4 ms·

For reference, working 40 years at $30,000 a year will earn you $1.2 million. Earning $640,000, or ~53%, more is certainly substantial. Edit: The $30,000/year

For reference, working 40 years at $30,000 a year will earn you $1.2 million. Earning $640,000, or ~53%, more is certainly substantial. Edit: The $30,000/year reflects current incomes, the $640,000 lifetime difference is based on 1987 dollars, like @twoodfin pointed out. It works out to greater than double lifetime earnings using the adjusted $1.3 million figure.

maratd 11y ago
> For reference, working 40 years at $30,000 a year Why are you using 30K as the baseline? The median per capita income in the US is 56K [1]. 40 years will earn you $2.24 million. Earning $640K or 29% more isn't as substantial as you make it out to be. Let's also factor in 4 years lost income and cost of attending an institution. (4 x 30K (starting salary)) + (4 x 40K (tuition/housing/food at a public university)) = 280K $640K - 280K = 360K 360K is 16% of total earned income. That's not that much. We're also not factoring in interest, assuming you borrowed money to pay for that degree ... and let's not forget I'm quoting prices for a public university while the $640K figure includes some very expensive colleges that might put you in the red. If you're going to attend a university, don't do it for money. That's a really stupid rationale. [1] https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
- pc86 11y ago
  The very page you linked to shows that HS graduates early roughly half what college graduates do: https://en.wikipedia.org/wiki/Personal_income_in_the_United_States#By_educational_attainment https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
  - maratd 11y ago
    I was using the figure provided by OP. The post has since been edited to note that was an older figure. Using the data on that page, it would be 981K over the lifetime of the worker. Plug that into the formulas above and it's still nowhere near half after all the costs are factored in, although it's a far healthier percentage. One thing that isn't noted though ... there is a fundamental difference between causation and correlation. There is no evidence to suggest colleges add that value. Merely that people who earn more go to college.
    - pc86 11y ago
      I was not clear in my reply, so my apologies for that. I was stating that ~2x figure (give or take) as part of the pile of evidence that median personal income is nowhere near $56k.
- learc83 11y ago
  >The median per capita income in the US is 56K Where are you getting that from? The median personal income is very close to 30K. The median household income isn't even 56K. And where did you get 40K per year for total cost at a public university, the average is closer to 20K. Furthermore, why are you including cost of living for college students but not for workers when calculating the opportunity cost? >If you're going to attend a university, don't do it for money. That's a really stupid rationale. Even if you're calculations were correct, they're only correct for generic "college". If you plan on choosing a major that pays better than average, even with your calculations, attending university for the money would still be a net win.
  - maratd 11y ago
    > Where are you getting that from? The median personal income is very close to 30K. The median household income isn't even 56K. The data is clearly sourced it the wikipedia article. Your data is either old or just wrong. > Furthermore, why are you including cost of living for college students but not for workers when calculating the opportunity cost? That's a fair point. You will still incur costs that you wouldn't otherwise, like books, etc. > If you plan on choosing a major that pays better than average Where is the evidence the increase in earnings is the result of the degree rather than selection bias? Correlation is not causation.
