1: Lots of companies will reject you on sight without a degree. I don't think it's a good thing, but it is reality.

2: With a degree your ability to move overseas dramatically improves. I moved to America after graduating. I flat out couldn't have done that without a degree. Points based systems immigration systems like New Zealand have dramatic bonuses for people with degrees.

3: You don't have to jump through the hoops and explain why you don't have a degree all the time. Stupid reason I know, but it's something I've seen friends without degrees have to do constantly - and not just in career situations. As I mentioned, I went to a no-name university. If you live in NZ, you'll know it. If you're an American, chances are, you've never heard of it. But because I have a degree, it doesn't ever really come up.

4: The cost isn't that bad, when you spread it out over a career. My degree & living costs cost about $60k NZD (~$40k USD). That's $1k USD / year, or $.50 per hour. Considering how my income has multiplied in the few years since I've graduated (SF wages help tremendously here), the actual cost is barely anything, even when you control for the opportunity cost of studying.

Where I think College returns make a lot less sense

• Paying out of state tuition for lifestyle reasons, when you're going into a relatively low paid field afterwards (e.g. teaching).

• Paying private school tuition at a school without a strong reputation

• Grad school, in general, seems to be a rip off

You took your degree in a country with far lower inequality and better inward education investment, and then jumped over to work in a country that doesn't tax people enough to support USA students.

I'd imagine that is pretty good value.

The funny thing is, my student loan is one of the highest out of my American friend group† (although very normal amongst my NZ peers). Unlike the US, there was a lot less much in the way of financial aid/scholarships available, so sticker price was what people actually paid.

https://data.oecd.org/inequality/income-inequality.htm

† For people with undergraduate degrees

The friend bit is anecdata.

Looks like NZ avg debt is $28k NZD [1]

USA is $29 USD [2]

So USA is 50% more expensive, on avg (NZDUSD 1.5). IMHO both are a disgrace, but that's another thing.

1: https://en.wikipedia.org/wiki/Student_loans_in_New_Zealand#S...

2: https://studentloanhero.com/student-loan-debt-statistics/

Perhaps the biggest difference is the interest rate which is government backed and around maybe 1-2%. According to first result on Google the interest rates on US student loans seems to be around 6-8%.

There's fairly decent financial aid available to cover your living costs if you're from a low income family, but that cuts off pretty quickly, and unlike the US, there isn't really a culture of paying for your children's education, so there's a lot of kids (like me) who grew up upper-middle class but didn't get much help through university.

Overall, I'd equate the USD = NZD as realtively equivalent, even though there is a currency difference. The average American is graduating into a job paying $51k USD, whereas NZ grads are often starting at $50-55k NZD.

[1] https://www.shrm.org/resourcesandtools/hr-topics/compensatio...

The US really benefits from immigrants that were trained by poorer countries. I too moved here, my chronically ill relative is still at home.

You probably mean "knowledge workers" :)

Grad school is often much better for immigration scoring than a bachelors. Especially if you can manage to do the graduate degree in the country you want to immigrate to.

I'm not sure I agree on grad school, perhaps you could elaborate? It's true that it's very much hit or miss. But my experience is that there's plenty of grad schools which offer 1 - 1.5 year Masters' and tuition fees that aren't abnormal. Here too your second point rings true, either you pay a lot of money for a good rep (e.g. if you go into BigLaw, assuming you don't burn out, it gives a high return rate), or you pay little for a no-name university, and then I feel grad school absolutely does come at a premium. Compared to a 3-4 year Bachelor's degree, it's usually a relatively quick program with potentially bigger upside, especially if paid for by your employer.

I think what most students underestimate is just how many of them fail to finish the standard path. Almost half of students don't finish their bachelor's within six years due to delays and changing paths, and a lot of them quit entirely. I think college makes sense if you know what you're looking to study, why, are dedicated to completing it, and able to.

A lot of students go into fields of study as a teenager, literally never having had a 5 minute conversation with a person actually working in the field, having spent no time looking at the income tables, or indeed not actually considering the field at all, but just wanting to become a college student. It's these students who probably drag down the stats quite a lot. I've seen fairly unimpressive people go into a business course, work their ass off, do various internships, and land high-paying jobs. And I've seen smart kids start the same business course, muck around, graduate after 6-7 years and land a mediocre job that doesn't really require any particular degree. At the end of the day the student is still the most important factor here, and by the time they head to college, it's often already 'too late' for institutions to turn an B student into an A student, without the intrinsic motivation. There's lots more room in primary/secondary school for that, that's really where it's at. What college you head to after is less important in my opinion.

• Lucrative fields like medicine & dentistry saddle you with enormous debts (often in the mid six figures) that take multiple years to pay off. The ROI is probably worth it if you work to 65, but you're locked in for easily twenty years, and such high debt levels make taking risks very difficult.

• Lucrative, but more populated fields like law & business also often saddle you with enormous debt, and for these degrees you need a school with a strong brand name to get a look in anywhere (if you do an MBA and you aren't at Harvard/Stanford/Wharton, and a very few others, what's the point?).

• In a lot of fields (liberal arts/social sciences) what's the point of getting a masters? Do you get an earning premium? Is the earning premium worth the opportunity cost? I'd be surprised if the answer is often yes. I have a friend who was a teacher and is now studying to be a families therapist. Lovely person, but absolutely terrible choice. Years of additional study and debt, and no hope of a future earning substantially more money to show for it all.

I agree completely with your points about teenagers not doing enough due diligence before they study.

Also Masters (MBA is different) is useless in most fields unless used to get a visa or something. Usually you are foregoing wages with few additional benefits. Might be slightly easier to get first job.

Not sure source of degree matters as long as accredited. Certainly there can be upside like same alma mater but I rarely care but will admit to negative bias to Univ of Phoenix but interview and work history trump everything.

Having said that BS or BE have merit if the student actually takes it seriously. I learned a whole lot that I'm not sure I would have learned through self study alone (a least around that time).

