

Don't Get That College Degree - ojbyrne
http://www.nypost.com/seven/06282009/postopinion/opedcolumnists/dont_get_that_college_degree__176545.htm

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Dilpil
If Bill can get 8% returns on his money every year, he might wanna start a
hedge fund. Or at least borrow as much money at 5% as he can and invest it
all.

~~~
fan
The stock market generally returns around that amount, though not in a stable
manner. (Hence its hard to infinitely borrow stable capital at 5% to fund
unstable returns at 8%).

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tokenadult
"How can that be? College degrees bring higher income, but at today's cost
they can't make up the savings they consume and the debt they add early in the
life of a typical student."

That's a very interesting analysis. I've read for a while now that for many
young people who pursue college degrees, the economic return of the investment
to gain the degree is actually negative. There are some broader societal
implications here too, as much of funding for college study is third-party
payment funded by taxes on people who never attend college at all. Some
economists of education, notably Mark Blaug, point out that public subsidies
for college study are massive wealth transfers from the poor to the rich.

~~~
Alex3917
All investment in formal education is a net negative, from pre-k onward. Right
now my town spends about 11k per student per year, not including extraordinary
expenses. Multiply this by 13 years, and it comes out to 143k.

Let's say that instead of investing 11k in each student every year, my town
just put 143k in an account for me on the day I was born. From the town's
perspective this is feasible given the current tax structure, since we are
doing this for each student instead of spending that money on schools.

Furthermore, let's say that my parents had invested the money they spent on
pre-k in that account on the day they would have otherwise paid tuition. This
means that we are adding, say, 8k per year at age 3 and 4.

Furthermore, let's say that we add 20k to the account for each of the four
years between ages 18 and 22.

Then we invest the whole thing in smallcap stocks. Assuming we can get a 10%
return per year, then by my chubby-fingered iPhone math this looks like I'd
have had ~1.2m in the bank by age 22.

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scott_s
And after no education, what is your 22-year-old self qualified to do?

~~~
Alex3917
Who said anything about no education? Also, I'd have started working at age
16, and I didn't even add any of that income into the mix. Even assuming I was
making minimum wage for the first five years I'd easily have enough money to
retire by age thirty.

~~~
scott_s
How would you gain that education? Keep in mind that without public money,
most of our educational infrastructure wouldn't exist - including
universities.

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randallsquared
Ah, just as grocery stores didn't exist before the taxes that support them.
Hm. Wait.

~~~
jibiki
But grocery stores cost money! I don't think Alex can simultaneously claim:

1\. A million-odd dollars in savings by the age of 22 by forgoing public
education

2\. An education by the age of 22

At very least, it requires some justification.

~~~
Alex3917
Homeschooling, competitive athletics, community engagement, apprenticeships,
mentors, freelancing, boostrapping, public libraries. And maybe a Ph.D.
someday just for fun.

~~~
scott_s
Homeschooling isn't free.

Your suggestion is basically school-vouchers with no strings attached. For the
kids whose parents want them to get an education, they would use that 11k a
year to help pay for it - either private schools, tutors, educational
materials and food. (If you, like me, went to a public school, then about a
third of your food on the weekdays was heavily subsidized by the school
system. Normal lunch at my high school cost $1.55 ten years ago - the food I
ate cost more than that.)

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RobGR
I have read that Newton would not put numerical examples in his writing
because he feared people would pick over some small error and use it to claim
the whole work was wrong. I think that's what most of the negative comments
here are like that - you guys are probably right about different ways to run
the numbers, but you are missing the forest for the trees.

The investment in a college degree is so large, and involves speculating on
payoffs that are so far in future, at a time when whatever you think you will
do as a career will likely change several times, that the pay off has to be an
enormous no-brainer. If the college investment pays off if the interest rate
is 8% but not if it is 5%, the college loses just by a bird-in-hand rule. The
college guy has to beat the non-college guy by something like 10 times no
matter what back of the envelope estimates you make.

Some related personal observations:

\-- Ten years ago online forums argued about how to get into the best college,
no one even raised the question of if college itself is useful. Now articles
and discussions like this are commonplace.

\-- No one I know really uses anything they learned in college to make money.
Even people working in the same field their degree is in, had to learn how to
really work in that field on the job after they left college. College was a
big time and money consuming initiation ritual.

\-- Most the people I know who earned a large amount of money -- not those who
inherited it -- either did not attend college at all or did very poorly in it;
nad none of them admitts to using any college education to make money.

\-- A handful of the most agressively and purposely stupid people I have ever
met have advanced degrees ( medical and legal). I suspect that some part of
the culture of those evironments educates people in the stupid direction, not
the smart direction, in a kind of "reverse education", encouraging aggressive
pronouncements of certainty on uncertain questions, for example.

\-- Taking a personal sample of the people I know who have made a lot of money
(avoiding those I hear about elsewhere -- just people I personally know, to
avoid a media bias but replace it with a personal bias), the way to get rich
is to fail out of college after one year of hard drinking, and inherit enough
money to buy a small business such as a restaurant or retail franchise and
work your ass off for about 15 years, expanding to a chain of those
businesses.

\-- Most of the people who I know who are going to college now, don't really
actively want to go to college. They want to not be at home, and to be around
people their age particularly of the opposite sex, and they are passively
following the path of least resistence.

All of this sounds bad, but I see a great thing in it: if we as a society
really only should be sending about 5 to 10 percent of people to college
(perhaps half of them only after a few years in the work force), then we can
hugely increase the productivity of our economy very easily. I think, like
medical care, we spend a lot on education in this country to get something
that is at best only the same as what is available in countries that spend
much less.

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jleyank
Depends on the field. According to the American Chemical Society, starting
salary for BS Chemical Engineers is 58K in 2007. This is higher that the
numbers mentioned in the article, and I suspect the oil biz is a reasonable
gig. I think everybody's in agreement that the starting salary for, say,
orthopedic surgeons is a little bit higher than this. And Wall Street paid
those MBA's quite a lot up until recently.

So, maybe SOME degrees are worth the hassle. Others, less so unless you're
really turned on by the subject - I really love history, but I'm not going to
try to get degrees in the subject.

As buugs said, don't get one if it's not what you want. Get one if it's what
you need...

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ojbyrne
"Depends on the field" isn't really a good argument, because the
counterargument is that the same thing applies for people without college
degrees. Some make minimum wage, some make more than the average given in the
article. Just as an example corresponding to yours, laborers on oil rigs make
really good money straight out of high school. In particular, here in Canada
during the oil boom (now not so much) it was quite common for a laborer
straight out of high school to make $50 - $80 US an hour in northern Alberta.
Admittedly dangerous, dirty, unpleasant work.

