Is College Still Worth It? The New Calculus of Falling Returns [pdf]

You took your degree in a country with far lower inequality and better inward education investment, and then jumped over to work in a country that doesn't tax people enough to support USA students.

I'd imagine that is pretty good value.

Grad school is often much better for immigration scoring than a bachelors. Especially if you can manage to do the graduate degree in the country you want to immigrate to.

Also Masters (MBA is different) is useless in most fields unless used to get a visa or something. Usually you are foregoing wages with few additional benefits. Might be slightly easier to get first job.

Not sure source of degree matters as long as accredited. Certainly there can be upside like same alma mater but I rarely care but will admit to negative bias to Univ of Phoenix but interview and work history trump everything.

Having said that BS or BE have merit if the student actually takes it seriously. I learned a whole lot that I'm not sure I would have learned through self study alone (a least around that time).

I'm not sure I agree on grad school, perhaps you could elaborate? It's true that it's very much hit or miss. But my experience is that there's plenty of grad schools which offer 1 - 1.5 year Masters' and tuition fees that aren't abnormal. Here too your second point rings true, either you pay a lot of money for a good rep (e.g. if you go into BigLaw, assuming you don't burn out, it gives a high return rate), or you pay little for a no-name university, and then I feel grad school absolutely does come at a premium. Compared to a 3-4 year Bachelor's degree, it's usually a relatively quick program with potentially bigger upside, especially if paid for by your employer.

I think what most students underestimate is just how many of them fail to finish the standard path. Almost half of students don't finish their bachelor's within six years due to delays and changing paths, and a lot of them quit entirely. I think college makes sense if you know what you're looking to study, why, are dedicated to completing it, and able to.

A lot of students go into fields of study as a teenager, literally never having had a 5 minute conversation with a person actually working in the field, having spent no time looking at the income tables, or indeed not actually considering the field at all, but just wanting to become a college student. It's these students who probably drag down the stats quite a lot. I've seen fairly unimpressive people go into a business course, work their ass off, do various internships, and land high-paying jobs. And I've seen smart kids start the same business course, muck around, graduate after 6-7 years and land a mediocre job that doesn't really require any particular degree. At the end of the day the student is still the most important factor here, and by the time they head to college, it's often already 'too late' for institutions to turn an B student into an A student, without the intrinsic motivation. There's lots more room in primary/secondary school for that, that's really where it's at. What college you head to after is less important in my opinion.

You also need to take into account the opportunity cost. You could have been working at the time, earning $XXk/year.

In usa they are used as a path to immigration. 90% of grad students are foreigners.

No guaranteed federal loans would fix everything. This means tuition loans could then be discharged and the lender would be more discerning about loaning to a student heading to some boutique private college with sky-high tuition and ending up with a humanities degree.

You have four - parents. Students can’t get a loan without filling out FAFSA which requires their parents involvement. Parents could guide children in the right direction.

>That last legal change remains bewildering to me.

I have done no research on the matter, but my parents told me that doctors would go to school on loan for 7+ years, start a practice, and discharge all their loan debt through bankruptcy.

The student loan system will cost the government $170 billion in losses over 10 years, because interest doesn’t cover money written off due to hardships and loan forgiveness. The non-dischargability of student loans protects the government from further losses.

Non-dischargability is a reasonable feature given the other aspect of federal student loans: they offer income-based repayment. Under Obama’s REPAYE, your loan payments are capped at 15% of your discretionary income.

Is it? Permit this armchair economist a theory:

People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.

To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.

Whenever I hear someone say they don't need to go to college, I remind them Mark Zuckerberg was at Philips Exeter (2019 tuition 49k), Bill Gates and Paul Allen at Lakeside School (2019 tuition 36k), Reid Hoffman attended Putney School (2019 tuition and boarding 56k). Many of the people that make pronouncements about college not being a necessity came from wealthy backgrounds or went to the upper crust of private high schools in America. In fact whenever someone makes these crazy suggestions I suggest you look up their background and it will usually be wealthy family/private high school.

I will grant Bezos and Thiel being the exception to private schools but still they came from upper middle class / wealth backgrounds...

These individuals could do without college. The hard work and preparation at their high schools put them through a grueling curriculum. If they have enough discipline to graduate from these high schools they would have been a success with or without college.