    - learc83 11y ago
      >The data is clearly sourced it the wikipedia article. Your data is either old or just wrong. Point me to the line in that article that says that. Here is a quote from the 2nd paragraph. "The overall median personal income for all individuals over the age of 18 was $24,062[6] ($32,140 for those age 25 or above) in the year 2005.[7] The overall median income for all 155 million persons over the age of 15 who worked with earnings in 2005 was $28,567.[8]" Where are you getting 56k from? >Where is the evidence the increase in earnings is the result of the degree rather than selection bias? Correlation is not causation. That is entirely possible, but many studies have attempted to correct for this. Here is a good summary of several. http://www.nytimes.com/2014/05/28/upshot/the-value-of-college-its-not-just-correlation.html http://www.nytimes.com/2014/05/28/upshot/the-value-of-colleg... There are also a few other problems with your formula. $30k is way too high for an 18 year old just out of high school. And again, 20k per year is closer to the average total yearly cost of a public school. Let's say 20k per year in income which is much closer to the median starting salary for an 18 year old. Let's also say that if it costs a college student 10k a year to live that it only costs a non-college student 5k to account for extra costs for the college student. So we have 20k a year in lost income and 15k a year in costs over what the student would have paid had they not attended. That's 4x20k + 4x15k = 140k. About half of your estimate. That also doesn't take into account that college students are free during breaks to work, or take paid internships. College only takes about 30 weeks per year, while the workers will be working about 50 weeks out of the year. (Also Engineering and Computer Science internships in particular pay fairly well.)
Retric 11y ago
65-18 = 47 years, 680k/47y = 13.6k / year. Median income is 52k. Split the difference and assume it's 52 - (13.6k /2) = 45K * 47 = 2.115 million. So, now 680k is an extra 32% which sounds great! Except that's pretax, and takes ~100+k of capital to get and your get 4 years less for interest to compound. If you actually work out the numbers, paying for collage adds less money than buying that much stock and giving your kids the interest from that stock while they work. So, on it's on a BS is a poor investment, the only advantage is it's a highly leveraged investment. PS: For comparison the median plumber makes ~49k/year in the US. Median electrician also makes ~50k/year.
- dinkumthinkum 11y ago
  Before we go too far off the plumber deep end, consider there are more lawyers in the U.S. than plumbers: http://m.wolframalpha.com/input/?i=plumbers+lawyers http://m.wolframalpha.com/input/?i=plumbers+lawyers (note difference in salary as well) Anyway, these numbers work best when you compare "all college graduates" to the "holy grail of all trades," the oft-referenced plumber. Most non-college graduates are not swimming in thr rich plumber mondy. Once you take out the bottom earners out of the college graduate pool, the difference in numbers becomes much more drastic, I think.
- garrettgrimsley 11y ago
  Your median income figure appears to be wrong. I think that you might be using median household income rather than median per-capita income. The $680k (sic) figure is also in 1987 USD, and if you don't adjust for inflation then it throws your calculations off. See The College Payoff: Education, Occupations, Lifetime earnings [0] for a rigorous assessment. What you said about buying stock vs paying for college is interesting and something to consider. [0] https://repository.library.georgetown.edu/handle/10822/559300 https://repository.library.georgetown.edu/handle/10822/55930...

