<p>Interesting article comparing earning power.
<a href="http://assetbuilder.com/blogs/scott_burns/archive/2007/09/21/does-it-pay-to-go-to-college.aspx%5B/url%5D">http://assetbuilder.com/blogs/scott_burns/archive/2007/09/21/does-it-pay-to-go-to-college.aspx</a></p>
<p>sorry about the typo</p>
<p>"Specifically, he found that an 18-year-old who elected to borrow about $40,000 a year for college would have a lifetime consumption standard of $21,033 a year. If the same 18-year-old decided to go straight to work from high school, her lifetime consumption standard was about 10 percent lower, $19,068. This standard is the amount of money available for spending after all taxes, savings, and fixed commitments such as college loans--- calculated not for 10 or 15 years but throughout life."</p>
<p>The above shows how bogus the article is. Very few people are stupid enough to borrow $40 k a year for college. THe average amount of debt that students go into to pay for all of their underground education is about $19,000, certainly not $160,000.</p>
<p>Anyone would be an idiot to forgo college based on that article.</p>
<p>But the college kid has four great years while the HS kid is working at the local factory or hanging drywall all day. Then the college grad gets a nice professional job with better promotions and vacations. No comparision really when you factor in quality of life.</p>
<p>bogus indeed. won't even bother to read.</p>
<p>Unfortunately more and more college grads are struggling to find good jobs.</p>
<p>In the world of progressive taxes we reward those who don't make much money and penalize those who do. That doesn't provide much inventive to work hard and strive to succeed.</p>
<p>Our progressive taxes are really taking a toll on graduate education. From a financial point of view it is much better to earn an income instead of investing an average of 8 years earning a doctoral degree. Those are usually very lean years and with progressive taxes it takes decades to financially recover. We are already importing most goods. Now we are importing a high percentage of the technical workforce. Pretty soon all we will do is invest in real estate and sell things - made elsewhere - to each other.</p>
<p>Bio. of Harvard Phd. (Penn B.A.) that did the study <a href="http://people.bu.edu/kotlikoff/Bio.pdf%5B/url%5D">http://people.bu.edu/kotlikoff/Bio.pdf</a></p>
<p>Bogus? Harvard grad. economics research? Ivy league professor. Bogus?</p>
<p>I don't think there's anything wrong with his credentials or his math. The premise is questionable though. As Northstarmom points out the typical student loan burden is several times lower than the author's example. In addition he talks about private schools which are considerably more expensive than public. Seems to me the take away lesson is "Don't incur excessive debt." Good advice but nothing really new.</p>
<p>This article is sensationalizing the subject just as many articles do. I can't comment on the prof since the article may have taken the prof's comments out of context. The article states an extreme end of the student borrowing $40K per year and ending up with the average delta in earnings between a college grad and a non-grad. The article doesn't cover a student who has grants/scholarships or who goes to a lower cost school or who earns more than the average delta.</p>
<p>A student living at home commuting to SDSU ($5-6K per year), for example, earning a degree in engineering will be substantially ahead of the model the article indicates.</p>
<p>Most decisions are over-determined. I don't think money was my dominant motivation for earning a PhD, but I have always been able to support myself. I enjoyed the years I spent earning the PhD and the work it allows me to do more than I would enjoy anything more money would allow me to buy.</p>
<p>That said, I did not incur debt for either undergraduate or graduate education. Paid my way through both at publics with scholarship (first) and TAship (second).</p>
<p>But I was out of work force for five years earning a pittance. I wouldn't have had it any other way.</p>
<p>The article is typical of lay summaries of economic thought provoking articles.</p>
<p>Most economic analyses make rather broad simplifying assumptions, like assuming average people with average futures. Of course this may have no bearing on real life.</p>
<p>For example, it is not a great stretch of imagination to think that a kid who borrows 40K per year for four years may gain a greater return on his/her investment in human capital. But the articles ignore this. </p>
<p>One of the comments on the assetbuilder blog mentions comparing the MIT grad to the hs grad. That commentator may be on the right track. The flaw may be that the students that attend 40K colleges are not the same as the ones that get the average premium for a 4 year college degree. </p>
<p>Of course, given the financial aid prospects at the best schools, it may be true that the one who is desperate enough to go to a school where one must borrow 40K/yr is the one who is lucky to get the average return, so maybe the article is on the right track!</p>
<p>Someone else had the big word- QUALITY of life, an economic analysis doesn't cover all facets of life.</p>
<p>
[quote]
Bogus? Harvard grad. economics research? Ivy league professor. Bogus?
