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The fundamental flaw in your comment is the assumption that education is an investment that compounds in value. That's not the case for a large percentage of th

The fundamental flaw in your comment is the assumption that education is an investment that compounds in value. That's not the case for a large percentage of the young people who go to college today. Many will exit with weak earnings prospects and crippling debt that will compound.

sp332 12y ago
Weak earnings prospects? Unemployment among people with a bachelors degree was under 4% last year. It was over 7% for people without one. http://www.businessinsider.com/college-vs-no-college-unemployment-rates-2013-6 http://www.businessinsider.com/college-vs-no-college-unemplo... Edit: Obama's pay-as-you-earn program puts an upper limit on how harsh the debt load can get.
- Domenic_S 12y ago
  Puts an upper limit on how harsh the debt load can get... on a month-to-month basis. If you're deciding affordability based on monthly obligation instead of total cost, you're doing it wrong.
  - sp332 12y ago
    The max total cost is 10% of your income for 20 years. After 20 years you just stop owing any money, you're done. Making the monthly payment is more important than total nominal cost. That's because missing a payment adds penalties that make it much more difficult to get out of debt. So making sure the monthly amount is doable is really important.
    - Domenic_S 12y ago
      > making sure the monthly amount is doable is really important. Of course it is, but you can't be so preoccupied with the monthly affordability that you forget about the total cost. (N.B. this is a trick car dealers use every day to get you to pay too much for a car) In this sense it's not unlike the US healthcare debate where everyone was so preoccupied with how to make hospital bills affordable with government-mandated insurance that we totally forgot to ask why an aspirin costs $75 in the first place.
- 7Figures2Commas 12y ago
  You seem to be confusing employment and earnings. Just because you're employed doesn't mean that your earnings prospects are good. Many college graduates are employed but underemployed, and many others have low-paying jobs that don't even require a college education. As for pay-as-you-earn, which I believe requires a high debt-to-income ratio (a red flag to begin with), you need to do the actual math. Even with forgiveness, many pay-as-you go borrowers will pay more over the life of their loan. Your comment about "making sure the monthly amount is doable is really important" is how people who live beyond their means justify purchasing things they can't really afford. This mentality is why we have 72+ month auto loans. If you purchase a college education using debt and it does not produce monthly income that comfortably enables you to repay said debt within a reasonable amount of time, just how good is the "investment" you're making? Five figures of debt (the national average) should not take two decades to pay off; many people pay off hundreds of thousands of dollars of mortgage debt in 15 years. The fact that relatively small amounts of debt so frequently become crippling tells you everything you need to know about how college is working out for lots of young people who don't know how to do basic math and are being mislead by adults who lack financial literacy themselves.
  - sp332 12y ago
    My point about employment is that if you're not employed, you have no earnings. Not everyone who goes to college should take the pay-as-you-earn route, but it does put a ceiling on the total amount a person can owe after college, which is a darn sight better than the situation before where that number was effectively unbounded. As for your other points, going to college is still generally profitable. http://www.npr.org/2014/02/11/275297408/going-to-college-may-cost-you-but-so-will-skipping-it http://www.npr.org/2014/02/11/275297408/going-to-college-may...
    - 7Figures2Commas 12y ago
      > As for your other points, going to college is still generally profitable. Per the article you provided, "Those with a college degree now make $17,500 more per year than those without." I don't doubt that this is accurate. But here's the problem: not thinking through your decisions and banking on the assumption that you'll have an average outcome based on statistics is a great way to mess up your life. There are plenty of people in tech who don't have four-year degrees who make multiples more than the median wage of college graduates of a similar age. And lest you resort to the "tech is an exception" argument, there are plenty of professions, from sales to construction to plumbing, in which you can easily find folks without four-year degrees making very good money. In today's economy, anyone going to college without purpose and a plan expecting to earn $17,500 more per year "because statistics" is at risk of experiencing a rude awakening, particularly when debt is used to finance an education that will offer a piece of paper and little in the way of practical skills.
rwallace 12y ago
Right, but starting college a couple of years later isn't the solution to that problem. The solution is to do something other than going to college, or at least other than going to such an expensive college for such an economically valueless degree.

sp332 12y ago

Weak earnings prospects? Unemployment among people with a bachelors degree was under 4% last year. It was over 7% for people without one. http://www.businessinsider.com/college-vs-no-college-unemployment-rates-2013-6 http://www.businessinsider.com/college-vs-no-college-unemplo... Edit: Obama's pay-as-you-earn program puts an upper limit on how harsh the debt load can get.