Only works for programmers though. Everybody else should obviously get degrees.

Disregarding the mental toll of a PhD (one problem being that too many people want to be paid to think than there are available positions), I totally disagree with the parent poster's claim that graduate school is a rip-off. Just being in an an academic environment, being able to take classes, & studying around really smart people and doing research at the highest academic level is a really great experience & makes the stress worth it.

I guess your mileage may vary. The best description I've heard about grad school is that it's a self induced neurosis. That was certainly my experience at the time I did it.

Ok...

If you come out the other end of a PhD, then you have the opportunity for best of both worlds: high paying job to work on the problems you find intellectually stimulating.

Also, it is cliche, but doing a PhD does train a person in a way to think that you don't necessarily pick up in a normal job.

The thinking advantage of a PhD is really valuable, its like an extended apprenticeship with your advisor. Also, it gives you time to look at things you find interesting (well, it should, sometimes not).

You also need to take into account the opportunity cost. You could have been working at the time, earning $XXk/year.

Local undergrad is way more sensible. If you want to be elite, kill it locally then do a masters at Oxbridge or whatever.

In usa they are used as a path to immigration. 90% of grad students are foreigners.

Nowhere near that in total over all fields and even in STEM where the percentage is the highest it is about 80%.

https://www.nytimes.com/2017/11/03/education/edlife/american...

https://appam.confex.com/appam/2018/webprogram/Paper27374.ht...

> Using a new administrative dataset combining the universe of permanent migrant departures from the Philippines with the universe of institution-level post-secondary enrollment and graduation, we show that enrollment and graduation in nursing programs increased in response to demand from abroad for nurses. The supply of nursing programs increased to accommodate this. The increase in nursing enrollment and graduation during the period was much larger than the increase in nurse migration and contributed to a brain gain

Their economy runs on remittances, and the population is mostly under 18, so the government wants graduates to emigrate and send money home.

They even have the OFW department to monitor treatment of their emigrant workers, and provide a parallel immigration office.

Possibly the worst citation ever. :)

It's not a simple "college ain't what it used to be" story. The biggest puzzle is how to explain why recent grads still command significantly higher incomes than nongrads without accumulating significantly more wealth.

Increasing tuition is a factor, as is the declining return on capital gains over successive generations. Limited financial literacy and predatory lending seem to be hurting recent grads too.

Most notably, the inability to discharge school debt in bankruptcy since 2005 may have had strong effects.

That last legal change remains bewildering to me. You have three parties: schools, financial institutions, and teenagers. So uneducated teenagers are expected to know whether or not their choice in school, degree, expenses, and personal background will make their education worth it? When the other parties have all the data and experience? And if it turns out everybody was wrong, the now barely-employed twenty-something is least prepared to absorb the burden. More importantly, the least susceptible to incentives to improve this endemic situation for other future students. It creates a moral hazard which drives schools to overprice courses of education that are higher risk, and removes any incentive for lenders to educate borrowers on expected returns from different choices.

Policy circles are hotly debating right now how to overhaul the entire system. Maybe we should acknowledge the policy changes that helped break everything in the first place, and reverse those as soon as possible.

The student loan system will cost the government $170 billion in losses over 10 years, because interest doesn’t cover money written off due to hardships and loan forgiveness. The non-dischargability of student loans protects the government from further losses.

Non-dischargability is a reasonable feature given the other aspect of federal student loans: they offer income-based repayment. Under Obama’s REPAYE, your loan payments are capped at 15% of your discretionary income.

I don’t doubt this, but it’s a statement that focuses only on losses and completely ignores the economic benefits of the educated workforce.

$170 billion over ten years is on the order of 1% of education spending. Since graduates and postgraduates are earning, on average, roughly 2x and 3x non-graduates respectively, the extra income taxes paid by the non-defaulting group of college graduates alone makes the loan forgiveness losses a drop in the bucket, the income makes up for the losses many times over.

Speaking as a person with two degrees myself, I can say that non-degreed programmers seem to be just as productive as those with degrees. In fact, CS majors in particular have a problem just solving the problem in front of them, and often want to over-engineer things using the techniques and patterns they learned in school that are applicable to huge systems, whereas non-degreed programmers often just solve the actual problem they have without trying to justify (in their own minds) years spent learning other techniques.

I am not at all convinced that a college-educated workforce is more productive, for more than half the jobs in which it is required.

Your hypothetical isn’t the way things are actually playing out, so I don’t feel like it needs to be argued. Degree holders are generating value on average, so the economy does, in fact, have more money as a result of education. And the government also makes money on it’s investment in education on top of that.

Generating value is synonymous with growing the economy and being more productive. You can't inflate incomes without either increasing productivity or printing money. If degree holders command higher incomes without offering higher productivity, it comes at the expense of non-degree holders earning lower wages than they would have without the degree holders around.

In my opinion, much of the income premium comes from employers using degrees as a filter (similar to a standardized test). Doing well on the SAT doesn't make you more productive, but does give you a leg up over your peers.

I’m not really sure how to answer your first part, I’m not trying to talk past anyone, but I feel like people are responding to my point that the income premium is what matters to the student loan program by repeating the conclusion of the paper that the wealth premium is going to zero.

The income premium and the wealth premium in this paper are two different things, and even though people with degrees might end up having net zero additional wealth accumulation at the end of their lives, that doesn’t mean the student loan program is also net zero, or that people with and without degrees have the same lifestyle.

The student loan program gets to make it’s money back before degree holders get to save the money, so the income premium matters to the government more than the wealth premium, when figuring out whether forgiving loans is worth it or not.

Of course, degrees aren't zero value, but the subsidies for education (student loans) could still be distorting supply in a way that results in a net loss for the government. For example, a self-taught engineer or entrepreneur spends years in school instead of inventing or starting businesses. This is a poor allocation of investment and human capital which results in a net economic loss (including a loss for the government).

