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Maybe this is a perfect opportunity to cut costs and make college more affordable in the process. Higher education is getting quite expensive and I believe thes

Maybe this is a perfect opportunity to cut costs and make college more affordable in the process. Higher education is getting quite expensive and I believe these costs should be rationalized. If you take the average cost of some higher end schools (say 150k) and look at the opportunity cost of investing that in the stock market for 40 years. That’s about 15x return (7% for 40 years). Thats $2.25M at retirement. Probably better than most end up with, no?

mrosett 6y ago
A couple reasons I don't think that's the correct comparison: * There's a huge consumption component to college * Nobody's lending you 150k to invest in the stock market when you're 18. (Not sure we should be lending it to them for college, of course.)
- schwartzworld 6y ago
  You're missing the point. The argument that your money would get you farther if you invest it over 40 years is inherently flawed because most people who don't go to college don't do that. Your earning power is higher with a college degree. I never finished mine, and it took me a long time and a lot more work to catch up to my peers financially. I might never have done it if I didn't get lucky and make a few right choices in my 30a.
mikekchar 6y ago
Kind of apples to oranges. Take the difference in salary between a college graduate and a high school graduate over those 40 years. Factor in inflation. Invest that at a 7% return. I'm sure it will easily dwarf $2.25M. Why don't people have millions invested by the time they retire? Because no matter how much money people make (up to a certain point, depending on the person), they spend it. If you give the average high school graduate $150K and tell them to invest it for 40 years, I pretty much guarantee that it will be gone long before the 40 years are up. To be fair, I don't have millions invested and I'm scarily close to retirement. So I'm not trying to be critical of others ;-)
- WalterBright 6y ago
  I know people who retired as millionaires on a lower middle class salary doing just that - living below their means, and regularly investing the difference. It does work. But if you spent all your income, you'll never have money.
  - t-writescode 6y ago
    I suspect all you can argue nowadays is that it _did_ work. With housing costs increasing faster than inflation, forcing people to spend money on rent instead, which has no investment potential, I don't think it still works.
    - goldenchrome 6y ago
      Your own house isn't an investment because you always need to live somewhere. Investments are things you can spend like index funds and bonds.
      - zamfi 6y ago
        > Your own house isn't an investment because you always need to live somewhere Ehhh, yes and no. Plenty of people who bought nice-ish houses in the Bay Area in the '70s and '80s sold them in 2014-2018 and retired outside the bay with a nice extra pile of cash. You need housing, but you don't need a crazy expensive house in a crazy expensive area.
      - 2ion 6y ago
        If not that it's an insurance against future rent payments and it creates different options. The total cost of ownership with a high likelyhood for an well-priced and appropriate property with appropriate mortgage payments is lower than runaway rents in hcol areas. Lastly, you can trade property value and QoL by neglecting upkeep at any time to make up a shortfall in income and even "run down" the property over quite some time, at extreme levels not even using utilities, which is not an option if you're paying rent -- try neglecting your rent payments.
      - 6y ago
deusex_ 6y ago
There’s an old story about a guy taking a smoke break with his non-smoking colleague. “How long have you been smoking for?” the colleague asks. “Thirty years,” says the smoker. “Thirty years!” marvels the co-worker. “That costs so much money. At a pack a day, you’re spending $1,900 a year. Had you instead invested that money at an 8% return for the last 30 years, you’d have $250,000 in the bank today. That’s enough to buy a Ferrari.” The smoker looked puzzled. “Do you smoke?” he asked his co-worker. “No.” “So where is your Ferrari?”
- oars 6y ago
  This is perfect for explaining my current situation (not related to college nor smoking). Thank you for sharing.
- nerdponx 6y ago
  s/Ferrari/several years of retirement income/
  - arcturus17 6y ago
    - Do you have several years of retirement income in the bank? - No, I spent it all on $SOMETHING_ELSE I think that’s the point...
    - lukego 6y ago
      It's a naïve joke though because while few of the non-smoking colleagues are driving around in Ferraris many of them are discretely funding a secure retirement. So the joke really is on the smoker.
      - lazylizard 6y ago
        There is no joke. Some prefer drink. Some prefer food. Some prefer cigarettes. People have different things to spend on thats all.
        6y ago
Shivetya 6y ago
I have always been of the opinion that if colleges accept federally backed student loans they should be required to offer course credits at a federally mandated rate. As in, many have no problem the government dictating what hospitals can charge it for services and goods so why cannot the same apply to colleges? You can guarantee that colleges would fall in line quickly. there would be also attempts to circumvent the charges but those can be dealt with. they could though try to up sell you on amenities you may not otherwise have chosen to pay for but do now through high tuition. So summary, Federal student loans only apply to programs with set rates per course credit and degrees. fall outside of these degrees; lets be honest there are some degree programs we should never back; and you pay your own way and colleges can charge what they want.
- jtbayly 6y ago