maratd 11y ago

> For reference, working 40 years at $30,000 a year Why are you using 30K as the baseline? The median per capita income in the US is 56K [1]. 40 years will earn you $2.24 million. Earning $640K or 29% more isn't as substantial as you make it out to be. Let's also factor in 4 years lost income and cost of attending an institution. (4 x 30K (starting salary)) + (4 x 40K (tuition/housing/food at a public university)) = 280K $640K - 280K = 360K 360K is 16% of total earned income. That's not that much. We're also not factoring in interest, assuming you borrowed money to pay for that degree ... and let's not forget I'm quoting prices for a public university while the $640K figure includes some very expensive colleges that might put you in the red. If you're going to attend a university, don't do it for money. That's a really stupid rationale. [1] https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...

pc86 11y ago
The very page you linked to shows that HS graduates early roughly half what college graduates do: https://en.wikipedia.org/wiki/Personal_income_in_the_United_States#By_educational_attainment https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
- maratd 11y ago
  I was using the figure provided by OP. The post has since been edited to note that was an older figure. Using the data on that page, it would be 981K over the lifetime of the worker. Plug that into the formulas above and it's still nowhere near half after all the costs are factored in, although it's a far healthier percentage. One thing that isn't noted though ... there is a fundamental difference between causation and correlation. There is no evidence to suggest colleges add that value. Merely that people who earn more go to college.
  - pc86 11y ago
    I was not clear in my reply, so my apologies for that. I was stating that ~2x figure (give or take) as part of the pile of evidence that median personal income is nowhere near $56k.
learc83 11y ago
>The median per capita income in the US is 56K Where are you getting that from? The median personal income is very close to 30K. The median household income isn't even 56K. And where did you get 40K per year for total cost at a public university, the average is closer to 20K. Furthermore, why are you including cost of living for college students but not for workers when calculating the opportunity cost? >If you're going to attend a university, don't do it for money. That's a really stupid rationale. Even if you're calculations were correct, they're only correct for generic "college". If you plan on choosing a major that pays better than average, even with your calculations, attending university for the money would still be a net win.
- maratd 11y ago
  > Where are you getting that from? The median personal income is very close to 30K. The median household income isn't even 56K. The data is clearly sourced it the wikipedia article. Your data is either old or just wrong. > Furthermore, why are you including cost of living for college students but not for workers when calculating the opportunity cost? That's a fair point. You will still incur costs that you wouldn't otherwise, like books, etc. > If you plan on choosing a major that pays better than average Where is the evidence the increase in earnings is the result of the degree rather than selection bias? Correlation is not causation.
  - learc83 11y ago
    >The data is clearly sourced it the wikipedia article. Your data is either old or just wrong. Point me to the line in that article that says that. Here is a quote from the 2nd paragraph. "The overall median personal income for all individuals over the age of 18 was $24,062[6] ($32,140 for those age 25 or above) in the year 2005.[7] The overall median income for all 155 million persons over the age of 15 who worked with earnings in 2005 was $28,567.[8]" Where are you getting 56k from? >Where is the evidence the increase in earnings is the result of the degree rather than selection bias? Correlation is not causation. That is entirely possible, but many studies have attempted to correct for this. Here is a good summary of several. http://www.nytimes.com/2014/05/28/upshot/the-value-of-college-its-not-just-correlation.html http://www.nytimes.com/2014/05/28/upshot/the-value-of-colleg... There are also a few other problems with your formula. $30k is way too high for an 18 year old just out of high school. And again, 20k per year is closer to the average total yearly cost of a public school. Let's say 20k per year in income which is much closer to the median starting salary for an 18 year old. Let's also say that if it costs a college student 10k a year to live that it only costs a non-college student 5k to account for extra costs for the college student. So we have 20k a year in lost income and 15k a year in costs over what the student would have paid had they not attended. That's 4x20k + 4x15k = 140k. About half of your estimate. That also doesn't take into account that college students are free during breaks to work, or take paid internships. College only takes about 30 weeks per year, while the workers will be working about 50 weeks out of the year. (Also Engineering and Computer Science internships in particular pay fairly well.)

Retric 11y ago

65-18 = 47 years, 680k/47y = 13.6k / year. Median income is 52k. Split the difference and assume it's 52 - (13.6k /2) = 45K * 47 = 2.115 million. So, now 680k is an extra 32% which sounds great! Except that's pretax, and takes ~100+k of capital to get and your get 4 years less for interest to compound. If you actually work out the numbers, paying for collage adds less money than buying that much stock and giving your kids the interest from that stock while they work. So, on it's on a BS is a poor investment, the only advantage is it's a highly leveraged investment. PS: For comparison the median plumber makes ~49k/year in the US. Median electrician also makes ~50k/year.

dinkumthinkum 11y ago
Before we go too far off the plumber deep end, consider there are more lawyers in the U.S. than plumbers: http://m.wolframalpha.com/input/?i=plumbers+lawyers http://m.wolframalpha.com/input/?i=plumbers+lawyers (note difference in salary as well) Anyway, these numbers work best when you compare "all college graduates" to the "holy grail of all trades," the oft-referenced plumber. Most non-college graduates are not swimming in thr rich plumber mondy. Once you take out the bottom earners out of the college graduate pool, the difference in numbers becomes much more drastic, I think.
garrettgrimsley 11y ago
Your median income figure appears to be wrong. I think that you might be using median household income rather than median per-capita income. The $680k (sic) figure is also in 1987 USD, and if you don't adjust for inflation then it throws your calculations off. See The College Payoff: Education, Occupations, Lifetime earnings [0] for a rigorous assessment. What you said about buying stock vs paying for college is interesting and something to consider. [0] https://repository.library.georgetown.edu/handle/10822/559300 https://repository.library.georgetown.edu/handle/10822/55930...