Unless you are in similar situation, please go to college and graduate. Specific degrees do not really matter just graduate so you don't get sidelined late in your career.

I still hear people say it is not necessary. It probably isn't really necessary for most IT roles but once youthful enthusiasm runs out, every employer will look to replace you. Do not think they will value your experience and loyalty.

Another counterpoint, if it was the case a college education is not necessary to succeed at Silicon Valley, why do these firms have a difficult time hiring black or hispanic employees... Sure college may be useless for some but please don't peddle this garbage in the face of reality.

So either the Silicon Valley firms are racist and are OK with having employees that never went to college as long as they look a certain way or this is all bunk in an effort to hire young enthusiastic employees that have no room to negotiate after a certain age...

As we just saw many wealthy families bribe their children into an Ok college... I bet all the wealthy people above will make sure their children attend college. I will bet all their wives and friends went to college. I will bet they never shared a beer with friends that never went to college.

Please don't be stupid. Finish college, learn something that interest you, give back to society.

Maybe all these policy discussions are bunk and every child in America should expect the same quality of education a student at Exeter would demand.

Obviously prices vary.

I can make a living with a trade skill, but data shows I’m more likely to make a lot more with a college degree. You have billionaire dropouts and baristas with phds. But on average, degree nets you a lot of lifetime income.

Maybe that will change.

I think as we advance in the information age, maybe degrees are less about helping you actually get the job done, and more about serving as a mean for companies (and countries) to roughly filter high surplus of candidates. Add the fact its easier today to apply for job posts, its very hard for recruiters to filter intelligently at reasonable time. My guess is if everyone would have first degree, the recruiters will require a second degree.

This has less weight on jobs short in candidates (i.e specialized nurse, plumber, welder, proven AI expert, or whatever is hot right now).

For those prices just do it yourself. Is this hyperbole or did you really pay $900 for an hour job? How complicated could it have been if it only took an hour?

> Graduating within 6 years after start, males and female

> 2011 starting cohort: 60.4%

> Open admissions: 30.7%

> >=90% accepted: 42.3%

> 75-89.9% accepted: 57.8%

> 50-74.9% accepted: 62.0%

> 25-49.9% accepted: 70.3%

> <25% accepted: 86.9%

[0]: https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.a...

The actual data shown in that reference seems to tell a different story, it shows people with college degrees earning 20-50k per year, on average, after taxes. That will sum to more than $100k over a lifetime.

They point out that much of your lifetime earnings are predicted by your parents' level of education.

Anecdotally, plumbers charge more per hour in some cases than many lawyers make. Their income, however, is limited by their ability to book many jobs and actually carry them out. The opportunity cost of one job is exactly another job. So comparing to other wage earners their income is high, but compared to a banker that can make several loans in the course of a day where the opportunity cost is only capital (which they have practically unlimited access to being that theyre a banker) changes the situation quite drastically.

https://www.theguardian.com/books/2018/feb/22/skin-in-the-ga...

> Bankers are in the “Bob Rubin trade”, named after the former secretary of the US Treasury, who “collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any cheque – he invoked uncertainty as an excuse.

I'll save the doctors, lawyers and techbros for someone else. But there are equal examples you can find.

There's also the value proposition where I could make $15/hr at a McDonalds, so its hard to set a labor cost floor below $15/hr. I KNOW from experience that even when everything goes wrong I can replace a kitchen faucet in ten hours. Sure it starts out as an hours work but three trips to home depot later for strange wrenches and adapters and valves and next thing you know its ten hours. Thats an absolute minimum of $150 of lost income doing likely physically easier work standing at a mcdonalds cash register or whatever. Obviously I can make way more than $15/hr doing software development. On the other hand, a plumber has seen it all, has all the tools at his fingertips, and can do it in an hour for $150, and the hardest physical labor I'll have is writing a check.

Maybe a fair price for replacing a kitchen faucet is the hourly price of any other sweaty dirty technical complicated highly skilled tool/capital intensive job, which across the entire labor market seems to run $30/hr to $100/hr billed. If I were a $100K+ extremely highly experienced and trained diesel engine mechanic like my cousin, it would be financially foolish to turn down work to replace his own kitchen faucet. Even if he paid me a fraction of his hourly to haul around his toolbox and lift things for him as some kind of apprentice, I'm still honestly financially better off being a diesel mechanic's assistant than trying to replace the faucet myself.