[/quote]
</p>
<p>Whats bogus is assuming the avg college grad is assuming $160,000 in debt.</p>
<p>Avg amount of indebtness is far below that, thus putting the typical college grad well ahead of the hs grad much sooner.</p>
<p>Because of choices made more than 4 years ago, our DS will be graduating with a coveted BS degree and $50,000+ in college savings retained in his investment account.</p>
<p>During these past 4 years we did not have to eat into our savings even though the cost of tuition+on campus housing amonted to $44,000 this past year. Yes we contributed a total of $13,500 for tuition and academic fees.</p>
<p>Much of the financial angst about college is about choices made prior and during the admissions process.</p>
<p>It's absolutely absurd to postulate that any substantial number of college students are borrowing $40k a year.</p>
<p>Someone attending a public college (which includes the vast majority of college students) can quite possibly get a four-year degree for much less than $40,000 - meaning they'll spend in total less than what the study assumes will be borrowed in a single year.</p>
<p>Anyone who's passed a basic statistics course knows that any study which begins with wildly incorrect data invariably results in wildly incorrect conclusions. Doesn't matter how good the credentials are of the person doing the study.</p>
<p>All of you seem fixated on the idea that college students don't actually borrow $40k/year. That is true, but very often the parents borrow large amounts. Someone pays and the point is that all of that money that is invested in education is not quickly, or ever, recooped by an eventual higher income. </p>
<p>In my area, non-college careers are well paid. Certainly this is true for auto mechanics, plumbers, landscapers and many other service professionals. Tradesmen are not only paid well, but many start their own businesses and become wealthy. Meanwhile the college grad is paying off loans and trying to find jobs with a survivable income. At the very least, I believe our society needs to look at better tax relief for college costs. Home mortgage costs are tax deductable. Shouldn't we do the same for college costs, or at the very least for college loans?</p>
<p>Ha...I'm an identical twin. Our college for 4 years will total....get ready...$48,000. Public university after the HOPE scholarship. My sister will also be paid by a hospital so much each month because she's coming back and working for them....so it will be less than 48,000 for 2 bachelor degree's. Also...for my Masters (I dont feel that its my parents obligation to pay for it) I will either be a TA or a Researchers assistant to pay for that degree.</p>
<p>That article was something else...</p>
<p>edad,</p>
<p>I'm sure some parents borrow those huge sums. Most don't, but that is actually a red herring.</p>
<p>The true question is whether $160,000 or more spent on higher ed is a good investment, wheter or not it is borrowed money. (turns out the numbers will not change a whole lot borrowed or not). And it is an interesting question not addressed by the article.</p>
<p>Think of it this way: Would a kid be better off financially if she or he started work right after HS while the parents gave him or her $40,000 per year for four years to invest? Depends on the assumptions and the kid of course.</p>
<p>A really great college education is an experience to treasure forever. It's not just about money.</p>
<p>I agree completely, Bethie. As i've said many times, my D, graduate of a wonderful LAC, works now in a job which does not require a college degree. But her college experience is very much a part of who she is, how she lives, and also how she does her job. It was never about a monetary advantage.</p>
<p>If nothing else, the story bolsters the idea that every student does NOT need to go to college! These days, it seems like every angle of every story of a persons' life struggle focusses on how they miraculously made it to college, or deserve a college education but can't get one because of some obstacle. College is treated as the end-all-be-all golden ticket to a decent life. Maybe its time to revise that premise.</p>