better idea of what the experts think is important in a field. So for instance I didn't read Marxist or Austrian economics.
- Nobody is going to know whether you did that advanced course on category theory for coders. I'm sure it's both interesting and relevant, but you have more time to learn this yourself, when you're not being judged by an exam.
- You'll also learn things better when you're not constantly thinking about proving it on an exam.
- Everything is college is really an intro. A really evil one where you're asked to fly over some field and then get asked some very specific questions when it comes to exam time.
- Of course there are things that really are work relevant at college, especially programming related stuff. It's hard to know what they are as a novice, but looking at it now it seems anything where you're in the practice of using a repo and iterating a solution is what you're after, or using common tools like git or tmux (there's a lot). That can occur in many types of courses though, whether it's systems or human interface and so on.
Since there's a lot of Americans here, and I have some experience of that system, I'd say go to Europe. Or the UK, if you like keeping it in English. In Europe, most of the courses are very specific and short. I got a Masters degree 4 years after high school, and I wasn't even at uni for most of the year (3x8 weeks a year), so in theory it could have all been done in 2 years. Which puts into perspective how much you're actually learning there.
- The more time you spend, the more time you're not working and making money/experience. You're also in a quite restricted social group with only the professors providing contact with older, more experienced people.
- There really is nothing you can learn in college that isn't public knowledge. At best you get a better idea of what the experts think is important in a field. So for instance I didn't read Marxist or Austrian economics.
- Nobody is going to know whether you did that advanced course on category theory for coders. I'm sure it's both interesting and relevant, but you have more time to learn this yourself, when you're not being judged by an exam.
- You'll also learn things better when you're not constantly thinking about proving it on an exam.
- Everything is college is really an intro. A really evil one where you're asked to fly over some field and then get asked some very specific questions when it comes to exam time.
- Of course there are things that really are work relevant at college, especially programming related stuff. It's hard to know what they are as a novice, but looking at it now it seems anything where you're in the practice of using a repo and iterating a solution is what you're after, or using common tools like git or tmux (there's a lot). That can occur in many types of courses though, whether it's systems or human interface and so on.
Since there's a lot of Americans here, and I have some experience of that system, I'd say go to Europe. Or the UK, if you like keeping it in English. In Europe, most of the courses are very specific and short. I got a Masters degree 4 years after high school, and I wasn't even at uni for most of the year (3x8 weeks a year), so in theory it could have all been done in 2 years. Which puts into perspective how much you're actually learning there.
Disclaimer: I don't have a degree and I've had a very successful career as software engineer so far.
I think the concept of university is mostly a time waste and the reasons for it is:
- University is the concept of someone teaching you a topic and then you being able to claim you are qualified in this topic. However, people nowadays need to train themselves in complete new fields multiple times in their lifetime and therefore we already have to teach ourselvs new things all the time and be able to proof that we are qualified in something without a university degree. So why a degree in the first place?
- Before we had the internet, digital books, online training courses and other learning materials at our fingertips one had to go to a different physical location packed with other students and learn a subject at a slower pace so that everyone could equally follow the topic. Today this is a waste of time. If one has access to all the learning materials themselves, then they can consume it at their own pace, possibly learn a 3 year course in a single year. Why slow yourself down unnecessarily?
- Experience > degree. After the first 2-4 years of work experience nobody cares anymore about your initial degree, unless it's medicine or law. Once you've worked, people are interested in your actual ability to deliver and after 2-4 years there's enough data to convince someone how good you are.
- The more people have a degree, the less it's something which makes you stand out. I believe that being different is the best way to stand out from a crowded and competitive market, no matter how. Basically you want to be part of the minority. If nobody has a degree, you want to have a degree, if everybody has a degree, then you don't. People like to see something special in other people, if you can convince them that you know something without going through a lengthy programm like everybody else, then people will think you are smarter or something like that (even if it's not true). This only works though if your in the minority. It's the same pshycology which allows one person to charge 300% more than competitors and having the largest share of customers, because they think that there's something inherently better about it.
