7 ms·

That would be the correct assessment given the return of college vs the cost. Unless you want to be a doctor/lawyer/dentist/engineer, college isn't really worth

That would be the correct assessment given the return of college vs the cost. Unless you want to be a doctor/lawyer/dentist/engineer, college isn't really worth it. and to those saying an average college grad makes 1M more per lifetime than a HS grad, that included people who went to college when it was worth it. we need to look at the expected earning of someone joining now, but this as expected, can't be calculated.

Mistletoe 3y ago
80k invested at 18 and getting 10% returns like in the stock market is $1 million at age 45. At 65 it’s $7 million dollars. The math on college doesn’t even beat the stock market. I’m not anti-college because I think you find yourself there and learn a lot, but the math doesn’t make sense compared to just investing the money in my opinion. And 104k is the average. >The average cost of attendance for a student living on campus at a public 4-year in-state institution is $26,027 per year or $104,108 over 4 years.
- reedf1 3y ago
  "...getting 10% returns like in the stock market..." You should start a fund!!
- rikketikm 3y ago
  No one has 80k laying around when he/she's 18, your calculation doesn't make any sense.
  - MrPatan 3y ago
    Then no one can pay for college anyway
    - hef19898 3y ago
      But that is, again, a US problem, isn't it?
      - friend_and_foe 3y ago
        No. Look, the cost comes from somewhere. You earn it later and pay it later, in taxes or in loan service payments. Either way, you pay it. At least with a loan you have a shot at being done paying one day. And this sort of thing only makes sense as a nation managing a treasury if the people go on to make significantly more from their degrees. With the way education is going, credentials no longer guarantee good pay, and if everyone can go "for free" then every job will require a degree, you wind up in a scenario where a nation wastes 4 years per generation only to wind up with the same economic landscape later. They'll cut these programs well before that happens. There's no such thing as a free lunch.
        johnnyanmac 3y ago
        >Look, the cost comes from somewhere. yeah, the government let a private corporation manage it, and they lobbied for laws to make sure their loans are un-defaultable. It's just free, guaranteed money for them. And college isn't getting more expensive because of higher costs, it's getting more expensive because they can add a bunch of fancy amenties that are used as advertisement, even if it doesn't directly help with the education aspect. Even 10 years ago there were thousands of dollars of costs per semester on misc. fees that I couldn't opt out of. it was basically a tax from my school. So yeah, the cost comes from somewhere, and both the funders and the beneficiaries have every incentive to bloat it.
        piva00 3y ago
        > Look, the cost comes from somewhere. You earn it later and pay it later, in taxes or in loan service payments. Either way, you pay it. At least with a loan you have a shot at being done paying one day. And this sort of thing only makes sense as a nation managing a treasury if the people go on to make significantly more from their degrees. Society benefits from having a highly educated population, even if wealth generated by that is squandered by a class of people, a society needs people to be educated to be able to innovate and generate new wealth. If you are only thinking in financial terms there's no way for higher education to ever make sense in the long term, given that over time it slowly becomes the new status quo (as it's happening), and salaries won't ever continue to increase with higher education when there's a larger and larger share of the labour pool highly educated. It is still a net benefit to society to have highly educated people, there's more specialised labourers to draw from to transform ideas into wealth generation. I don't think we should ever think of education in purely individual's finance terms, I gladly pay my taxes (in parts to fund education) in a country where I wasn't educated in because I know it benefits me in the end, more educated people helps to avoid economical stagnation. It's not free lunch but giving everyone in a society an equal opportunity to achieve specialised education is a net positive in the long term, even if it costs a lot. The same with healthcare. > With the way education is going, credentials no longer guarantee good pay, and if everyone can go "for free" then every job will require a degree That already happens in the USA even with education being as expensive it is, I don't believe it's a sound argument...
    - HDThoreaun 3y ago
      you can get a loan for college, not for the stock market.
      - fragmede 3y ago
        what do you think buying on margin is?
- xboxnolifes 3y ago
  > 80k invested at 18 and getting 10% returns like in the stock market is $1 million at age 45. At 65 it’s $7 million dollars. The math on college doesn’t even beat the stock market. This isn't the alternative for most people. There isn't an option to get a mix of 80k in federal and non-federal students loans to throw into the stock market. The real question is, for most people, does it make sense to take on ~80k in student loans and go to school for 4-5 years, or should you try to immediately enter the job market. Plus, expecting 10% real returns, year after year, in some chosen passive fund is unrealistic modeling.
  - Mistletoe 3y ago
    No one said 10% real returns. It’s 10% counting inflation, which is the number I provided. > The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index. I don’t know why people are getting hung up on this 10%, it’s just the historic returns everyone in Boglehead and FI/RE communities uses. If you wanted to use the 6-7% real returns after inflation that is fine too. The numbers still are the same, you’ll just get an inflation adjusted number. You’ll need inflation adjusted numbers on your college earnings too though, I don’t think the “extra 1 million earned by a college grad” is inflation adjusted.
    - HDThoreaun 3y ago
      I get hung up because the last century was by far the best economic century for humans ever, and it seems reasonably likely that the next will not be as good growth wise.
      - readthenotes1 3y ago
        That affects the value of a college degree as well, of course. I believe there have been studies that show that graduates who are unlucky enough to be job searching during a one or two-year recession have a lifelong income deficit compared to those who don't
        3y ago
- fabian2k 3y ago
