Ah, you can't: Of course, lenders won't give out large loans for an individual to skip college and dump tuition into the stock market, this is just a hypothetical scenario.
So this article is unrealistic.
Governments are willing to subsidize loans for education but not investing for at least two entirely rational reasons.
First, an educated populous -- especially college educated, and especially in STEM fields -- is in the public interest. We need doctors, lawyers, engineers, and, yes, even well-rounded marketing/sales teams. Could we get all of those things without subsidizing education? Probably not in the quantities needed by American firms.
Second, consider the sheer mass of each college-aged adult reliably pouring six figures into investment vehicles on their 18th birthday. It would take on a force of its own. In small quantities, this works out well for the non-student. In large quantities, the tail wags the dog. And anyways, where are all these lucrative investments that pay out decade after decade and that require nothing but cash money, quality of labor market be damned? I mean, they exist, but surely not in large enough quantities to sustain an entire society of passive income earners...
...again, that's why you don't do that with hypotheticals intended to be social commentary.
The article is saying "wow, college is sure overpriced for the amount of money you invest."
Good social commentary helps us identify and solve problems.
I don't think this particular commentary puts us in a good mindset for understanding or solving the problems with higher education funding in the united states.
> The article is saying "wow, college is sure overpriced for the amount of money you invest."
The article suggests thinking about the cost of college in terms of payouts to single individuals without any systems-level analysis. On the basis of this perspective, we conclude college is absurdly overpriced.
Perhaps college is overpriced. But not nearly as overpriced as this mindset would have us believe.
That 7% ROI from the S&P 500 isn't powered by pixie dust. It'd powered by mostly degreed people using their degrees.
Social commentary that distracts from the need for an educated populace and instead focuses solely on ROI to individual students is not good social commentary, IMO.
So even if we consider this as pure social commentary, my critique is the same: it identifies a problem, but does so in a way that doesn't emphasize the most important root causes of that problem.
(edit: also, I stand by my previous statement: IMO unreasonable hypotheses are almost always not useful hypotheticals.)
Like your entire argument is "the S&P is pushed forward by people who go to college." Not to be rude, but that has no relevance whatsoever to the article. The article could have said to invest in real estate or god forbid bitcoin. The specifics don't matter.
Again not to be rude but I often feel like people on here have this disease that doesn't allow them to generalize from specifics. ;-)
Ok. And it's a bad hypothetical because it emphasizes individual roi instead of systems-level effects when discussing a problem where all the interesting action is in the systems-level effects.
I understand it's a hypothetical. I think it's a distracting hypothetical.
> Not to be rude, but that has no relevance whatsoever to the article
It has every bit of relevance to the article because college is more than just an individual investment opportunity. The benefits of a large college educated population are enjoyed by an entire society.
The real take-away from the article is that we apparently don't tax capital well enough because there's an absurd arbitrage opportunity for lazy people who have 200k in the bank. Or that the benefits of a college educated populace are high enough, and the cost also high enough, that we should be subsidizing college more than we currently are. Not that college is over-priced. The fact that your jump to the latter conclusion instead of the former is exactly the problem with this hypothetical.
> The specifics don't matter.. Again not to be rude but I often feel like people on here have this disease that doesn't allow them to generalize from specifics. ;-)
Look. Either I'm not supposed to generalize from this specific case, or else your entire complaint is really confusing. Generalizing from this specific leads to all the wrong conclusions.
Almost none of those companies could exist -- especially at their current scale -- without a huge pool of college-educated engineers/scientists/doctors.
There may be a lot of employees there not using their degrees. But the true value creators at S&P 500 companies are certainly not those people.
Housing is volatile, but stocks are significantly more so, and with significantly more near-total losses over time.
Stocks are much easier to repossess and liquidate during a margin call which results in margin interest being lower than mortgage interest. You can't get as much leverage as you can with real estate but that's because of government regulation not because banks are unwilling.
Some deep discount houses (IB and TradingDirect among likely some others) are lower than mortgage rates.
Well if somebody gives you money for X it's not really your money since you are not at liberty to spend it however you want. Only X is technically yours.