Thank you. Excellent article that needs to be read by everyone who's considering dropping out for "a startup".
Let's ignore the complexities and focus on crude market value. A smart person with no college degree can probably earn $25,000 per year at 18. We're assuming a middle to upper-middle class background-- no special family connections-- and a reasonable work ethic. With a CS, math, or science degree from a good college, that jumps to about $80,000 at 22. That's a 34% annual growth rate in one's earning potential! (I'm ignoring the career prospects of Communications majors; a startup is much harder than getting 3.0+ in a CS program.) Typical income growth in the work world is 5-7% for average people and 10-20% (with ups and downs) for very ambitious people. I've been running at 17%/year since I left school, but that's likely to slow down as I trade off income acceleration for more interesting work and autonomy. My point is: being able to grow your earning potential at 34%/year, and probably have fun and learn a lot, while surrounded by intelligent people, over 4 years... is not something to walk away from.
Yes, everyone hates college sometimes. The lowest of the lows truly suck. Sleep deprivation. Drunk people. Final exam stress. Realizing that some idiots get in no matter how elite a college you attend. On the whole, though, if you struggle with college the problem is probably with you-- or more specifically, your level of maturity, and college is a great place to improve that.
Mark Zuckerberg could grow (in wealth and earning potential) much faster than 34%/year. College was slowing him down. Same with Bill Gates, Steve Jobs, etc. Most of us are not in that league-- not yet, anyway.
That's just discussing market value. Here's another factor. Forget about the startup dream and focus on the reality (for the middle 90%) of the work world. College is more fun, interesting, and educational than the first 5 years of the work world for most people. Don't throw that opportunity away lightly.
I graduated with honors from a top 10% university and it cost a heck of a lot more than $25k AND I've now been working for 3.5 years and I haven't hit the $80k mark yet. Only a small subset of the skills that I'm marketing right now did I learn in college.
Furthermore, I'm doing better than a lot of my peers. Your numbers are suspect at best.
$25k x 4 = $100,000 opportunity cost for college.
$20k x 4 = $100,000 college debt load (if you're lucky).
8% over 10 years for interest payments = ~$45k.
$245,000 total cost to go to school.
If you figure a $55,000 starting salary after school and do $8,000 yearly increases because you're clever and smart, it will take you 4 complete years to make up the difference AND that's still assuming the same clever and smart person has been working without a degree for 8 years and is still only making $25k/year. (For the curious, the two cross path around $350k total salary earned)
ALSO, that same clever and smart person could have been accruing a whole host of assets with the money they were making every year and could be well north of net worth $250k by the time the college grad gets to net worth $0. That clever and smart person with 8 years experience in the real world could use those assets to do all sorts of things our college grad is still going to have to wait some years to do.
The financial benefit for a smart person going to school and not going to school, in my mind, is irrelevant. When you factor in opportunity cost and debt, that same smart person will have grayed the difference between a college grad and a non-college grad by the time the college grad gets to net worth $0.
And as college tuition inflation continues to outpace all other expenditures in society, I would move more firmly into the drop-out camp.
1) I like that you include the oppurtunity cost because people often ignore it (especially when it comes to graduate school), but you can go to school at night and that vanishes.
2) $25k x 4 is both high and low. It's low for 4 years at an expensive school, it is high for compared to going to a community college for 2 years and then graduating from more expensive 4 year place. My girlfriend went to a state school for a year and then a private school for 3, she definitely saved $15k in one year. That wasn't the plan at the outset but it was a result of the path she took.
3) 8% is way too high of an interest rate. Our loans are between 2 and 6.8%. I'm paying down the 6.8% fast, but at 2 or 3% it's almost free money once you include inflation and the tax rebate.
4) It shouldn't take 10 years to pay back
5) If you are making $25k and living outside of your parents house, you have no money left over to invest. Frankly the difference between $25k and $55k is the difference between sustaining yourself and building up wealth. No matter how frugal you are, it's nearly impossible to get ahead on $25k a year.
All points taken, except 5). In major urban centers, $25k is too little to save up. But in many other parts of the US (especially where I live in NE Ohio), a single person could save a good amount making 25k a year. People around here raise families on that.
Don't forget some people get free rides through college (I did), so they only have to pay for food for 4 years. Also, 25k a year seems a bit optimistic, IMO.
