Americans Are Losing Faith in the Value of College | Hacker News Reader

Americans Are Losing Faith in the Value of College

nytimes.com

6 pointsvwoolf11 comments

It seems overpriced unless you're very serious about a career in something like engineering or something else that's likely to pay for itself.

We've started talking about it with my daughter, who is in high school, and... we'll see, I guess. I want whatever she does to be intentional rather than just 'what the done thing is'.

Many anecdotes advocating for college tend to be "I learned so much there" or "I made many friends and connections there" but over 4 years you'll do that anywhere.

Continuing an education and staying in the same community as your peers has benefits. However, the advantages of expensive niche schools seem to be entirely anecdotal outside of very specific academic fields or career paths.

The US government produces reports that show average income for degrees offered by institution by field of study. You can find it here: https://collegescorecard.ed.gov/data

You can check the average earning ten years post graduation and construct an estimate of life time earnings while also factoring in the 4 or 5 years of tuition and fees it requires to get on that path.

Then take the data from the census and/or BLS for earnings for high school graduates (https://www.bls.gov/cps/cpsaat07.htm) and extrapolate a lifetime earnings.

You will find that while there are some outliers, most colleges give you a higher lifetime earnings.

Benefits like healthcare aside as a gross simplification, this chart will tell you the same (https://www.bls.gov/emp/chart-unemployment-earnings-educatio...)

- high school: 45k/year for 47 years --> $2.1m lifetime

- undergrad: 75k average for 43 years --> 3.2m lifetime

Now we can subtract the cost of a 5 year state university degree. Let's take NY as an example. (https://www.suny.edu/smarttrack/tuition-and-fees/) of 9k per year net on average.

- undergrad: 75k average --> 3.2m - 0.045m --> 3.2m lifetime

On average university graduates come out 50% ahead (more than a million in lifetime earnings) of those with just a high school degree.

> - undergrad: 75k average for 43 years --> 3.2m lifetime

That number isn't actually for undergrads, it's for everyone that's completed at least a bachelor's. About 1/3 of those people have a master's or higher.

Pulling from https://nces.ed.gov/programs/coe/indicator/cba/annual-earnin... which does break down by educational level, those should be 1.86m vs 2.64m, for a difference of ~783k. The standard 10 year student loan would come out to $54k total, so $729k. The average person takes 21 years to pay that off though, which would bring the total to ~84k, leaving a 699k difference.

It would be worth factoring in that there's a filtering process for undergrads, and that high school is the default category. I would expect average lifetime earnings to be higher for undergrads even it was a nominal category and colleges didn't exist, because admittance is selective.

It also discounts the value of student loans. This is a little spurious, but I pulled the S&P500 returns for the past 47 years. If our highschool graduate got a $45,000 loan at 4% interest (modern value and interest) in 1975, dumped it into the S&P500 and reinvested the returns, they would have $1,573,832.60 (minus the still-outstanding $45k principle) in 2023, making their lifetime earnings 3.6m. That alone is over 50% of the undergrad's total lifetime earnings, and for doing practically nothing.

If the high school graduate invested the same proportion of their income that the undergrad spends on student debt payments, they would have $2,803,589 in 2023.

Even without reaching that far back, if one person went to college in 2018 and the other invested their $45,000@4% interest and paid $180/month into it, the college person graduates with -$45,000 and the investor has $22,619 in profit. For the same situation starting in 2003, the investor has $221,217 in profit already.

I worked in this space for years. There are some colleges and majors that are a wash and a very few that are net negative, but the majority are net positive and the best are typically net positive several million in lifetime earnings even counting the hole you dig paying tuition and fees.

Hate them if you want but the vast majority are a fantastic investment.

The Case Against Education: Why the Education System Is a Waste of Time and Money by Bryan Caplan explains this well

The main argument being that universities don't teach they certify attributes that employers value.

Employers value higher education and will pay a premium for it. I'm not sure that diminishes the argument in favor of it.

Main argument is that if one person stands from his seat in a concert he can see better, that doesn't mean if everyone stands everyone will see better.

If everyone is standing do you really want to be the fist to sit down? Particularly when the evidence is clear that if you do and basically any significant percent of the audience does not that you will see and hear only 50% of the show?

The exact same argument can be made for dual incomes.

Should a family try to prove a point by living off of one bread winner with a high school education?

$47k is not going to go far in the bay area where the poverty line for a family of four is apparently $149,100.

as they should

Why should they? The overwhelming evidence says that a degree in higher ed is a financially great decision.

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