~~~
dinkumthinkum
I agree with the other commenter. So your examples are ones without much of a
ladder in terms of pay scales and incur serious risk of death. That's
wonderful.

Also, the fact that you say "some make more than the average given in the
article" really makes me want to say something flippant, but I won't.
Politely, I will say: Notice the word _average._

~~~
ojbyrne
I'm a college graduate, so I'm amenable to arguments against the original
post's thesis. But "depends on the field" is a logical flaw, because it's
assuming that the distribution of results for college graduates is more
positive than is represented by the average, while not accounting for the same
possibility for non-college graduates.

Also there's a pretty good ladder for some trades, which generally involve
something that should be welcome here. Namely starting your own business. Over
the course of my career I've met plumbers, cabinet-makers, steel workers, etc,
etc. who took the higher pay they made right out of high school (or more
often, two year trade school programs) and turned it into their own business.
And have earned more than I have, with zero debt, at every step of their
career.

ADDITIONAL RANDOM EDIT: Bill Gates...

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buugs
Don't get a degree if you don't care what you do? What an insight.

~~~
Locke1689
Yup. For some reason, I can't see a non-college grad doing research in high-
energy particle physics. Importantly though, a whole lot of people aren't
doing research in high-energy particle physics. If you're really good at
fixing cars and like it, don't go to college to get a degree in psychology.

~~~
pradocchia
What's with that anyhow? How did psychology become the degree of choice for
uninspired students?

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Dove
Two things about the numbers in this article don't work for me.

First, Bill makes $23,505 after college? What's his degree, basket-weaving?
Shoulda gone into engineering.

Second, Bill and Ernie each save exactly 5% of their income--even though Bill
earns much more than Ernie? This is not a basis for a fair comparison, it just
means Bill is choosing lifestyle over retirement. I calculate that it would
take Ernie about five years of living Bill's lifestyle to pay off his college
debts and catch up to Bill's savings. And then he has 25 years of a higher
income and hence options Bill doesn't have. Ernie's lack of financial planning
does not negate the value of his degree.

In fact, the fact that the article assumes financial illiteracy on the part of
both parties is revealing and disturbing. And it reinforces the point that, at
least in Ernie's case, he really would have done better to get a degree in
something involving some sort of math background.

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holaamigos
Its very bad comparison. A couple of problems: the comp is purely of
retirement savings, however the college kid is spending more on consumption
per year all through his life (not considered), also the assumption of 8%
returns is unlikely.

Stay in college kids!

~~~
fan
The article has a huge flaw in not comparing equal consumption.

The interesting question isn't how much retirement savings you'll have at the
end, but how much "net return" you get from the college degree.

I'd like to see a Net Present Value calculation of the two choices instead of
some flaky calculation assuming a fixed 5% savings rate.

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tedunangst
What happens if the college graduate invests 10%, which wouldn't be too hard?
What happens if the non-grad only invests 1% because that's all they can
afford? If the college grad invests all of their extra money, how long does it
take them to catch up?