  > many have no problem the government dictating what hospitals can charge it for services and goods so why cannot the same apply to colleges? Many having no problem with it does not mean it has happened or that it would work. You are talking about the only other industry in the US with similar cost increases to colleges.
- nradov 6y ago
  Another option would be to financially penalize schools every time one of their students defaults on a federally backed student loan. That would incent schools to keep debt loads to a reasonable level.
- IG_Semmelweiss 6y ago
  Or you can remove the price floor by removing aubsidized loans. And while you are at it, accreditation. Watch the pitchforks as administrators everywhere feel their cushy jobs are threatened
entha_saava 6y ago
As a student, it sounds more and more necessary these days. I am a student from Rural India, studying at an "engineering" "college" (obviously in urban area). The minimum cost for getting into engineering degrees is too much for rural income scales here. And the quality of education is PATHETIC (everything is rote learning based and everyone is trying to game the system, because edu system is so mechanical). Since the formal education is so costly and ineffective[0], many people like me would benefit from a commoditization through online medium. I started learning programming one year before I joined the college in Bachelor of Engineering (CSE) program. And having seen the teaching methods and rat race, I am pretty sure I can learn better if I go on my own. But there are too many stakeholders in the ineffective process, that would prevent such a thing from happening. But even if they conduct college through online classes for the next year, I would be happy, because I would save on accommodation expenses by staying at home :). [0] The ineffective four years of education is probably why many people complain about Indian SWEs. The entire thing is rat race for sustaining jobs - then mechanically clearing exams, copying GitHub repos, lying on resumes etc... If all of these people chose their subjects with genuine interest, about only 10% would be studying in CSE and "Indian SWE" would've had a better image worldwide.
- nopinsight 6y ago
  Flipped classroom should be explored more, both for effective learning experience and lower costs. In high-demand fields like CS, ML, and Software Engineering, experts who can communicate well are both rare and well compensated in industry. Many if not most colleges cannot afford or unwilling to pay competitively for them. Learning from top experts who teach online classes that can be accessed from many institutions while having local tutors would allow students to learn from experts who are good teachers and get in-person help as needed. https://en.wikipedia.org/wiki/Flipped_classroom https://en.wikipedia.org/wiki/Flipped_classroom
  - itronitron 6y ago
    And flipped classroom should be a familiar concept to anyone that has taken a 'seminar' class in college. Basically, everyone reads assigned material and then the teacher leads discussion during class. Flipped tends to use video instead of written material but the classroom experience is similar.
deleted 6y ago
[deleted]
vaidhy 6y ago
So, how do you live during the intervening 40 years? If you include the money you are spending to live, does college still come up on the bottom?
- ryeguy_24 6y ago
  You get a job. I’m not implying you don’t work. I guess we need to compare marginal increase of college vs non-college salaries and career trajectories to be fair.
ryeguy_24 6y ago
A few follow ups to my comment above. 1. It’s only fair to compare the retirement amount vs the average marginal increase of salary obtained from having a college degree. Not sure this is a large number these days. 2. Most don’t pay full ride but for those that do it’s hefty. And also, those that can afford it, typically have a lot of money to begin with. 3. I raise this question because unlike the smoker comment, I can determine if I just want to put money away for my kids (in a trust) and give them that lump sum when they are older (not 60 but maybe much older) as opposed to pay for college. I likely won’t do this but for argument sake, if you have a motivated kid, I’d bet they’d find a way to learn what they need to learn. 4. As from the “Silicon Valley” show. “The real value of education is intangible!”. I do think I gained a good amount from college but I think a majority of that was social/independence growth rather than learning. Although, one or two of my computer science courses really got burned in my head and I believe added a ton of value to my way of thinking. Anyway, original comment was a bit in jest but it’s still an important discussion because I think we should be paying for education and not “branding” which, let’s be honest, is a lot what school is used for - a market-accepted currency for purchasing a good career.
Cass 6y ago
The math on this doesn't add up because your career doesn't just have to finance your retirement, it also has to finance the decades of your life before that. Sure, if you had 150k at age 18 and weren't going to need another cent until you turn 65, you could drop that money in the stock market and wait for riches to come to you. But as it is, you're going to need some kind of job. And while there's a few pleasant careers available without college these days (software engineering being one of them), for most jobs that aren't heavy physical labor or minimum wage drudgery, you're going to need that college degree.
tangjurine 6y ago
Every college is desperately trying to justify charging MORE in this process. Goes to show how out of touch the system is. (They have legitimate reasons, but still)

mrosett 6y ago

A couple reasons I don't think that's the correct comparison: * There's a huge consumption component to college * Nobody's lending you 150k to invest in the stock market when you're 18. (Not sure we should be lending it to them for college, of course.)