The example of patents looks a lot more like "people with advanced degrees are more likely to be in jobs where filing for patents is encouraged by the employer" than it does like "people with advanced degrees invent more". To be honest, the fact that our current patent situation is so obviously a net negative might be skewing my judgement on this, but if you thought that bringing up patents was a way to make it sound convincing that college degrees enhance productivity, well it doesn't for me anyway. I even have a patent, or my employer got one from my work anyway, and I still think our patent system is value-destructive.

Maybe the government part is confusing here. Imagine student loans coming strictly from for-profit banks. It is possible for the banks to make their money back, while students lose money, right? This happens to restaurant owners and poor families all the time. It doesn’t matter if the loans stimulate the economy, or if a percentage of loans default, the bank still makes it’s money.

Anyway, I’ll play along with the other arguments, just for fun. So by what metric are you declaring that productivity is not growing per employee? The US per-capita GDP has been growing steadily. How do you back up your claim that productivity hasn’t gone up?

Even if it were true, I don’t think it’s clear or true that you can declare the economy as not having benefitted from education in the past. The paper we’re commenting on has data that shows a net positive economic value in the past, even though the wealth premium is disappearing. And BTW do you really believe that - that the education system has done zero economically? Is that what you’re implying?

People with advanced degrees do invent more, in part because people with advanced degrees are more likely to be in jobs where invention and patents are encouraged, yes. Also because people who are prone to inventing are more likely to choose to do a PhD. How does this demonstrate that people would be inventing more if they chose not to go to college? People can already choose not to go to college, and choose to invent, and by and large that is not happening - what’s really stopping all the non-degree holders from inventing right now? You’re saying it’s just jobs keeping inventors out? There’s no education requirement on submitting a patent, so if college does nothing, why aren’t high school graduates already the majority of applications?

To put it another way, earnings are correlated with an individual's talent and drive. Currently, many of those people end up getting degrees. It's a correlation, it's not the degrees that are causing the jump in earnings, it's the individual's skills.

To address your separate point directly, there are studies that attempt to directly answer the question you’re asking. For example: http://conference.iza.org/conference_files/CoNoCoSk2011/gens...

However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.

One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.

In fact, the labor productivity growth rate does not seem to have significantly changed at all, even as the percentage which is college educated has gone up a lot: https://stats.oecd.org/Index.aspx?DataSetCode=PDYGTH

To address your point directly, I don’t personally believe that non-grad programmers are as economically productive as grads on average. I would totally believe that non-grads are as productive at building UI widgets and CRUD apps and stuff like that. However, inventions and patents are absolutely dominated by people with postgraduate degrees. It’s not a matter of hourly output, it’s a matter of yearly compound interest, and the compound interest in computer programming is generated by research. It is overwhelmingly PhDs who are developing neural networks and AI methods right now, overwhelmingly postgraduates who are the architects of new hardware and of new software methods. These are the things making the computer industry grow larger in fundamental ways.

The original paper that this whole discussion is happening in the context of literally says that the college premium is very low, and for non whites practically zero. The whole issue is that society-wide, college education doesn’t increase the wages of people. Yes, the college educated people make much more than those without a degree, but the question is how much they’d make on average if those same people didn’t get a degree, and as the paper argues, only a little less if at all.

Education only adds value to the society if it allows graduates to do jobs that otherwise couldn’t be done without education. For example, surgeons require lots of education to do their jobs. If nobody educated surgeons, those jobs wouldn’t be done. Thus, educating surgeons does increase tax receipts.

On the other hand, education obtained in an MBA degree isn’t really obligatory to do the job that MBAs typically do. If nobody got MBA, those management positions would be filled anyway, potentially by different people. This way, MBA is zero sum and has no benefit for society, though it does benefit the individuals who obtain it. Government doesn’t earn extra tax from educating MBAs, MBA programs just determine who will be paying that tax.

No, that’s not true, you’re missing a very important point. Taxes come out of income, they aren’t extracted after you control for everything, they are extracted on your income, and the income for 4-year degree holders is 2x the income of non-degree holders on average.

Do they make more because they learned valuable skills allowing them to do valuable jobs that otherwise wouldn’t be done? Then yes, the government extracts part of the extra productivity they generate that wouldn’t have been generated but for the education.

Or maybe do they make more because the college degree certifies them as quality people, which signals their value as good workers, leading to employers choosing them over other people? In that case, college education doesn’t make the workers any more productive. No extra value is produced because of college education. However, the college educated workers in that world still make more than not educated workers. All college does then is to determine who gets to do the higher income jobs. If nobody went to college in that world, those exact same jobs would be done anyway, it’s just employers would have to use different signals for employee quality than college degree.

I believe that our world is much closer to the latter than to the former. College is mostly quality certification to signal value, and it’s not building human capital through teaching people skills that make them more productive. This is shown by papers like above, where they find that after controlling for other explanatory variables, college premium is zero or close to zero, but also by common sense: a typical college graduate forgets 95% of the material in class, and the remaining 5% is often not likely to be used anyway, since most degrees are not teaching any practical work skills anyway (except for the job of being a college professor), and on top of that a lot of people don’t even work in a job they have a degree for.

Only the wealth premium is going to zero, the income premium is currently still quite high and is stable.

Only the income premium matters to income taxes, the wealth premium that is going to zero does not affect income taxes directly in the short term.

The only premium that the student loan program cares about in the short term is the income premium, and the income premium has not gone down.

The question of why this all happens is indeed interesting and important, however not relevant to what I’ve been talking about here, that student loans are on balance repaid by the college income premium.

In short, the college premium from the point of view of the government’s income is not the same as the college premium to the student. It’s possible for the government to see a favorable financial return on student loans at the same time the student sees negative value in their degree.

If that cohort of people (generally more ambitious, societal/educational rule following, and possibly more intelligent [at least more “book smart”] than the national median of college non-attendees) would have earned enough to pay the same income tax anyway, those gains cannot be ascribed to the government student lending.

I’m looking at the raw data, not through the lens of a model that discounts absolute income & savings differences to try to answer a hypothetical question about what college is worth to the individual.

