College is really, really worth your money
stevereads.com
stevereads.com
1) Children born to wealthy parents are both a) more likely to go to college because their parents can pay for it, and b) to step into high paying jobs because of their social networks than poor kids. Thus while there is correlation between college degrees and earning potential, the root cause is being born into a wealthy family.
2) Smart people are more likely to go to college than dumb people, and smart people are more likely to do well in jobs which require intelligence. Similarly, intelligence is the causal factor, not simply attending college.
College may very well be worth the money; but your statistics prove no such claim.
Just because something isn't causal doesn't mean the statistics are worthless.
3) Children born to wealthy parents are more likely to go to better primary and secondary schools (possibly private schools, or possibly by living in better neighborhoods.) This generally leads to smarter people as mentioned in #2.
4)Secondly, wealthy (or even middle-class) parents are more likely to have a culture of appreciation for education, as education likely played some part in getting them to where they are, and that culture will tend to rub off on their children.
Let's say college costs $100,000 (tuition plus opportunity cost of income, etc). Now let's say instead of spending that $100,000 on college we invested the money instead at 6% per year returns. That will give you $1,028,572.
The difference between college and no college is about $1,100,000.
My point isn't that college isn't worth it (most of the time I think it is). My point is that the gains are not as great as a simplistic comparison might suggest.
On a final note: The analyses comparing college to no college rarely adjust for things like IQ or emotional intelligence, which should really be the included so that there's no bias towards college simply because the smarter more conscientious part of the population decides to attend and complete college.
How does the economy earn that 6% return?
Given that college is a bad investment for most people, we'd be better off if fewer people did that. (Though the optimum is probably that some people go to college, not all or none.)
The problem is that we're all told 'go to college'.
What we're not told is 'go to college and learn a worthwhile skill'.
Personally I think the value of a college degree has dropped enormously while the cost has risen. Thus these types of calculations are going to look even skinnier 20 or 30 years down the track.
Again, I'm not agitating to not go to college, but I would counsel any college-entry age students into asking what the real-world skills they are getting, and whether it is really worth the cost of admission. Sometimes it's a binary choice - you can't work in a field without a degree. In other cases, it's much less cut and dried.
This particularly applies to higher degrees, where the marginal benefit of each additional qualification drops lower and lower.
> What we're not told is 'go to college and learn a worthwhile skill'.
I almost agree with this. I think that there is some ideal number of humanities students to be cranked out of universities per year, but we're way over that. As a result, the demand can't meet the supply. In fact, the demand might be reduced due to the troubles involved in filtering through the flood of applicants.
The real problem is that universities behave like anything else: they'd rather make a quick buck. They admit way more humanities students than are needed because they can make more money that way. Engineering students cost a lot of money, they're whiny, and they smell bad. (Disclaimer: I was a whiny engineering student.) Why would you want more of them when you could surround yourself with kids who cost less and will pay you tons of money just to get away from their parents?
It's up to the students to work out for themselves that they're doing a pointless thing, and that it won't pay off. I suspect this is partly an information problem and partly a societal problem - there's too much emphasis on going to college as a social marker and not enough emphasis of what happens when you finish.
Maybe there's a good website weekend project in there to do an cost/benefit analysis of different types of study which calculates the debt, the 1 year, 5 year and 10 year salary ranges for the graduate, and also compares other non-college trades and vocations for equivalent payoffs.
If the high school graduate is contributing some monthly amount to an investment account, then the college-educated graduate could also invest at the same rate, making the difference in gains greater again. On top of that, a college graduate has the potential to invest an greater amount than the high school graduate based on the difference in income.
But yes your point is correct, it's not a simple formula. A bit of risk, a bit of "gambling", a bit of crystal ball.
Are there any studies that show the college "premium" for more closely matched people? Perhaps based on SAT scores. So we could see the premium for a person with 1000, 1500, 2000 SAT score of going to college vs not.
I would guess that the difference between a high school grad and an English major is similar to the difference between an English major and an engineering major.
Maybe in the verge of death I'll look for a shaman...
Overall my point is that college is not overrated for all the careers. The article did not focus only on IT....
And IT is not only about coding
Of course, the simple explanation for that is 'the market doesn't like them', so it's mutual dislike.
This is why you'll generally find the largest agitators for changes away from market based economies towards controlled economies (read : more 'fair') are people with the most worthless qualifications. Show me someone who likes socialism and I'll show you someone who studied a (monetary) value-less qualification at university.
Of course, it's a crying shame that poets get paid a fraction of reality TV stars, but that's just a reflection of what society values more.
And that's why plumbers make so much money, because a flushing toilet is about the most valuable thing in society, especially when yours isn't.
The data needs to be adjusted for the fact that "college educated" has become an entrenched label in society. Without the label, society values a person much less. That is all the data in the article proves.
What I would like to understand is whether college is valuable because society thinks so or is there something that college does that is unique to it. (and if the latter is true, is it worth $50k a year?)
I think you're preaching to the wrong crowd here