My parents paid for my schooling, so I had a free ride of sorts too. This obviously changes the numbers a great deal, and should certainly factor into decision making.
$25k a year is $12.50/hr. With proper job hunting, this shouldn't be too difficult to find with a high school education.
It depends on your ambitions and your skill set. Average college graduates are definitely not making $80k/year out of school.
CS graduates with decent coding skills can get that much. And in my experience, your major doesn't matter much if you can code. A CS major might make your CV 20% more appealing, and what you'll learn is certainly valuable, but technical skill (not major) is what matters. (I majored in math, not CS.)
Your back of the envelope is dubious. Where are they paying 22-year-olds $80k? Only at soul-sucking corporations and over-funded startups with no fiscal responsibility.
Also, the person with the capability to get a CS/Math/Science degree (from a respectable program) will likely have other potential that fall somewhere between the typical dropout and Gatesian success.
I think the strongest argument to stay in school is that most 18-year-olds don't have the discipline to fulfill that potential, so they'll get more out of a structured environment. I know I was certainly this way. However if you are the exceptional 18-year-old that is driven in some way (whether it be code, art, music, business, whatever), then you probably won't regret jumping.
Yeah, you might be able to get a high-paying recent-grad job but odds are you won't, either because you don't make the cut technically (the bar is high) or because your job-finding, interviewing, and negotiating skills are crap.
Often, it's both-- because you don't make it through a college-assisted placement program into a high-profile company that likes to hire recent grads, and the college hasn't provided any reasonable training on how to go about getting a good job and compensation on your own, you flounder and struggle up a ladder of mediocre tech jobs until you figure that stuff out. You are probably not making $80k/yr during that time.
Oh, I don't know about that. I don't want to get all Kanye about highed ed, but I never understood why university teaching methods are so dependent on the final exam. All the work students do throughout the year is worth very little compared to the final exam. Its a system, imho, that encourages skipping class and binge studying.
It rewards people who can cram well and have good memories, but punishes those who do good work and who aren't good at last minute cram sessions. I've always thought it borderline cruel, especially when the workplace doesn't reflect this. I rarely jerk around M-F and stay up until 4am on Sunday to perform some big task. Its all about rationally addressing problems, breaking them into chunks, and performing those chunks. At universities, its all about irrationally fucking around and doing a last minute cram to get by. I can see why so many talented young men and women would consider dropping out to enter the startup workforce, especially in a down economy that isn't hiring and the sudden realization of having a huge loan debt for the next 10-20 years.
I remember more than a few classes that were structured as 90% final exam and 10% everything else (or more typically 80/20). I never felt this was fair to the student and only encouraged lousy study habits, procrastination, and cheating. Its almost as if the American college experience is one big exercise in not doing things the proper way.
I feel this made me a worse procrastinator than I already was and that it took me several years to shed these bad habits.
Or... it taught you to deal with procrastination head on?
Anyway, this is not universal. My CS program (University of Minnesota) tended to be about 50% assignments / 50% tests. It varied by class of course, theoretical stuff has to go by tests (numerical computing, discrete math, etc). The programming classes sometimes had competitions for bonus points, optimizing a C program in machine architecture, or a head-to-head game competition between programs (that was super fun, and really cut my cleverness down to size).
The technical school I went to gave finals a low weight. You could phone it in and not change much, or you could do really well and bump your course average up a point.
they have software where you can set up a flashcard system if you know what you are doing, and it will time out when you should review what for optimal memorization
1. Don't procrastinate and get distracted. Even if you're taking hard courses, a college course load is rarely more than 50 hours per week. Average in hard majors is probably 35-40 all-in. That's not onerous at all, especially when you're only working 40 weeks per year (including internship).
2. Concentrate on learning interesting stuff, not on the grades. Good-enough grades (3.5+) will come from this for most people in most circumstances. There are hard-ass professors and even unfair ones (although I never had an unfair professor) but they are very rare and their damage is seriously limited.
I find it odd when college students claim they're going to sue professors over grades. Really? In college you're judged on the average of 30-40 (!) mostly independent grades. If you flunk a class and ace the other 35, you have a 3.89 GPA. In the real world, manager as career-SPOF is pretty much the default.