In the case of income & taxes, it’s important in this particular case (that of student loans and income taxes) to look at the raw unadjusted income, because that is what the government sees. It doesn’t matter if tuition is cutting into graduates’ savings, because the government gets it’s income taxes before people get a chance to save (or even spend!).

Your second point is hypothetical, since studies trying to control for IQ and parents’ education and all the other factors we can think of are still showing positive economic returns for college graduates. This paper is asking the question, ‘how can we calculate the return on investment in college’ from the point of view of a student, and trying to rule out factors that give you more income without going to college. However, that is not the same thing as asking ‘what would happen if everyone stopped going to college?’.

I think it's better terms than even you said -- 10% of discretionary. Discretionary is AGI minus 150% of the poverty rate... a real hardship borrower--say the barista with a million dollar pottery degree--could easily qualify for a $0/mo payment then have all loans discharged after 20 years. (That forgiveness would result in a massive tax bill, however...)

My only remaining quibble is that while private loans might be 7-8% of all loans, they're still large in absolute terms, and seem to cluster around the most problematic areas of education, like unaccredited schools. Yet somehow they seem to have the benefit of both worlds, nondischargability without income based repayment, unless I'm missing something.

May not be the cornerstone issue here, but still seems like the policy on private educational loans could be better.

After your comment, poked around, this history seemed especially useful to fill in some of the gaps I had on the policy history here: https://www.savingforcollege.com/article/history-of-student-...

Thanks, you changed my mind.

This one feels like a "true in theory, but not practice." Since the change was recent, we don't know how it will turn out, but it seems _very_ likely that some percentage of folks will die with outstanding student loans. If tuition keeps rising, it will be a non-trivial amount of money.

What happens to the many students who are paying at less than their interest accumulation? Does the federal government pay the difference so their loans don't at least keep growing, or does the amount they owe just keep getting bigger and bigger? And in either case, wouldn't such a capped payment scheme be advantageous primarily to the lender collecting the interest?

Is it? Permit this armchair economist a theory:

People with degrees tend to use those degrees in pursuit of career development. Career development causes people to move to "cluster" regions e.g. Silicon Valley, New York "Cluster" regions tend to have a high cost of living due to insufficient housing and transportation infrastructure which didn't grow at the rate of other economic development The high cost of living eats up the additional income from the degree, preventing wealth accumulation. Add on long-term macroeconomic effects of the fall in entrepreneurship and other indexes of economic dynamism, aligned with increases in consumer spending, and you have a high-income, relatively comfortable serfdom.

To test the theory, try controlling for geographic area - there should be a clear increase in wealth accumulation of degree-holding entrepreneurs in low cost of living areas, compared to non-degree holders who still somehow eke out a living in high cost of living areas.

You have four - parents. Students can’t get a loan without filling out FAFSA which requires their parents involvement. Parents could guide children in the right direction.

No guaranteed federal loans would fix everything. This means tuition loans could then be discharged and the lender would be more discerning about loaning to a student heading to some boutique private college with sky-high tuition and ending up with a humanities degree.

The only thing that would happen is that the banks would force all loans to be co-signed. Guess who is statistically unlikely to get loans in that scenario?

Very. They may very well take into account your grades and SAT score to determine feasibility of repayment.

>The only thing that would happen is that the banks would force all loans to be co-signed.

They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that?

>Guess who is statistically unlikely to get loans in that scenario?

People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?

That's not what it means at all. College is not a binary option. There many schools with varying tuition. And even in a world where college tuition is much higher than it should be due to the distortion of subsidized and guaranteed federal loans, a student can make a decision that balances their financial situation and academic goals. That may involve choosing a less prestigious state school closer to home, working in the summers, or working part-time, or going to school part-time, etc.

I also don't really understand your point. The requirement for consignment of a loan is because the loaner cannot afford the loan. That doesn't change if the loan is simply guaranteed as in the present system.

>but people who should go to college can't, both because they can't get the funds (even though they could pay them back as a graduate)

Why wouldn't that be incorporated into the loan application, i.e. the ability of the loaner to graduate and join a competitive field. That's the argument I'm making. The people who are most screwed by school debt are those that went to expensive schools to get non-competitive degrees that won't enable them to pay back their debt. Nobody is crying for doctors who may carry a large debt, but also make very good money.

>because the first group is driving up prices.

Funny you should reference market mechanics now ....

You act as if the SAT score is a predictive of future success. Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly? Ask me how I know.

They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that?

So only the rich should go to the good schools?

People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?

Student loans are or should be based on the ability to pay back loans based on future earnings. Most loans are based on credit, prior repayment history and income - three things that students don’t have.

It would seem folly to take the test with 0 prep and there’s a Khan Academy free prep course that you could use for the 20 hours of prep.

Given that, I’m not so sure that intensive prep is going to boost someone’s score significantly beyond basic prep.

Do you really think some free online tutorials are as good as $100/hour private tutor who is a college professor that we got for my son or in my case having a mother who was not only a high school Math teacher but also taught SAT tutorials? Do you really think the latter had no bearing on me having to highest SAT score in my school and the second highest in the district with 800 seniors?

I’m not bragging. I didn’t exactly live in a top ranked school system in the small town south.

I am fairly convinced that outcome was likely from years of math education in daily life, on car trips, doing math puzzles with my parents, etc. We’re doing the same with our kids now. My daughter just scored perfect on the SSAT practice math test and finished in half the allotted time. My total extent of “dedicated” prep was under an hour. Our total extent of informal prep was thousands of hours over nearly a decade. (That test isn’t nearly as difficult as the SAT, of course.)

I suspect your mom had more to do with your outcome based on years than the expensive tutor did in a few dozen hours. (I’ll also not hesitate to do that if I think it’s needed.)

If your upbringing was causal in preparation for both, it seems the college board might be correct in claiming that the SAT measures college readiness.

It's a predictor of your odds of graduating from University.