  You usually don't have 80k lying around at 18, and nobody is going to loan you 80k to invest them (and even if they would, the interest would fundamentally change your calculation). And 10% returns is rather optimistic, though the number I've seen most often in these kinds of calculations is 6-7%, so it's not that far off. So this comparison doesn't really make much sense as those students simply don't have the money to invest in stocks instead. The opportunity costs here are the wages they could earn in the meantime.
  - ReptileMan 3y ago
    > And 10% returns is rather optimistic, though the number I've seen most often in these kinds of calculations is 6-7%, so it's not that far off. When we talk about compound interest it is way off. Also sustained growth of that magnitude - especially if we want it above inflation is very hard and has occurred in very rare circumstances.
  - Mistletoe 3y ago
    It’s not optimistic it’s just the historic returns. >The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index.
  - red-iron-pine 3y ago
    10% is the total return, but you see 6-7% because that's the real growth after inflation, which assumes average inflation of around 2-4%. So you're getting 10%, but in terms of actual, real, concrete gains it's more like 7%. Also remember that's the average so it's possible to see years of 5% and then a few of 14%. The 7% number also looms large because at 7% a year you double your money in ~10.3 years; makes it easy to plan for 30+ year investment horizons.
- woopsn 3y ago
  I mean, if you are 18 and come into $80k, by all means invest? That hardly invalidates the value of college education, which is an option for most high school graduates.
- hef19898 3y ago
  One, those 80k need to come from somewhere. Also, if you manage to get 10% per year, consistently over 27 / 47 years, you should run your own investment fund. There, you gonna make your 7 million per year...
- Wildgoose 3y ago
  It's a shame that nobody seems to have understood the comparison you were making. You can directly compare the value of investing money in education and the stock market. If you had $80,000 to invest at 18 you often would be better simply investing in the stock market. Most people of course borrow the sums required which means the interest increases the monies owed as opposed to gains from investment earnings. And the monies borrowed are owed come what may, not even bankruptcy allows escape from the debt and accumulating interest.
  - johnnyanmac 3y ago
    even if I gave you the BOTD and assumed that the govt. simply gave every 18YO 80k to use as they see fit: investing is an awful first thing to do unless you already have a job and stable life setup. Pretty much any sane financial planner will say 1. get your base costs covered 2. get an emergency savings 3. get a long term (3 months) savings 4. THEN you can invest an 18YO trying to get their home situation put together will probably burn through a good portion just by renting out an apartment and getting the bare necessities. And ofc they need a few months to find what is probably a minimum wage job, which will probably not cover rent by itself. If they can get over that huge hump, there won't be much left to invest (definitely not a 3 months savings).
ActorNightly 3y ago
>engineer College isn't generally worth it for engineering either, unless you really want to work for something government or government adjacent where there is an explicit requirement for a degree. Learning to code can be done on your own time, and you can get a job without a degree, and software development is applicable to all engineering, with more and more of the "expertise" of other fields being moved into computer software.
- nudgeee 3y ago
  Engineering = mechanical/aerospace/chemical/electrical/biomedical/material, etc.
- piva00 3y ago
  You can't be a civil, mechanical, aerospace, marine, chemical, etc. engineer through software... Software is just a tool for engineering disciplines, not everyone wants to be writing software instead of designing and building physical things.
  - ActorNightly 3y ago
    >You can't be a civil, mechanical, aerospace, marine, chemical, etc. engineer through software.. Civil is the oddball in that list, because of PE certification, but the rest you absolutely can. Having a Masters in Aerospace Engineering and having switched to software later, 95% of the work that I did over the 10 years in aerospace involved software packages. 60% of it was matlab, either data processing or analysis, and 30% of it was CAD, which is essentially programming. Knowing what I know now, if I wanted to get into Aerospace through software, I would work on open source projects for autopilot or some aerospace analysis software, teach myself CAD, and with that portfolio I would absolutely get hired entry level into the companies I worked at, and would learn all the same stuff I learned while working, and the total level of effort to do this would be less than going to a 4 year college. And the only cost would be a decent laptop that can run CAD software.
- johnnyanmac 3y ago
  >Learning to code can be done on your own time, and you can get a job without a degree, In a vacuum, yes. In reality, I'm not sure I would have gotten past courses in stuff like Systems, compilers, and networks without being able to poke at peers and professors alike in order to get my head around them. Maybe some curated masterclasses could do the same thing for cheaper ("hundreds" instead of thousands), but those are a much more recent phenomenon; certainly not something widely known nor available a decade ago when I started school. It's also a matter of "you don't know what you dont know". There are all kinds of stories of prodigies who were tinkering with code since they were 10. Meanwhile, I'm a graphics engineer, and I didn't even know what DirectX was until my 2nd year of college. It's an affordance that is increasingly less of an option, but the ability to see and dabble in different domains really helped me shape what I enjoyed or didn't. Without that experimentation, I saw myself freshman year working as an Android app developer. That changed quickly. There's a lot of factors to take into account.
jwestbury 3y ago
I think this is a bit of a reductive -- and likely inaccurate -- approach, as university is (a) not seen by everybody as purely vocational training and (b) may have benefits that aren't as easily quantified. For my part: I'm a high earner in a technical field who has a B.A. in English literature, despite having intended to major in computer science. My field of study helped me become more open-minded, improved my writing skills, and helped me to develop soft skills, all of which have been more helpful to my career than my technical skills (based on my own observations and feedback from peers and managers). University can be a transformative experience if not treated as vocational training; but that's also a good argument for increased vocational training and less emphasis on attending university.