- In many countries attending university means creating debt. There's good debt and there's bad debt. If I take credit to buy a property which has very high and real chances of drastically increasing in value, then it's good debt, but if I take credit in order to learn something which I can learn myself and which after 2-4 years won't even matter anymore, then it's possible very bad debt.
I know someone who paid 150k for an MBA at a business school and I think the money was wasted. If you pay 150k on an MBA in business, then clearly the course material will be entirely wasted on you. 150k is good money that could have been spent so much better in other areas, like buying property and then see the value grow whilst receiving passive income through rent or investing in an actual business which you want to create after the MBA.
I think the concept of university is mostly a time waste and the reasons for it is:
- University is the concept of someone teaching you a topic and then you being able to claim you are qualified in this topic. However, people nowadays need to train themselves in complete new fields multiple times in their lifetime and therefore we already have to teach ourselvs new things all the time and be able to proof that we are qualified in something without a university degree. So why a degree in the first place?
- Before we had the internet, digital books, online training courses and other learning materials at our fingertips one had to go to a different physical location packed with other students and learn a subject at a slower pace so that everyone could equally follow the topic. Today this is a waste of time. If one has access to all the learning materials themselves, then they can consume it at their own pace, possibly learn a 3 year course in a single year. Why slow yourself down unnecessarily?
- Experience > degree. After the first 2-4 years of work experience nobody cares anymore about your initial degree, unless it's medicine or law. Once you've worked, people are interested in your actual ability to deliver and after 2-4 years there's enough data to convince someone how good you are.
- The more people have a degree, the less it's something which makes you stand out. I believe that being different is the best way to stand out from a crowded and competitive market, no matter how. Basically you want to be part of the minority. If nobody has a degree, you want to have a degree, if everybody has a degree, then you don't. People like to see something special in other people, if you can convince them that you know something without going through a lengthy programm like everybody else, then people will think you are smarter or something like that (even if it's not true). This only works though if your in the minority. It's the same pshycology which allows one person to charge 300% more than competitors and having the largest share of customers, because they think that there's something inherently better about it.
- In many countries attending university means creating debt. There's good debt and there's bad debt. If I take credit to buy a property which has very high and real chances of drastically increasing in value, then it's good debt, but if I take credit in order to learn something which I can learn myself and which after 2-4 years won't even matter anymore, then it's possible very bad debt.
I know someone who paid 150k for an MBA at a business school and I think the money was wasted. If you pay 150k on an MBA in business, then clearly the course material will be entirely wasted on you. 150k is good money that could have been spent so much better in other areas, like buying property and then see the value grow whilst receiving passive income through rent or investing in an actual business which you want to create after the MBA.
> University is the concept of someone teaching you a topic and then you being able to claim you are qualified in this topic.
University is supposed to be learning from the experience of experts. Having a person with experience on hand cuts down the time needed to learn things. Online articles and tutorials aren't a dialogue. Online forums are good, but often can't promise somebody will care about your education. Universities have staff who are paid to teach, talk with, and answer you.
That's not to say you're wrong about the value of universities in practice. Kids are told to focus on reviewing textbooks with other students in the same class, getting high grades, and graduating with a degree. People say "visit professors during office hours," but don't stress that this is part of the most valuable thing in a university: an expert who is required to help you learn the field.
> Experience > degree. After the first 2-4 years of work experience nobody cares anymore about your initial degree, unless it's medicine or law.
Assuming a similar skill level. But a student can leave a 4-year university with a higher skill level than somebody who learned on the job for 4 years. Those people usually just have time to learn about the job they have, so they might take longer to gain skills for the next rung on the career ladder.
University is supposed to be learning from the experience of experts. Having a person with experience on hand cuts down the time needed to learn things. Online articles and tutorials aren't a dialogue. Online forums are good, but often can't promise somebody will care about your education. Universities have staff who are paid to teach, talk with, and answer you.
That's not to say you're wrong about the value of universities in practice. Kids are told to focus on reviewing textbooks with other students in the same class, getting high grades, and graduating with a degree. People say "visit professors during office hours," but don't stress that this is part of the most valuable thing in a university: an expert who is required to help you learn the field.