>Do you know how easy it is for parents of means to pay for “sat tutorials” that will help their kids improve their scores significantly?

Children of Parents who care about their education will do well. News at 11.

>So only the rich should go to the good schools?

That's not what I said at all. There are lots of good schools providing good education out there. State universities, by and large, are phenomenal, frequently with a good tuition for in-state students. You don't need a boutique humanities degree from a high priced private college. You can leave those to the rich.

>Student loans are or should be based on the ability to pay back loans based on future earnings

Sure. I don't disagree with that. It's why nobody complains about doctor school debt load, because their field pays well.

What's disgusting is giving a non-affluent student tens of thousands per year in debt to get a humanities degree.

And that's the problem .... we're not discriminating enough by the chosen degree. Federal loans should discriminate by the program.

>Most loans are based on credit, prior repayment history and income - three things that students don’t have.

You're still operating within the current system where tuition has been distorted due to massive injection of federally guaranteed loans into the system.

There is no reason why you shouldn't be able to choose a good school and work part-time or do school part-time and pay your way (at least mostly). This is possible today even in the distorted market.

And finally, are you really arguing that loans should be given to individuals who cannot afford them and will not afford them with the degree they will get??

Loans are not grants nor gifts. You're not doing anyone a favour by giving them a loan they cannot afford to repay.

There are other ways to subsidize education rather than distorting the lending market.

- Not requiring your parents to be rich is otherwise known as intergenerational upward mobility. If the effect of the current system is to externalize the costs of upward mobility on the rest of the society, then that's probably worth paying (to a point). The bigger problem is that government-issued loans suppress market pressure on colleges to operate efficiently.

Sure. Let's go with that. Even under that assumption, there are multitudes of reasons why a bank would require cosigners, all coming down to you being a risk factor. For example, your grades may be low (risk of not graduating), you may be choosing an expensive art college with high tuition, or a degree wit no guarantee of reasonable income.

Again, loans are not gifts. You do not do anyone a favour by giving them a loan they cannot afford.

Right now, the entire industry assumes students are not price conscious and you only need to sell them on the college experience instead of the price and value of the degree.

Having said that, the government can always provide grants to make things more equitable.

I think this is a good point because the problem with college recruiting is that they simultaneously advertise that they are an experience and a good investment, while shrugging off the responsibilities of being a good investment.

I disagree with the idea that financial institutions should be in the business of determining what a “useful degree” is because a Debian Developer I know has a degree in philosophy. He does development because he happens to like programming and the mission of the project. He doesn’t need a CS degree and I think him having a philosophy degree let’s him bring something unique to the table. Education is abstract enough that you can’t put it into discrete boxes. If you tried Universities would become business schools.

Borrowing money for college isn’t bad if the loans are low. College is expensive because of ballooning administration. Federally subsidized loans arguably gave an incentive for this. The right policy is to give Universities a disincentive to adding overhead.

>That last legal change remains bewildering to me.

I have done no research on the matter, but my parents told me that doctors would go to school on loan for 7+ years, start a practice, and discharge all their loan debt through bankruptcy.

It's skeptical of those claims of abuse that seemed to originate in Congress, but nonetheless discusses some of the other historical approaches to solve for that, such as requiring a 5-7 year waiting period for bankruptcy after graduation.

I think rayiner added some compelling points above too, income based repayment may be a substitute here to solve for this issue while preventing abuse.

Whenever I hear someone say they don't need to go to college, I remind them Mark Zuckerberg was at Philips Exeter (2019 tuition 49k), Bill Gates and Paul Allen at Lakeside School (2019 tuition 36k), Reid Hoffman attended Putney School (2019 tuition and boarding 56k). Many of the people that make pronouncements about college not being a necessity came from wealthy backgrounds or went to the upper crust of private high schools in America. In fact whenever someone makes these crazy suggestions I suggest you look up their background and it will usually be wealthy family/private high school.

I will grant Bezos and Thiel being the exception to private schools but still they came from upper middle class / wealth backgrounds...

These individuals could do without college. The hard work and preparation at their high schools put them through a grueling curriculum. If they have enough discipline to graduate from these high schools they would have been a success with or without college.

Unless you are in similar situation, please go to college and graduate. Specific degrees do not really matter just graduate so you don't get sidelined late in your career.

I still hear people say it is not necessary. It probably isn't really necessary for most IT roles but once youthful enthusiasm runs out, every employer will look to replace you. Do not think they will value your experience and loyalty.

Another counterpoint, if it was the case a college education is not necessary to succeed at Silicon Valley, why do these firms have a difficult time hiring black or hispanic employees... Sure college may be useless for some but please don't peddle this garbage in the face of reality.

So either the Silicon Valley firms are racist and are OK with having employees that never went to college as long as they look a certain way or this is all bunk in an effort to hire young enthusiastic employees that have no room to negotiate after a certain age...

As we just saw many wealthy families bribe their children into an Ok college... I bet all the wealthy people above will make sure their children attend college. I will bet all their wives and friends went to college. I will bet they never shared a beer with friends that never went to college.

Please don't be stupid. Finish college, learn something that interest you, give back to society.

Maybe all these policy discussions are bunk and every child in America should expect the same quality of education a student at Exeter would demand.

Everyone I meet that works at starbucks has a masters AND 90k in student debt. Bankruptcy doesn't make student loans go away.

I think things are about to start swinging in the "non-college" direction.

Obviously prices vary.

I can make a living with a trade skill, but data shows I’m more likely to make a lot more with a college degree. You have billionaire dropouts and baristas with phds. But on average, degree nets you a lot of lifetime income.

Maybe that will change.

Aside from those 2 examples there are plenty of colleges with a business model of selling overpriced useless degrees to people who can't be bothered to do some due diligence before getting a loan. Those degrees won't pay off and despite sharing the "college" name, I wouldn't average between the 2 groups.

I've got a few friends who work in science, and it seems to be a pretty poorly paying field, with a real lack of job prospects, unless you secure a job at a government research department.