Google shows union building and construction trades are ALL billing around $50/hr around here, plus or minus $10/hr related to lifestyle, I suppose. Picking a fight with the plumbers means picking a fight with the residential electricians and the ironworkers all making within a couple dollars per hour of each other. It is kinda shocking how all building trades make about the same hourly.

Of course Starbucks is a better working environment if you have a liberal arts degree and a mortgage sized student loan, and only pays $11.02 nationwide average. Almost any profession on a construction site will get you five times the pay achievable with a liberal arts degree... Yes a small fraction of liberal arts degree holders will get six figure sinecures, but then again a small, yet larger, fraction of plumbers will be multimillionaire business owners.

There's a lot of recent evidence that, all else being equal (controlling for educational attainment, test scores, and grades) parental income/social class has a huge impact on income.

That is, if you come from a lower social class, you can expect a lower income increase from college than someone coming from a higher social class.

There's significant policy implications here-- our long-standing goal of getting lower income kids to take college loans and go to college may not have a positive expected return for them.

That's why, for people interested in technology, software development is an incredible blessing. If you're clever about it, and plan ahead in HS, you can easily skip college and come out making $100,000/yr within 3-4 years, even in small markets.

I've never taken a single computer science class, make well over $100,000 in a highly-challenging software development job, and no one has ever asked me about a college degree (with the exception of one job that I regretted accepted and which I quit in 8 months).

There are other similar routes available to people without college degrees. Several wealthy people my parents know started out in construction, but rapidly moved into flipping houses and real estate, and made a fortune. Their physical labor was over by their late 20s.

There are many paths that skip college and don't end up working physical labor after a decade or two. But you have to be clever and proactive (if you're on HN, I'm going to assume you're at least the former).

* Life experience

* Knowledge gained

* Friends made

But what would you add?

As Mr. Giffen has pointed out, a rise in the price of bread makes so large a drain on the resources of the poorer labouring families and raises the marginal utility of money to them so much that they are forced to curtail their consumption of meat and the more expensive farinaceous foods: and, bread being still the cheapest food which they can get and will take, they consume more, and not less of it.

https://en.wikipedia.org/wiki/Giffen_good

Why is it notable?

This practice will go away as all publishing moves to digital formats. But as long as there is a print version for purchase as well, it will be more cost-efficient to organize papers like this.

It's a logical mechanism of near unlimited credit creation to absorb all productivity gains for capture by rentiers.

People on here earn top percentile salaries which warp the calculus, myself included, but $50K is approximately one year of the UK median income (I imagine the US figure is similar).

I'd be worried about making back hundreds of thousands in a low paid field. But a 50K degree in a well paid field is a no brainer to me.

Earnings increases are cumulative. I'm almost certainly 200% over what I'd have without my undergrad, and not just due to the piece of paper.

I saw a developer position recently that required at least a four-year degree and it genuinely surprised me because of how infrequent that requirement appears on developer job postings. The vast majority of posts I see are "four years degree or equivalent experience"

I've worked in software shops before where less than half of the staff had a 4-year degree completed—but it is noteworthy y that everyone had at least some college.

>and my own employer when applying for advancement

That I have seen before, but in higher-ed, where it is kind of a given as it is sort of an eating-your-own-dog-food requirement. If your top employees don't have a degree, and you sell degrees, it can tarnish your appearance.

The government is heavily involved in the student loan industry. Consequently, the entire market is heavily distorted. One of the largest programs is the Direct/Stafford loan program [0]. Essentially the student (and only the student; no cosigners allowed) directly borrows money from the federal government at a fairly cheap interest rate (in the last decade [1], it has ranged from 3.4% to 5.05%). In some cases, the student is not liable for interest accrued while they're in school (see the following paragraph for details if you're interested). The loan limit is $31k for dependent students and $57.5k for independent students.

There's two variants to direct loans: subsidized (where the government pays for the interest while the student is in school) and unsubsidized (no qualification necessary). Anyone can take out unsubsidized loans, limited to the COA (cost of attendance: the amount a college declares it would cost to attend; inclusive of tuition, fees, books, room & board, etc.). Anyone who's EFC (expected family contribution: the amount the government expects the student/their parents to pay annually based upon their income and assets) is less than COA can take out up to the shortfall in subsidized loans (but no more than the specified limit which varies by dependent-status and year in school).