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apsec112
"What happens if the non-grad only invests 1% because that's all they can
afford?"

The world is basically divided into two categories of people: those who can
afford to save 10% of their income and those who are currently accumulating
additional debt (I, as a college student, am in the latter group). The odds
that your expenses _exactly_ match the amount you need to spend are pretty
small. If you find that you have exactly $0 left over at the end of the month-
you don't have savings, but you aren't accumulating debt- you're probably just
increasing your expenses until they match your income. You can live decently
on $10K (after-tax) in this country.

"If the college grad invests all of their extra money, how long does it take
them to catch up?"

Not long at all, but people _don't_. The American national savings rate is
_negative_.

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zimbabwe
What absolute horseshit. People who go to college as part of a calculated
attempt to make a profit aren't the sorts of people who ought to be in
college. College is for living with people who share the same interests as
you, learning to develop yourself as an adult, and learning under people who
know what they're doing.

I don't know if my forthcoming college degree will help me make money, because
right now I don't know what I want to make money doing. College is giving me
time to try out a dozen different things and meet a few hundred terrific
people, so that when I leave I know more about myself and about what I want to
do than I did when I came in.

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Ratufa
The author lost me with his silly retirement argument on the first page. Note
that the college grad starts out making so much more than the high school grad
(by the author's figures) that s/he could start adding to that index fund at
the time of graduation, while still paying off his student loans and having a
higher standard of living than the high school grad. The college grad also
could invest sufficient money in the fund each year to quickly surpass the
amount of equity the high school grad has and still have a higher standard of
living.

The author would have been better off skipping the pseudo-finance.

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haseman
This seems to ignore the fulfillment of the work. There's always more money to
be made if you're willing to be miserable.

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noelchurchill
_I'm not arguing against higher learning but for it -- and against the degree
system that stands in its way._

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leecho0
Does anyone have numbers for average earnings for programming jobs
with/without degree?

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mstefff
always great to hear your thoughts all over a newspaper article...

~~~
zimbabwe
Sarcasm?

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dinkumthinkum
What an ill-conceived article. On the other hand it could be an interesting
cynical ploy. I guess if you could convince enough people that getting a
formal education is worthless or "not worth it" then it could actually
increase the market value of those who have one. So, if I was being cynical I
should probably just say "Thanks!"

But, presuming the intentions are not cynical I found these arguments
troubling. Indeed, ironically the one arguing for less education doesn't seem
to understand basic elementary math:

"Some students will get a better-than-average deal. They'll get more aid or
end up in higher-paying jobs. But far too many will lose money."

What a joke. Of course "some students will get a better-than-average deal."
Why don't people understand averages? That's like those numb skulls who say
"half of all students read below the average level; what a crisis!"

Also, I'm not impressed with citing Charles Murray. He presents an even more
cynical and myopic view. As for the state of universities: sure, many large
public universities have some ridiculous courses; I agree with that. However,
to quibble with the author's list, History and Philosophy of Dress is not a
silly course. There is a lot to be said of a society and it's positions
regarding norms of attire. In courses like that the primary subject, in this
case "dress," is simply a scarecrow on which to hang a much deeper discussion.

Now examples like "Campus Culture and Drinking," that may be a bridge too far
and I know many like it. However, my undergraduate institution, which
admittedly was private, had no such "mickey mouse" courses and we had
comprehensive exams. People who completed all the course work but could not
pass the oral exams failed to complete their degree programs. They _FAILED_.
And these were not dumb people. They didn't fail because they didn't turn
something in on time. This is in direct opposition to the author's premise
that universities are just so easy.

That makes me angry. That disrespects many brilliant students for whom the
author of this drivel could not be worth of shining their shoes. The idea that
the curriculum has been dumbed down is just without merit. Are there mickey
mouse degree programs? Sure. Now let's stop knocking down strawmen and deal
with reality. I'd like to see the author of this article, who apparently has a
very fanciful notion of averages, pass any of my colleagues course on advanced
algorithms, distributed computing, differential equations, and the like and
then tell me about rampant "grade inflation" or falling standards.

As far as the online courseware. That's fine. But I thought education was
worthless anyway, right? Anyway, so the answer now is that everyone is going
to become autodidacts? Wow, great idea. Autodidactism is fine but let's not be
naive with it. So the answer is either be a Ramanujan or go get a job a Super
Wal-Mart or something like that, just don't go to college, right?

This article is just full of contradictions. Don't get me started on the
"Knowledge Tree Shapes."

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thras
Do degree holders earn more or are the kind of people who get degrees the kind
of people who tend to earn more?

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Devilboy
I'd argue it's both, many employers pay more when hiring people with degrees
and certainly the people who end up with a degree tend to be the kind that
would end up in higher-paid positions regardless.