I ended up getting a microbiology degree and an EE, went to medical school (MD PhD) but dropped out. I was able to get a great job doing programming, so Im relatively sure they were right.

With my kids Im using the same approach.

With regards to grad school, my parents' philosophy was if you could not get grad school funded by an RA or TA, then you had no business going.

I try to use reliable data sets [0] to help understand because anecdotes are hard for me to make decisions. The data are almost always a few years old so they aren’t perfect and could miss a new trend. But it’s the best I know how to use.

[0] figure 4 shows stem 3rd highest after health and management https://www2.ed.gov/policy/highered/reg/hearulemaking/2011/c...

More seriously, anecdotes are terrible when giving advice to fresh high school seniors on their way to graduation. When people think of degrees in certain fields, they gravitate to the successful people (“I’ll study acting and make millions like the famous actors I know”, etc). They don’t think of and aren’t even aware of how many people get those degrees and fail hard.

That’s why they need to see the placement and salary stats to understand what their up against. Once they understand a French Comparative Literature degree has approximately no economic value, then they can make that decision knowingly. Papering over that by pointing out the one leader that happens to have that degree does more harm than good.

I think there's a world of difference between "I want to study acting and I'll end up successful like Brad Pitt" and "Hmm, my cousin is in marketing, and seems to have created a great career there, I should talk to them about that."

Anecdotes about people you don't know, and career stories you don't fully understand aren't helpful, but frankly I don't think massive data sets on how much the average graduate earns within two years of graduation (for example) are all that helpful either, except as a broad way to compare yourself. It's such a large number of people, you don't really anything particularly useful at an individual level (even though there are plenty of good uses for data like that).

At the end of the day, people hire you. Not data. After all, who says that a teenager can tell apart badly interpreted data any better than poor anecdotes?

Teenagers should be able to understand data by the time they pick a college or career.

http://www.cs-tcse.org/

https://engineers.texas.gov/downloads/eb17.htm

The sciences degrees are only obviously worth it if you then go on to become a doctor, but that's more schooling and the undergrad degree isn't a strict requirement anyway.

Most of my friends with degrees in math, physics, etc., just ended up being software engineers anyway. So the degree "paid off" for them in the same way a CS degree would, but they would've been better served just going CS.

In fact, funding for scientific research was cut by the Obama administration, leading to the closure of all but two of our branches and displacing dozen of workers amidst a recession.

When I transferred to academia, I took on an underpaying role, and found that the same shenanigans were afoot there. Now, we are approaching the end of the 2000s population boom, and in five years, universities will have many fewer prospective applicants for the following decade at least. The ripples of the contraction caused by the gambling of a few spoiled bankers will be felt again in another 20 years with a much smaller and resource-constrained workforce, still reeling from the burdens of loan debt and overpriced housing.

Unless Sanders gets his way, that is.

It's probably best I plan my exit in advance this go-round.

I’m talking about averages as there are certainly schools that suck. I would take my statement to mean that every single college is a net benefit. But as a general guidance, no other information available, a degree will net me more money over my lifetime.

If I were giving advice to someone thinking about schools, I would have them review the particular school, keep costs low, and study with a particular career in mind, stem/medicine a good target.

[0] https://www.ssa.gov/policy/docs/research-summaries/education...

What do you mean by that? Zuckerberg and Gates are indisputably elite because they're two of the richest people in the world.

But I wouldn't call them elite beforehand, and definitely not if they didn't work a day in their lives. Their parents' money seems to come from being a lawyer, a dentist, and a psychiatrist. That's not "elite", that's something any family can achieve in two generations.

You could argue a much lower threshold for elite, which is fine, but then it's quite a bait and switch to lead with Zuckerberg and Gates for that category.

https://philip.greenspun.com/bg/

Perhaps it's just me, but in the Zuckerberg case specifically, I'd think quite a bit of luck and timing had to do with it. If Zuckerberg had been born 10 years later after the obvious social network ideas were already created? Or if he had gone to a no-name college (or none whatsoever) and Facebook had never taken off the way it did at Harvard?

Or maybe you meant they were born elite, in which case, I don't know anything about that.

This is the big idea here - being born in the right situation gives you the ability to bear risk where a lower middle class kid can’t bear that risk because if things don’t work out, that kid is going to be homeless. When you can take a lot of risk with little downside, it almost always pays off in the long run.

I think the main value add - looking back on how I perceived FB when it came out and why a lot of us started using it - was branding and a cleaner, fresh design. And the newsfeed was a new concept...

That means they show up for $95. No work right? When they actually do something there is another charge right? Where you are? So confused.

The Guys doing the work make a fraction of the hourly rate, anywhere from 15 to 35 percent (not counting benefits). The rest goes to the house.

You brought up a 30 minute job. So I shared what it costs for me for a 30 minute (or more) job. And that it’s easy to get someone to come quickly for such a job.

I’m saying that if the problem can be solved in an hour, it’s $95. This is called a “service call.” Basically coming out and fixing what can be fixed without buying parts.

Any extra labor would cost more. This is a much better situation than yours since you can’t even get a plumber to help you flush a toilet for $300. That’s unfortunate.

Thus my suggestion from me that you could get better contractors. I think it’s reasonable that you should be able to pay $100 for a 30 minute job and be satisfied. Rather than be willing to pay $300 and being unsatisfied.

As a 1099 employee you need to be clearing at least double the equivalent employee hourly wage because there is so much overhead. Remember, a contractor doesn’t get a single day of paid vacation.

This does not count when a salaried employee works more than 40 hours.

My plumber charges 150/hour.

Contractors around here bill by the job. I had bids for $5000 for a 1 day job for 2 people when incorporated into a GC bid. The GC was getting 25% on top of the 5000.