Mistletoe 3y ago

80k invested at 18 and getting 10% returns like in the stock market is $1 million at age 45. At 65 it’s $7 million dollars. The math on college doesn’t even beat the stock market. I’m not anti-college because I think you find yourself there and learn a lot, but the math doesn’t make sense compared to just investing the money in my opinion. And 104k is the average. >The average cost of attendance for a student living on campus at a public 4-year in-state institution is $26,027 per year or $104,108 over 4 years.

reedf1 3y ago
"...getting 10% returns like in the stock market..." You should start a fund!!
rikketikm 3y ago
No one has 80k laying around when he/she's 18, your calculation doesn't make any sense.
- MrPatan 3y ago
  Then no one can pay for college anyway
  - hef19898 3y ago
    But that is, again, a US problem, isn't it?
    - friend_and_foe 3y ago
      No. Look, the cost comes from somewhere. You earn it later and pay it later, in taxes or in loan service payments. Either way, you pay it. At least with a loan you have a shot at being done paying one day. And this sort of thing only makes sense as a nation managing a treasury if the people go on to make significantly more from their degrees. With the way education is going, credentials no longer guarantee good pay, and if everyone can go "for free" then every job will require a degree, you wind up in a scenario where a nation wastes 4 years per generation only to wind up with the same economic landscape later. They'll cut these programs well before that happens. There's no such thing as a free lunch.
      - johnnyanmac 3y ago
        >Look, the cost comes from somewhere. yeah, the government let a private corporation manage it, and they lobbied for laws to make sure their loans are un-defaultable. It's just free, guaranteed money for them. And college isn't getting more expensive because of higher costs, it's getting more expensive because they can add a bunch of fancy amenties that are used as advertisement, even if it doesn't directly help with the education aspect. Even 10 years ago there were thousands of dollars of costs per semester on misc. fees that I couldn't opt out of. it was basically a tax from my school. So yeah, the cost comes from somewhere, and both the funders and the beneficiaries have every incentive to bloat it.
      - piva00 3y ago
        > Look, the cost comes from somewhere. You earn it later and pay it later, in taxes or in loan service payments. Either way, you pay it. At least with a loan you have a shot at being done paying one day. And this sort of thing only makes sense as a nation managing a treasury if the people go on to make significantly more from their degrees. Society benefits from having a highly educated population, even if wealth generated by that is squandered by a class of people, a society needs people to be educated to be able to innovate and generate new wealth. If you are only thinking in financial terms there's no way for higher education to ever make sense in the long term, given that over time it slowly becomes the new status quo (as it's happening), and salaries won't ever continue to increase with higher education when there's a larger and larger share of the labour pool highly educated. It is still a net benefit to society to have highly educated people, there's more specialised labourers to draw from to transform ideas into wealth generation. I don't think we should ever think of education in purely individual's finance terms, I gladly pay my taxes (in parts to fund education) in a country where I wasn't educated in because I know it benefits me in the end, more educated people helps to avoid economical stagnation. It's not free lunch but giving everyone in a society an equal opportunity to achieve specialised education is a net positive in the long term, even if it costs a lot. The same with healthcare. > With the way education is going, credentials no longer guarantee good pay, and if everyone can go "for free" then every job will require a degree That already happens in the USA even with education being as expensive it is, I don't believe it's a sound argument...
  - HDThoreaun 3y ago
    you can get a loan for college, not for the stock market.
    - fragmede 3y ago
      what do you think buying on margin is?
xboxnolifes 3y ago
> 80k invested at 18 and getting 10% returns like in the stock market is $1 million at age 45. At 65 it’s $7 million dollars. The math on college doesn’t even beat the stock market. This isn't the alternative for most people. There isn't an option to get a mix of 80k in federal and non-federal students loans to throw into the stock market. The real question is, for most people, does it make sense to take on ~80k in student loans and go to school for 4-5 years, or should you try to immediately enter the job market. Plus, expecting 10% real returns, year after year, in some chosen passive fund is unrealistic modeling.