> Experience > degree. After the first 2-4 years of work experience nobody cares anymore about your initial degree, unless it's medicine or law.
Assuming a similar skill level. But a student can leave a 4-year university with a higher skill level than somebody who learned on the job for 4 years. Those people usually just have time to learn about the job they have, so they might take longer to gain skills for the next rung on the career ladder.
I respectfully disagree with all your points. Unless you are privileged enough to attend an ivy league university you will not be taught by experts of a field. The majority of university teachers across the world are average people of average skill who often failed to achieve success in the open market and then defaulted back into a comfy uni job.
Also there’s no evidence for your claim that 4 years university get you better skilled than 4 years of self disciplined learning and work experience.
Maybe you went to a top university in the states but with all respect these universities are not even a fraction of what the average student experienced in every other university.
EDIT: btw i went to uni in Europe, but never finished due to the reasons which I mentioned above, so i’ve got some experience what uni life is.
Also there’s no evidence for your claim that 4 years university get you better skilled than 4 years of self disciplined learning and work experience.
Maybe you went to a top university in the states but with all respect these universities are not even a fraction of what the average student experienced in every other university.
EDIT: btw i went to uni in Europe, but never finished due to the reasons which I mentioned above, so i’ve got some experience what uni life is.
I've taken classes at two small private colleges and a community college in the US (total of seven years, mostly part-time, for an undergraduate). None were on the usual elite list. But you're right that I don't know much about universities in other countries.
>Unless you are privileged enough to attend an ivy league university you will not be taught by experts of a field. The majority of university teachers across the world are average people of average skill
Average skill of an expert in the field is good enough. Not an "expert among experts," but an expert nonetheless. And most people will end up as experts of average skill, so that's fine. I majored in math, and all my professors knew more about the subject, knew how it was used, and had their own research going on. Again, not an elite college, so they weren't big projects, but these people weren't just failures who found a cushy job. As a student, "more skilled than me" is all I needed. Anything they knew beyond what I should learn in college wasn't useful to me. It only mattered they knew how to teach it to me.
>Also there’s no evidence for your claim that 4 years university get you better skilled than 4 years of self disciplined learning and work experience.
Alright, you got me there. Do you have links to non-anecdotal and contrary evidence? Otherwise, I'm going study-hunting.
>Unless you are privileged enough to attend an ivy league university you will not be taught by experts of a field. The majority of university teachers across the world are average people of average skill
Average skill of an expert in the field is good enough. Not an "expert among experts," but an expert nonetheless. And most people will end up as experts of average skill, so that's fine. I majored in math, and all my professors knew more about the subject, knew how it was used, and had their own research going on. Again, not an elite college, so they weren't big projects, but these people weren't just failures who found a cushy job. As a student, "more skilled than me" is all I needed. Anything they knew beyond what I should learn in college wasn't useful to me. It only mattered they knew how to teach it to me.
>Also there’s no evidence for your claim that 4 years university get you better skilled than 4 years of self disciplined learning and work experience.
Alright, you got me there. Do you have links to non-anecdotal and contrary evidence? Otherwise, I'm going study-hunting.
Degree never helped me for shit. Someone rescue me...
College degree is only worth for high income positions like surgeon, medical degree, nursing and some engineering field (chemical?). It's just not useful for middle class income like teaching etc. But good luck in trying to get an interview without any kind of diploma. They will think something is wrong you.
It's funny to me that people can immediately see the issue with falling returns here as prices increase, but can't see the same thing when it applies to the stock market. In the stock market, the prevailing wisdom is "buy and hold no matter what the price is, because you can't time/game the market." Why doesn't the same logic apply to college? Shouldn't the efficient market cause college costs to rise to the appropriate level? Given that, shouldn't you just do it and ignore the cost?
What all these studies always fail to factor is that a college degree will give you an advantage over someone that does not have one in just about any situation. Just the fact that you have one will signal to the potential employer that you can accomplish goals, meet a deadline and the many things you need to deal with to get a degree over those that don't have one.