You have to factor in not only benefits, but also:

* federal-level taxes (there’s no employer to pay the other half, so the contractor bears the whole portion)

* tools (you buy your own tools, stock your own spares, do your own maintenance on your dime — non-billable)

* learning and mandated certifications (same as above — non-billable)

* liability insurance (non-billable)

* vehicle maintenance, taxes, tolls, and fees (non-billable)

* transit time to and from not only contracted job sites, but also estimates that may ultimately result in no revenue (non-billable)

* marketing/lead generation (Angie’s List and HomeAdvisor are free to you, not to contractors — non-billable)

* material storage (you have the keep the customer’s plywood dry if the weather changes, or if the customer has a family emergency and needs to reschedule)

Further I don't believe it is possible for a hospital with all its specialized equipment to 1099 its nurses (doesn't pass the IRS '20 questions' test on contracting).

[0] https://allnurses.com/what-quot-agency-nursing-quot-t441525/

I think as we advance in the information age, maybe degrees are less about helping you actually get the job done, and more about serving as a mean for companies (and countries) to roughly filter high surplus of candidates. Add the fact its easier today to apply for job posts, its very hard for recruiters to filter intelligently at reasonable time. My guess is if everyone would have first degree, the recruiters will require a second degree.

This has less weight on jobs short in candidates (i.e specialized nurse, plumber, welder, proven AI expert, or whatever is hot right now).

For those prices just do it yourself. Is this hyperbole or did you really pay $900 for an hour job? How complicated could it have been if it only took an hour?

But it can be dramatically diluted through lenient immigration policies (and that's exactly what happened).

Bottom line, you have to be clever stay on your toes to make it in today's economy, and even then you need lots of luck and excellent health. UBI would result in a much more just society.

UBI would require land value tax to ensure the public value is capture for public spending. UBI alone is a land speculator wet dream and Yang is totally wrong to be pushing it without LVT. Yes in the middle of nowhere it can help, but most people are in cities and rents will rise there to current rent + UBI amount.

That's the difference with Yang. He's the most data-driven politician I've ever seen.

Other politicians seem mostly ideological, and I don't think they'd adjust their policies even in the face of overwhelming data it's not working. Like if Warren used Antitrust law to break up Amazon and it didn't change any relevant metrics, I think she would still call the policy a success. Ideological politicians like that are way more dangerous than someone who wants to try new ideas and is willing to adjust if they don't work.

At this point his proposal is just a really expensive handout for people that already have jobs. And what critical social services are going to be cut to foot that bill?

[0] https://www.npr.org/2019/12/10/786314251/elizabeth-warrens-j...

I'm open to suggestions, but we've passed the point we were in from 1950 to 2000 where any mediocre person could work hard and be guaranteed a middle-class life. And that's wrong, not to mention very threatening to our democracy.

Iron lungs are physically large and heavy. They are expensive and difficult to move. Health insurance doesn't want to pay extra for your comfort.

With an iron lung you can talk and eat. There is minimal difficulty; simply time your sentences or swallows to match the action of the iron lung. There is also no danger of tubes damaging your vocal cords.

The choice of technology is obvious, depending on how much patient comfort is valued. It is clear that the modern system doesn't give a damn if patients are miserable.

Have a look at this 10 minute video:

https://www.youtube.com/watch?v=gD_dZvPwAj0

Even for people not in poverty it would help even out their income over their life cycle - more money when they have kids, find themselves temporarily unemployed, or in retirement.

Certainly land rents are totally unjust and a huge problem, and land value tax/public housing/public land ownership would be great, but the case for UBI is compelling even without any of that.

Yes, I think many things go straight back into land.

The UK has 'housing benefit'. It's 'landlord benefit', because it subsidises unpayable rents.

How would that be? If your rent goes up $1000 regardless of what you're paying now, someone who earns $0 and can't afford a $600 apartment now collects $1000 and can't afford a $1600 apartment while the guy who could afford the $600 apartment by earning $1500 now has a monthly income of $2500 and a $1600 apartment.

For the person on the margin of affordability they can now afford an apartment.

Those on the highest incomes don't gain in a raw sense because they pay in more than they get, but still benefit from income smoothing.

In the US ? Where you can’t immigrate legally as a skilled manual worker ?

All the frequently-cited studies about college look at the incomes of college graduates versus the incomes of non-college graduates, and then compare that to the cost of education, and that generally looks fairly positive.

But of students who enroll in 4-year programs, only 60% graduate within 6 years[1]. For these students, college has actively harmed them: they're saddled with crippling debt, but don't get the benefits of a college degree. Also consider that they aren't working as many hours, if any, during college, so they lose even more in wages they could have earned.

The EV if starting and finishing college is coming into question, but the EV of starting college is clearly negative if you have only a 60% chance of finishing.

[1] https://nces.ed.gov/fastfacts/display.asp?id=40

> Graduating within 6 years after start, males and female

> 2011 starting cohort: 60.4%

> Open admissions: 30.7%

> >=90% accepted: 42.3%

> 75-89.9% accepted: 57.8%

> 50-74.9% accepted: 62.0%

> 25-49.9% accepted: 70.3%

> <25% accepted: 86.9%

[0]: https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.a...

Many students who enter college lack the prerequisite knowledge to complete even introductory college classes, and are placed in remedial classes. These classes don't count for college credit, but cost the same as college classes there's a limited pool of financial aid available to a student, and typically this pool is smaller for remedial students, who are less likely to qualify for merit-based aid. The results are devastating: only 9.5% of remedial students graduate from two year programs within three years, and only 35.1% of remedial students graduate from four year programs within six years.

[1] https://postsecondary.gatesfoundation.org/remedial/

What you're describing happens, but it's enough of an outlier that it doesn't tip the median outcomes to the positive. People with some college but no degree still have above-median unemployment and below-median earnings. In fact an associates degree only gets you below-median unemployment: it still doesn't allow you to reach median earnings.

EDIT: Its not the one I'm looking for, but I found a good one. http://conference.iza.org/conference_files/CoNoCoSk2011/gens... shows that if you control for IQ, the average person makes $100k more over the course of their whole working life by getting a bachelor's.