That said, I dislike grade inflation because it adds to the stress of college. If 2.0 were average, then acing a course could cancel out a failure. (When my parents were in college, a 2.5 was a perfectly respectable GPA and 3.0 was actually good.) With 3.2 as the average, flunking a course cancels out 4 As. That sucks. It makes people risk-averse and stressed out.
I've only had one, and it was in a math course (something I'm usually pretty good with). First, he barely spoke english. Second, he just wasn't a good teacher. He even apologized the last day of class saying how bad a teacher he was and that everyone would at least pass. Nope, he failed almost the whole class.
I retook the class the next semester with a different teacher and aced it.
the 18-22 years are periods of extreme income growth for anyone ending up in a skilled field. I didn't go to school and eh, my income had a similar curve during those years. Going from unskilled to skilled is going to make your income curve look pretty goddamn dramatic for a few years, no matter how you go from unskilled to skilled.
The thing is, a degree no longer guarantees a skilled job. I know a lot of smart and well-educated people working retail right now.
Also: do not underestimate middle-class connections. As a kid I mowed lawns to make money. Middle class neighborhood in the central valley. One of the yards I dealt with belonged to the sister of an industry notable; it got me an interview. (it wasn't my first SysAdmin/Programming gig, but it certainly was the most impressive one. For years after, if I really desperately wanted a job I'd use that guy as a reference, and I'd get the gig.) During the depths of the dot-com crash? I cracked under the stress of being the only sysadmin to not get laid off, and quit without another job lined up. My dad, a mid-level IT manager at a university got me an interview with someone who had worked for him as a student who had later done well with his own company.
Those two jobs, I think, made the difference between a pretty good career and a sputtering, so-so career. And really, if I didn't have a dad and a stepdad in the field and if I didn't have computers, compilers, books and people who knew how to use such things around the house from the age of four onward, well, I'd probably have ended up with a semi-skilled career. Whatever you want to call this situation I was born into has helped my career far more than any amount of schooling could.
That said, I think you are likely right about the cultural aspects of College; No matter how rich I become, I suspect I will never fully relate as 'middle class' even though I mostly am. My social skills have suffered quite a lot; I'm probably four years behind my peers who went to school in that area. The thing is, high school is such a horrible experience it leaves you overly misanthropic and cynical. I think College softens this outlook for most people- it took some time for me to soften.
But income-wise? I don't think a degree would have bought me anything. I mean, it might be different now, just because the job market is so shit, and going to school for four years is lightyears better than being unemployed or working retail for four years; but I just wanted to say that school is not what gets you that 30+% salary increase for four years; going from being an unskilled worker to a skilled worker is what does it.
It's also possible that people born without at least middle-class connections can gain those connections by going to college; that could dramatically contribute to the value you take from a degree.
Let's ignore the complexities and focus on crude market value. A smart person with no college degree can probably earn $25,000 per year at 18. We're assuming a middle to upper-middle class background-- no special family connections-- and a reasonable work ethic. With a CS, math, or science degree from a good college, that jumps to about $80,000 at 22. That's a 34% annual growth rate in one's earning potential! (I'm ignoring the career prospects of Communications majors; a startup is much harder than getting 3.0+ in a CS program.) Typical income growth in the work world is 5-7% for average people and 10-20% (with ups and downs) for very ambitious people. I've been running at 17%/year since I left school, but that's likely to slow down as I trade off income acceleration for more interesting work and autonomy. My point is: being able to grow your earning potential at 34%/year, and probably have fun and learn a lot, while surrounded by intelligent people, over 4 years... is not something to walk away from.
Yes, everyone hates college sometimes. The lowest of the lows truly suck. Sleep deprivation. Drunk people. Final exam stress. Realizing that some idiots get in no matter how elite a college you attend. On the whole, though, if you struggle with college the problem is probably with you-- or more specifically, your level of maturity, and college is a great place to improve that.
Mark Zuckerberg could grow (in wealth and earning potential) much faster than 34%/year. College was slowing him down. Same with Bill Gates, Steve Jobs, etc. Most of us are not in that league-- not yet, anyway.
That's just discussing market value. Here's another factor. Forget about the startup dream and focus on the reality (for the middle 90%) of the work world. College is more fun, interesting, and educational than the first 5 years of the work world for most people. Don't throw that opportunity away lightly.