schwartzworld 6y ago
You're missing the point. The argument that your money would get you farther if you invest it over 40 years is inherently flawed because most people who don't go to college don't do that. Your earning power is higher with a college degree. I never finished mine, and it took me a long time and a lot more work to catch up to my peers financially. I might never have done it if I didn't get lucky and make a few right choices in my 30a.

mikekchar 6y ago

Kind of apples to oranges. Take the difference in salary between a college graduate and a high school graduate over those 40 years. Factor in inflation. Invest that at a 7% return. I'm sure it will easily dwarf $2.25M. Why don't people have millions invested by the time they retire? Because no matter how much money people make (up to a certain point, depending on the person), they spend it. If you give the average high school graduate $150K and tell them to invest it for 40 years, I pretty much guarantee that it will be gone long before the 40 years are up. To be fair, I don't have millions invested and I'm scarily close to retirement. So I'm not trying to be critical of others ;-)

WalterBright 6y ago
I know people who retired as millionaires on a lower middle class salary doing just that - living below their means, and regularly investing the difference. It does work. But if you spent all your income, you'll never have money.
- t-writescode 6y ago
  I suspect all you can argue nowadays is that it _did_ work. With housing costs increasing faster than inflation, forcing people to spend money on rent instead, which has no investment potential, I don't think it still works.
  - goldenchrome 6y ago
    Your own house isn't an investment because you always need to live somewhere. Investments are things you can spend like index funds and bonds.
    - zamfi 6y ago
      > Your own house isn't an investment because you always need to live somewhere Ehhh, yes and no. Plenty of people who bought nice-ish houses in the Bay Area in the '70s and '80s sold them in 2014-2018 and retired outside the bay with a nice extra pile of cash. You need housing, but you don't need a crazy expensive house in a crazy expensive area.
    - 2ion 6y ago
      If not that it's an insurance against future rent payments and it creates different options. The total cost of ownership with a high likelyhood for an well-priced and appropriate property with appropriate mortgage payments is lower than runaway rents in hcol areas. Lastly, you can trade property value and QoL by neglecting upkeep at any time to make up a shortfall in income and even "run down" the property over quite some time, at extreme levels not even using utilities, which is not an option if you're paying rent -- try neglecting your rent payments.
    - 6y ago

deusex_ 6y ago

There’s an old story about a guy taking a smoke break with his non-smoking colleague. “How long have you been smoking for?” the colleague asks. “Thirty years,” says the smoker. “Thirty years!” marvels the co-worker. “That costs so much money. At a pack a day, you’re spending $1,900 a year. Had you instead invested that money at an 8% return for the last 30 years, you’d have $250,000 in the bank today. That’s enough to buy a Ferrari.” The smoker looked puzzled. “Do you smoke?” he asked his co-worker. “No.” “So where is your Ferrari?”

oars 6y ago
This is perfect for explaining my current situation (not related to college nor smoking). Thank you for sharing.
nerdponx 6y ago
s/Ferrari/several years of retirement income/
- arcturus17 6y ago
  - Do you have several years of retirement income in the bank? - No, I spent it all on $SOMETHING_ELSE I think that’s the point...
  - lukego 6y ago
    It's a naïve joke though because while few of the non-smoking colleagues are driving around in Ferraris many of them are discretely funding a secure retirement. So the joke really is on the smoker.
    - lazylizard 6y ago
      There is no joke. Some prefer drink. Some prefer food. Some prefer cigarettes. People have different things to spend on thats all.
      - 6y ago

Shivetya 6y ago

I have always been of the opinion that if colleges accept federally backed student loans they should be required to offer course credits at a federally mandated rate. As in, many have no problem the government dictating what hospitals can charge it for services and goods so why cannot the same apply to colleges? You can guarantee that colleges would fall in line quickly. there would be also attempts to circumvent the charges but those can be dealt with. they could though try to up sell you on amenities you may not otherwise have chosen to pay for but do now through high tuition. So summary, Federal student loans only apply to programs with set rates per course credit and degrees. fall outside of these degrees; lets be honest there are some degree programs we should never back; and you pay your own way and colleges can charge what they want.