- This doesn't even account for the four years of work you lose by going to college instead of working.

- Its based on data from people who mostly graduated before the year 2000, and by all accounts the value of college is becoming less, not more. It's also based on a calculation when college was much cheaper.

Everything else, you just work hard at your first job and nobody gives a shit. I went to a big SUNY school and was a mediocre student. We all made out fine.

Steve Ballmer was Bill Gates’ roommate. You are getting free networking lottery tickets with high achievers at an Ivy.

The actual data shown in that reference seems to tell a different story, it shows people with college degrees earning 20-50k per year, on average, after taxes. That will sum to more than $100k over a lifetime.

Under this model, you could have someone with a higher IQ and a degree earning more money than a non-degree holder, but have a ‘negative’ return. Does that accurately reflect the situation, should the advice be to skip college, even though the absolute financial returns might be positive?

And what does this answer tell someone who has a low IQ or a low socioeconomic status? How should they try to evaluate this choice? Does discounting high IQ and high family education give an accurate picture of the benefits of post-secondary education to poorer families?

They point out that much of your lifetime earnings are predicted by your parents' level of education.

Anecdotally, plumbers charge more per hour in some cases than many lawyers make. Their income, however, is limited by their ability to book many jobs and actually carry them out. The opportunity cost of one job is exactly another job. So comparing to other wage earners their income is high, but compared to a banker that can make several loans in the course of a day where the opportunity cost is only capital (which they have practically unlimited access to being that theyre a banker) changes the situation quite drastically.

The UK famously has a plumber worth $100 million - Charlie Mullins.

According to wiki he is paying his plumbers more than I'd expect, which is cool.

>The company promotes itself as providing a high-quality service, employing "£80,000/year plumbers", charging £80–200/hour depending on time of day and service performed."

My argument wasn’t that the trades don’t scale at all (this would be an asinine argument as I know contractors that do scale and this guy is clearly an exception to that argument), but rather that the trades don’t scale the same way tech or finance do.

There's also the value proposition where I could make $15/hr at a McDonalds, so its hard to set a labor cost floor below $15/hr. I KNOW from experience that even when everything goes wrong I can replace a kitchen faucet in ten hours. Sure it starts out as an hours work but three trips to home depot later for strange wrenches and adapters and valves and next thing you know its ten hours. Thats an absolute minimum of $150 of lost income doing likely physically easier work standing at a mcdonalds cash register or whatever. Obviously I can make way more than $15/hr doing software development. On the other hand, a plumber has seen it all, has all the tools at his fingertips, and can do it in an hour for $150, and the hardest physical labor I'll have is writing a check.

Maybe a fair price for replacing a kitchen faucet is the hourly price of any other sweaty dirty technical complicated highly skilled tool/capital intensive job, which across the entire labor market seems to run $30/hr to $100/hr billed. If I were a $100K+ extremely highly experienced and trained diesel engine mechanic like my cousin, it would be financially foolish to turn down work to replace his own kitchen faucet. Even if he paid me a fraction of his hourly to haul around his toolbox and lift things for him as some kind of apprentice, I'm still honestly financially better off being a diesel mechanic's assistant than trying to replace the faucet myself.

Google shows union building and construction trades are ALL billing around $50/hr around here, plus or minus $10/hr related to lifestyle, I suppose. Picking a fight with the plumbers means picking a fight with the residential electricians and the ironworkers all making within a couple dollars per hour of each other. It is kinda shocking how all building trades make about the same hourly.

Of course Starbucks is a better working environment if you have a liberal arts degree and a mortgage sized student loan, and only pays $11.02 nationwide average. Almost any profession on a construction site will get you five times the pay achievable with a liberal arts degree... Yes a small fraction of liberal arts degree holders will get six figure sinecures, but then again a small, yet larger, fraction of plumbers will be multimillionaire business owners.

Wow. That, plus debt, is a huge hit.

The big item that analysis doesn't consider is the commonality of college education. "Between 2000 and 2018, the percentage of people 25 years and older who had completed a bachelor's degree or higher increased by 9 percentage points, from 25.6 percent to 35.0 percent." - Census Bureau[1]. That's for the entire population, so it lags changes for young people.

How did the St. Louis Fed miss that?

[1] https://www.census.gov/library/stories/2019/02/number-of-peo...

An actuary's kid will have an easier time becoming an actuary. Same for lawyers and doctors. That doesn't mean that college is a non causal factor in those students lifetime earnings... Quite the opposite. You're not becoming any of those things without college.

The student went to college precisely because they understand viscerally and precisely how college sets them up for a life of higher than average earnings. And what they need to do at college to tap into that potential.

Similarly, I'm not sure I believe the claim that there's no obvious causal link between education and financial acumen.

The big difference seems to be "do you know WHY you are at college?" And in cases where the answer is yes, it's still a good choice.

There's a lot of recent evidence that, all else being equal (controlling for educational attainment, test scores, and grades) parental income/social class has a huge impact on income.

That is, if you come from a lower social class, you can expect a lower income increase from college than someone coming from a higher social class.

There's significant policy implications here-- our long-standing goal of getting lower income kids to take college loans and go to college may not have a positive expected return for them.

??? You're saying that someone should not consider the outcome distribution of people similarly situated to themselves when making a choice? Isn't that completely rejecting empiricism?

If, from a public policy standpoint, our effort has been to get to the poor to college to end poverty; and the educated poor do do better with education, but not nearly as well as their middle-class cohort; and the present-value of education is smaller than the present-value of their lifetime wage increases-- one has to question whether the policy is well informed.

If you're asserting that the picture is unduly distorted by those at the very highest spread of the income distribution-- you're right. But the effect is still when we look at median outcomes.

> Some of these differences are probably innate. A brain surgeon is likely smart and his kids are probably also smart.

Presumably we'd be able to measure this and control for this.

> Some, but most are due to informational deficiencies and networking effects.

Yes, and various kinds of cultural cues about class of upbringing that persist after education and act to limit opportunity.