Domenic_S 12y ago
Puts an upper limit on how harsh the debt load can get... on a month-to-month basis. If you're deciding affordability based on monthly obligation instead of total cost, you're doing it wrong.
- sp332 12y ago
  The max total cost is 10% of your income for 20 years. After 20 years you just stop owing any money, you're done. Making the monthly payment is more important than total nominal cost. That's because missing a payment adds penalties that make it much more difficult to get out of debt. So making sure the monthly amount is doable is really important.
  - Domenic_S 12y ago
    > making sure the monthly amount is doable is really important. Of course it is, but you can't be so preoccupied with the monthly affordability that you forget about the total cost. (N.B. this is a trick car dealers use every day to get you to pay too much for a car) In this sense it's not unlike the US healthcare debate where everyone was so preoccupied with how to make hospital bills affordable with government-mandated insurance that we totally forgot to ask why an aspirin costs $75 in the first place.
7Figures2Commas 12y ago
You seem to be confusing employment and earnings. Just because you're employed doesn't mean that your earnings prospects are good. Many college graduates are employed but underemployed, and many others have low-paying jobs that don't even require a college education. As for pay-as-you-earn, which I believe requires a high debt-to-income ratio (a red flag to begin with), you need to do the actual math. Even with forgiveness, many pay-as-you go borrowers will pay more over the life of their loan. Your comment about "making sure the monthly amount is doable is really important" is how people who live beyond their means justify purchasing things they can't really afford. This mentality is why we have 72+ month auto loans. If you purchase a college education using debt and it does not produce monthly income that comfortably enables you to repay said debt within a reasonable amount of time, just how good is the "investment" you're making? Five figures of debt (the national average) should not take two decades to pay off; many people pay off hundreds of thousands of dollars of mortgage debt in 15 years. The fact that relatively small amounts of debt so frequently become crippling tells you everything you need to know about how college is working out for lots of young people who don't know how to do basic math and are being mislead by adults who lack financial literacy themselves.
- sp332 12y ago
  My point about employment is that if you're not employed, you have no earnings. Not everyone who goes to college should take the pay-as-you-earn route, but it does put a ceiling on the total amount a person can owe after college, which is a darn sight better than the situation before where that number was effectively unbounded. As for your other points, going to college is still generally profitable. http://www.npr.org/2014/02/11/275297408/going-to-college-may-cost-you-but-so-will-skipping-it http://www.npr.org/2014/02/11/275297408/going-to-college-may...
  - 7Figures2Commas 12y ago
    > As for your other points, going to college is still generally profitable. Per the article you provided, "Those with a college degree now make $17,500 more per year than those without." I don't doubt that this is accurate. But here's the problem: not thinking through your decisions and banking on the assumption that you'll have an average outcome based on statistics is a great way to mess up your life. There are plenty of people in tech who don't have four-year degrees who make multiples more than the median wage of college graduates of a similar age. And lest you resort to the "tech is an exception" argument, there are plenty of professions, from sales to construction to plumbing, in which you can easily find folks without four-year degrees making very good money. In today's economy, anyone going to college without purpose and a plan expecting to earn $17,500 more per year "because statistics" is at risk of experiencing a rude awakening, particularly when debt is used to finance an education that will offer a piece of paper and little in the way of practical skills.

rwallace 12y ago

Right, but starting college a couple of years later isn't the solution to that problem. The solution is to do something other than going to college, or at least other than going to such an expensive college for such an economically valueless degree.