jtbayly 6y ago
> many have no problem the government dictating what hospitals can charge it for services and goods so why cannot the same apply to colleges? Many having no problem with it does not mean it has happened or that it would work. You are talking about the only other industry in the US with similar cost increases to colleges.
nradov 6y ago
Another option would be to financially penalize schools every time one of their students defaults on a federally backed student loan. That would incent schools to keep debt loads to a reasonable level.
IG_Semmelweiss 6y ago
Or you can remove the price floor by removing aubsidized loans. And while you are at it, accreditation. Watch the pitchforks as administrators everywhere feel their cushy jobs are threatened

entha_saava 6y ago

As a student, it sounds more and more necessary these days. I am a student from Rural India, studying at an "engineering" "college" (obviously in urban area). The minimum cost for getting into engineering degrees is too much for rural income scales here. And the quality of education is PATHETIC (everything is rote learning based and everyone is trying to game the system, because edu system is so mechanical). Since the formal education is so costly and ineffective[0], many people like me would benefit from a commoditization through online medium. I started learning programming one year before I joined the college in Bachelor of Engineering (CSE) program. And having seen the teaching methods and rat race, I am pretty sure I can learn better if I go on my own. But there are too many stakeholders in the ineffective process, that would prevent such a thing from happening. But even if they conduct college through online classes for the next year, I would be happy, because I would save on accommodation expenses by staying at home :). [0] The ineffective four years of education is probably why many people complain about Indian SWEs. The entire thing is rat race for sustaining jobs - then mechanically clearing exams, copying GitHub repos, lying on resumes etc... If all of these people chose their subjects with genuine interest, about only 10% would be studying in CSE and "Indian SWE" would've had a better image worldwide.

nopinsight 6y ago
Flipped classroom should be explored more, both for effective learning experience and lower costs. In high-demand fields like CS, ML, and Software Engineering, experts who can communicate well are both rare and well compensated in industry. Many if not most colleges cannot afford or unwilling to pay competitively for them. Learning from top experts who teach online classes that can be accessed from many institutions while having local tutors would allow students to learn from experts who are good teachers and get in-person help as needed. https://en.wikipedia.org/wiki/Flipped_classroom https://en.wikipedia.org/wiki/Flipped_classroom
- itronitron 6y ago
  And flipped classroom should be a familiar concept to anyone that has taken a 'seminar' class in college. Basically, everyone reads assigned material and then the teacher leads discussion during class. Flipped tends to use video instead of written material but the classroom experience is similar.

deleted 6y ago

[deleted]

vaidhy 6y ago

So, how do you live during the intervening 40 years? If you include the money you are spending to live, does college still come up on the bottom?

ryeguy_24 6y ago
You get a job. I’m not implying you don’t work. I guess we need to compare marginal increase of college vs non-college salaries and career trajectories to be fair.

ryeguy_24 6y ago

A few follow ups to my comment above. 1. It’s only fair to compare the retirement amount vs the average marginal increase of salary obtained from having a college degree. Not sure this is a large number these days. 2. Most don’t pay full ride but for those that do it’s hefty. And also, those that can afford it, typically have a lot of money to begin with. 3. I raise this question because unlike the smoker comment, I can determine if I just want to put money away for my kids (in a trust) and give them that lump sum when they are older (not 60 but maybe much older) as opposed to pay for college. I likely won’t do this but for argument sake, if you have a motivated kid, I’d bet they’d find a way to learn what they need to learn. 4. As from the “Silicon Valley” show. “The real value of education is intangible!”. I do think I gained a good amount from college but I think a majority of that was social/independence growth rather than learning. Although, one or two of my computer science courses really got burned in my head and I believe added a ton of value to my way of thinking. Anyway, original comment was a bit in jest but it’s still an important discussion because I think we should be paying for education and not “branding” which, let’s be honest, is a lot what school is used for - a market-accepted currency for purchasing a good career.

Cass 6y ago

The math on this doesn't add up because your career doesn't just have to finance your retirement, it also has to finance the decades of your life before that. Sure, if you had 150k at age 18 and weren't going to need another cent until you turn 65, you could drop that money in the stock market and wait for riches to come to you. But as it is, you're going to need some kind of job. And while there's a few pleasant careers available without college these days (software engineering being one of them), for most jobs that aren't heavy physical labor or minimum wage drudgery, you're going to need that college degree.

tangjurine 6y ago

Every college is desperately trying to justify charging MORE in this process. Goes to show how out of touch the system is. (They have legitimate reasons, but still)