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Comment by kylehotchkiss | Hacker News Reader

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kylehotchkiss

USC is $100,000 a year? How likely is that degree to net you $400,000 of value through your career?

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Divided by 40 years it doesn't look like much...

$10k a year is a huge amount. The median US salary is $61k.

Also realistically, you're likely getting a loan, so you need to factor in interest.

Not sure why you're downvoted as this is true.

(and there's nothing wrong with you expressing this opinion)

Not everyone in the US makes 500k TC doing remote work.

400k for a degree is absolute bonkers!

To pay $400k off over even 20 years at 6%, which is below the average student loan rate is just over $2,000 a month and it is mostly not tax free. Our society is messing up with how expensive this has gotten. The bloat is facilities and administrators who earn two and three or more times the tenured professor salary. The guarantors have to be the schools themselves and those execs who take these bloated salaries. And that interest isn't deductable other than a pittance of $2,500 or less in a year.

Here is the IRS about this;

Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntarily prepaid interest payments. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status.

https://www.irs.gov/taxtopics/tc456

Agree, and the $61,000 part is much of what this article is missing. Its a lot like "weep for those making $300,000/year" when most families are making less than half of that on average (almost a third, $122k if both family members are pulling average). However, taxes tell us they're not even doing that great.

If your family is reporting a family income of $122k, you're already at approximately the upper 25% threshold. The $61,000 number hides a really L-shaped distribution skewed heavily toward the $2,500,000+ crowd. Previously calculated 2024 statistics from another post.

in the most recent tax filing season data available (2024), there were tax returns of:

                                        Top 1%       Top 5%      Top 10%       Top 25%       Top 50%   Bottom 50%  All Taxpayers
  Number of Returns                  1,535,899    7,679,495   15,358,991    38,397,477    76,794,954   76,794,954    153,589,908
  Average Income Taxes Paid           $653,730     $187,468     $108,251       $50,963       $27,891         $667        $14,279 
  Adjusted Gross Income (Millions)  $3,872,395   $6,182,180   $7,745,525   $10,613,602   $13,191,209   $1,531,038    $14,722,247

If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income

                                             1          2-5         6-10        11-25        26-50       51-100
  Number of Returns                  1,535,899    6,143,596    7,679,496   23,038,486   38,397,477   76,794,954
  Income Taxes Paid (Millions)      $1,004,063     $435,594     $222,966     $294,234     $185,068      $51,225 
  Adjusted Gross Income (Millions)  $3,872,395   $2,309,785   $1,563,345   $2,868,077   $2,577,607   $1,531,038 
  Average Tax Rate                       25.9%        18.9%        14.3%        10.3%         7.2%         3.3%
  Average Per Capita Income      $2,521,256.28  $375,966.29  $203,573.91  $124,490.69   $67,129.59   $19,936.70

Just like compounding interest, a VERY small percentage advantage each year snowballs to be a large advantage over a full career.

A college degree in the industry you work in also means your job security is MUCH higher than those without a degree.

What about just giving your kid $400,000 in index funds when they become an adult? What does that look like after 40 years?

It would be a ton with ~10% annualized returns on the SNP500 since 1985, especially if you reinvest dividends. Someone who lives very frugally can probably just live off the interest off that 400k alone and if they bank unitl a million, they can have a safe buffer and a comfortable lifestyle. If they reinvest all of it for fourty years since 1985 it’d be worth on the order of $10-25 million.

It’s actually quite stark how bad it’s gotten. I’d rather just give a kid that money to invest and have them live at home doing whatever work floats their fancy until they can live comfortably on interest alone.

A degree is worth almost $1MM in lifetime earnings (for men). So yes, compared to no degree. A more fine-grained analysis seems difficult, and one could imagine the conclusion is dominated by which specific schools and specific degrees you are comparing.

In the long run %100. comparing the lowest quartile of high school grads to the lowest quartile of college grads, the college grad makes about $30k more. So without accounting for interest on the loans (if they were needed) it would take about ~13 years to pay for itself, 17 if you count the four years it took to get the degree. At the upper quartile it looks more like five or six years to pay for itself. Please correct my napkin math or my napkin source if this seems shaky: https://www.ppic.org/publication/is-college-worth-it/

compare to a cheaper college

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