- Mistletoe 3y ago
  No one said 10% real returns. It’s 10% counting inflation, which is the number I provided. > The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index. I don’t know why people are getting hung up on this 10%, it’s just the historic returns everyone in Boglehead and FI/RE communities uses. If you wanted to use the 6-7% real returns after inflation that is fine too. The numbers still are the same, you’ll just get an inflation adjusted number. You’ll need inflation adjusted numbers on your college earnings too though, I don’t think the “extra 1 million earned by a college grad” is inflation adjusted.
  - HDThoreaun 3y ago
    I get hung up because the last century was by far the best economic century for humans ever, and it seems reasonably likely that the next will not be as good growth wise.
    - readthenotes1 3y ago
      That affects the value of a college degree as well, of course. I believe there have been studies that show that graduates who are unlucky enough to be job searching during a one or two-year recession have a lifelong income deficit compared to those who don't
      - 3y ago
fabian2k 3y ago
You usually don't have 80k lying around at 18, and nobody is going to loan you 80k to invest them (and even if they would, the interest would fundamentally change your calculation). And 10% returns is rather optimistic, though the number I've seen most often in these kinds of calculations is 6-7%, so it's not that far off. So this comparison doesn't really make much sense as those students simply don't have the money to invest in stocks instead. The opportunity costs here are the wages they could earn in the meantime.
- ReptileMan 3y ago
  > And 10% returns is rather optimistic, though the number I've seen most often in these kinds of calculations is 6-7%, so it's not that far off. When we talk about compound interest it is way off. Also sustained growth of that magnitude - especially if we want it above inflation is very hard and has occurred in very rare circumstances.
- Mistletoe 3y ago
  It’s not optimistic it’s just the historic returns. >The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index.
- red-iron-pine 3y ago
  10% is the total return, but you see 6-7% because that's the real growth after inflation, which assumes average inflation of around 2-4%. So you're getting 10%, but in terms of actual, real, concrete gains it's more like 7%. Also remember that's the average so it's possible to see years of 5% and then a few of 14%. The 7% number also looms large because at 7% a year you double your money in ~10.3 years; makes it easy to plan for 30+ year investment horizons.
woopsn 3y ago
I mean, if you are 18 and come into $80k, by all means invest? That hardly invalidates the value of college education, which is an option for most high school graduates.
hef19898 3y ago
One, those 80k need to come from somewhere. Also, if you manage to get 10% per year, consistently over 27 / 47 years, you should run your own investment fund. There, you gonna make your 7 million per year...
Wildgoose 3y ago
It's a shame that nobody seems to have understood the comparison you were making. You can directly compare the value of investing money in education and the stock market. If you had $80,000 to invest at 18 you often would be better simply investing in the stock market. Most people of course borrow the sums required which means the interest increases the monies owed as opposed to gains from investment earnings. And the monies borrowed are owed come what may, not even bankruptcy allows escape from the debt and accumulating interest.
- johnnyanmac 3y ago
  even if I gave you the BOTD and assumed that the govt. simply gave every 18YO 80k to use as they see fit: investing is an awful first thing to do unless you already have a job and stable life setup. Pretty much any sane financial planner will say 1. get your base costs covered 2. get an emergency savings 3. get a long term (3 months) savings 4. THEN you can invest an 18YO trying to get their home situation put together will probably burn through a good portion just by renting out an apartment and getting the bare necessities. And ofc they need a few months to find what is probably a minimum wage job, which will probably not cover rent by itself. If they can get over that huge hump, there won't be much left to invest (definitely not a 3 months savings).