[0]: https://studentaid.gov/understand-aid/types/loans/subsidized...

[1]: https://studentaid.gov/understand-aid/types/loans/interest-r...

Spoiler. Been there, done that. Unless you're at an Ivy, if you're majoring in philosophy, you'll not think it was worth it in five years. My sin was Classics, but similar outcome.

Assuming you're on HN because you're teaching yourself programming, the sting will be somewhat lessened (that's the route I took), since you'll at least be able to get a job.

But it'll still sting to make those massive loan payments knowing that nothing you learned is helping you with your professional life, and that things like philosophy, mathematics, and languages (and computer science!) can be learned just as easily with discipline, YouTube, and a few good textbooks.

It's very easy to delay the pain of loan payments when you're in school, but they'll be there waiting for you, inevitably, through sickness and health, marriage and divorce.

If you have endless curiosity, college is even less worth it. Instead, being loan-free gives you the freedom to work in areas that truly intrigue you, and to work in very low-paying internships while you're learning.

But I know I won't convince you. Likely no one could have convinced me at the time (although only one person tried, once).

Edit: if this were the 1970s or earlier, when you could pay for college classes from waiting tables or a $10,000 loan (inflation adjusted!), I'd absolutely say go for it. But taking out even $50,000 in debt at age 18 for anything less than a guaranteed job with a good income (physician assistant, nursing, accounting) is mortgaging your future. Taking out $200,000, which is the going rate for most [edit: should read "many, private", and is probably closer to $100,000] liberal arts 4-year-degrees, is insanity, but between culture BS about degrees and "academic counselors", I know it may not seem that way to you right now.

The simple reality is collage class are incredibly shallow introductions to the subject matter and hardly worth the price of admission. That’s somewhat offset by credentials, but your comparison is high school which says more about how bad high school is than how great collage is.

No joke, at one point I tutoring my friends in some classes I had not taken. Your professors may have a deep understanding of the subject, but they need to dumb the material down so people can pick it up over ~15 weeks.

Analytic philosophy is very STEMish. Majoring in the logically rigorous courses sets you up for many monied disciplines (besides programming). Even better if you can minor in something like coding, accounting, or even a trade.

Doing ROTC can get you a scholarship, guaranteed job out of college, many opportunities beyond, and serving in the military is in itself a worthwhile endeavor.

This is very important as students tend to want to learn what's interesting over what's fundamental and important.

In my mind, university is ALWAYS better then no university, the actual thing that puts this in question is... is the cost worth it?

University is supposed to be learning from the experience of experts. Having a person with experience on hand cuts down the time needed to learn things. Online articles and tutorials aren't a dialogue. Online forums are good, but often can't promise somebody will care about your education. Universities have staff who are paid to teach, talk with, and answer you.

That's not to say you're wrong about the value of universities in practice. Kids are told to focus on reviewing textbooks with other students in the same class, getting high grades, and graduating with a degree. People say "visit professors during office hours," but don't stress that this is part of the most valuable thing in a university: an expert who is required to help you learn the field.

> Experience > degree. After the first 2-4 years of work experience nobody cares anymore about your initial degree, unless it's medicine or law.

Assuming a similar skill level. But a student can leave a 4-year university with a higher skill level than somebody who learned on the job for 4 years. Those people usually just have time to learn about the job they have, so they might take longer to gain skills for the next rung on the career ladder.

If you are, then the average outcome probably doesn't matter to you, because you're going to select for profitability in your degree choice, you're going to move around for work, continuously study and train in adult life, and generally you're gonna be fine financially (if perhaps not emotionally, oho).

If you're not profit focused - if you're doing the degree primarily and substantially because you love X and want to do X - then what do you care if it doesn't pay back? You got to be an X! The question is almost irrelevant.

I think a lot of analysis suffers from this averaging effect whereby actually that average person doesn't exist.

There is no realistic path that would have lead to me making the average income for my cohort, for example, because I'm just not that sort of person - I'd rather just go relatively all out, or else work for a non-profit or scrappy startup or whatever, so I either bin high or low.