The real question is, "Does an ivy league degree, and those that are very expensive worth it?" I suspect that in most cases it's not. An art degree from Harvard will most likely not pay for itself. But an engineering one from a respected state school will likely have a good return on investment.
Bottom line a degree is worth it. But you have to make sure you pick a major that pays off in the end.
The real question is, "Does an ivy league degree, and those that are very expensive worth it?" I suspect that in most cases it's not. An art degree from Harvard will most likely not pay for itself. But an engineering one from a respected state school will likely have a good return on investment.
Bottom line a degree is worth it. But you have to make sure you pick a major that pays off in the end.
I also find the analysis strange because it depends heavily on whether you're profit focused.
If you are, then the average outcome probably doesn't matter to you, because you're going to select for profitability in your degree choice, you're going to move around for work, continuously study and train in adult life, and generally you're gonna be fine financially (if perhaps not emotionally, oho).
If you're not profit focused - if you're doing the degree primarily and substantially because you love X and want to do X - then what do you care if it doesn't pay back? You got to be an X! The question is almost irrelevant.
I think a lot of analysis suffers from this averaging effect whereby actually that average person doesn't exist.
There is no realistic path that would have lead to me making the average income for my cohort, for example, because I'm just not that sort of person - I'd rather just go relatively all out, or else work for a non-profit or scrappy startup or whatever, so I either bin high or low.
If you are, then the average outcome probably doesn't matter to you, because you're going to select for profitability in your degree choice, you're going to move around for work, continuously study and train in adult life, and generally you're gonna be fine financially (if perhaps not emotionally, oho).
If you're not profit focused - if you're doing the degree primarily and substantially because you love X and want to do X - then what do you care if it doesn't pay back? You got to be an X! The question is almost irrelevant.
I think a lot of analysis suffers from this averaging effect whereby actually that average person doesn't exist.
There is no realistic path that would have lead to me making the average income for my cohort, for example, because I'm just not that sort of person - I'd rather just go relatively all out, or else work for a non-profit or scrappy startup or whatever, so I either bin high or low.
Harvard (and similar schools) give very generous aid, not to mention that one can easily transition to consulting or similar no matter their major if they came from Harvard. The considerations for Ivy+ schools are not the same as the considerations that are being discussed in this article/thread. The people that are actually ending up screwed with debt went to mid tier (or worse) private schools for the most part, or possibly mediocre out of state public options.
Hopefully the US can take a page from the Germans and institute vocational schools. We look down on plumbers, electricians, etc. We constantly couch our praise of them with phrases like, "Wait until your knee gives". I have a MSCS from GA Tech. I've got about 18 years official experience. I get paid $95/hr. Plumbers? $120/hr. Electricians are about the same. We need them. Let's teach them. Maybe with apprenticeships.
Are plumbers actually working 40 billable hours a week? And how much are they working that is not billable (driving from site to site)? I would be surprised if they made more in a year than educated STEM professionals. The attention-getting per-hour rate might not be a great metric.
2018 median pay is $53,910 per year
https://www.bls.gov/ooh/construction-and-extraction/mobile/p...
https://www.bls.gov/ooh/construction-and-extraction/mobile/p...
Which, to be clear, is nothing to sneeze at in large parts of the country.
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 like New Zealand have dramatic bonuses for people with degrees.
3: You don't have to jump through the hoops and explain why you don't have a degree all the time. Stupid reason I know, but it's something I've seen friends without degrees have to do constantly - and not just in career situations. As I mentioned, I went to a no-name university. If you live in NZ, you'll know it. If you're an American, chances are, you've never heard of it. But because I have a degree, it doesn't ever really come up.
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.
Where I think College returns make a lot less sense
• Paying out of state tuition for lifestyle reasons, when you're going into a relatively low paid field afterwards (e.g. teaching).
• Paying private school tuition at a school without a strong reputation
• Grad school, in general, seems to be a rip off