ActorNightly 3y ago

>engineer College isn't generally worth it for engineering either, unless you really want to work for something government or government adjacent where there is an explicit requirement for a degree. Learning to code can be done on your own time, and you can get a job without a degree, and software development is applicable to all engineering, with more and more of the "expertise" of other fields being moved into computer software.

nudgeee 3y ago
Engineering = mechanical/aerospace/chemical/electrical/biomedical/material, etc.
piva00 3y ago
You can't be a civil, mechanical, aerospace, marine, chemical, etc. engineer through software... Software is just a tool for engineering disciplines, not everyone wants to be writing software instead of designing and building physical things.
- ActorNightly 3y ago
  >You can't be a civil, mechanical, aerospace, marine, chemical, etc. engineer through software.. Civil is the oddball in that list, because of PE certification, but the rest you absolutely can. Having a Masters in Aerospace Engineering and having switched to software later, 95% of the work that I did over the 10 years in aerospace involved software packages. 60% of it was matlab, either data processing or analysis, and 30% of it was CAD, which is essentially programming. Knowing what I know now, if I wanted to get into Aerospace through software, I would work on open source projects for autopilot or some aerospace analysis software, teach myself CAD, and with that portfolio I would absolutely get hired entry level into the companies I worked at, and would learn all the same stuff I learned while working, and the total level of effort to do this would be less than going to a 4 year college. And the only cost would be a decent laptop that can run CAD software.
johnnyanmac 3y ago
>Learning to code can be done on your own time, and you can get a job without a degree, In a vacuum, yes. In reality, I'm not sure I would have gotten past courses in stuff like Systems, compilers, and networks without being able to poke at peers and professors alike in order to get my head around them. Maybe some curated masterclasses could do the same thing for cheaper ("hundreds" instead of thousands), but those are a much more recent phenomenon; certainly not something widely known nor available a decade ago when I started school. It's also a matter of "you don't know what you dont know". There are all kinds of stories of prodigies who were tinkering with code since they were 10. Meanwhile, I'm a graphics engineer, and I didn't even know what DirectX was until my 2nd year of college. It's an affordance that is increasingly less of an option, but the ability to see and dabble in different domains really helped me shape what I enjoyed or didn't. Without that experimentation, I saw myself freshman year working as an Android app developer. That changed quickly. There's a lot of factors to take into account.

jwestbury 3y ago

I think this is a bit of a reductive -- and likely inaccurate -- approach, as university is (a) not seen by everybody as purely vocational training and (b) may have benefits that aren't as easily quantified. For my part: I'm a high earner in a technical field who has a B.A. in English literature, despite having intended to major in computer science. My field of study helped me become more open-minded, improved my writing skills, and helped me to develop soft skills, all of which have been more helpful to my career than my technical skills (based on my own observations and feedback from peers and managers). University can be a transformative experience if not treated as vocational training; but that's also a good argument for increased vocational training and less emphasis on attending university.