Just How Hard is University to Overcome
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@PSX_Defector said in Just How Hard is University to Overcome:
$1400 a month would be for the $135K number you are throwing around with a nutso 30 year note at usury rates of 8%.
The rate that I used was 4.3%, the one directly from the US Department of Education that is the lowest one available. Grad students and professionals all have to pay higher rates. I specifically went for the most conservative possible numbers to ensure that you couldn't argue that I used an artificially high number.
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@PSX_Defector said in Just How Hard is University to Overcome:
IOW, you read a blog verses the Wall Street Fucking Journal. Someone with an agenda versus someone who is paid to research this shit day in and day out.
One, it wasn't a blog. Two, you didn't provide any number at all. I didn't dispute the WSJ at all, only pointed out that you missed the conversation and are using a number that doesn't mean anything here. While the WSJ is a joke, that's not an issue here. That you are misunderstanding how the numbers apply is the issue. The WSJ is talking about average loan amounts. You'll need to explain how we use that to figure out the total value of college because I'm unclear how you think you will use that to do math as we've already shown that the loan amount doesn't really matter.
You are trying to pick the argument apart by saying things that don't apply and attacking things I didn't even remotely say or suggest to draw attention away from simple math.
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@PSX_Defector said in Just How Hard is University to Overcome:
$135K is the MSRP for a for-profit, two year "school" like ITT Tech. The MSRP for Texas A&M is $27K a year. http://admissions.tamu.edu/freshman/cost
$135K is a random number that Dashrender picked on a line for showing a loan vs. cash balance. You are not following the discussion at all.
The numbers we are working with are the "total average amount paid" for college in the US. Not an MSRP, not unaccredited schools. You should read the thread before picking it apart because this stuff doesn't make any sense.
The average is the average. Ranting that only fools pay average is silly. I might as well rant that only fools go to college. Does that get us anywhere? No, trying using the governments official figures and show that college is making sense financially. That's what we are doing here.
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@scottalanmiller said in Just How Hard is University to Overcome:
@PSX_Defector said in Just How Hard is University to Overcome:
$1400 a month would be for the $135K number you are throwing around with a nutso 30 year note at usury rates of 8%.
The rate that I used was 4.3%, the one directly from the US Department of Education that is the lowest one available. Grad students and professionals all have to pay higher rates. I specifically went for the most conservative possible numbers to ensure that you couldn't argue that I used an artificially high number.
Which is for the subsidized loans. Which is capped at $3500 per year. Total cap is $9K per year for both for undergrad.
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized
The rest if you were to use your numbers would be on private loans, which are not at 4.3%. Not usually 8%, but not by much.
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@PSX_Defector said in Just How Hard is University to Overcome:
Using all these numbers, you expect a person fresh out of high school, without a golden crotch to lean back on, to make $60K out the fucking gate?
No, I expect $25K or maybe $30K.
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@PSX_Defector said in Just How Hard is University to Overcome:
@scottalanmiller said in Just How Hard is University to Overcome:
@PSX_Defector said in Just How Hard is University to Overcome:
$1400 a month would be for the $135K number you are throwing around with a nutso 30 year note at usury rates of 8%.
The rate that I used was 4.3%, the one directly from the US Department of Education that is the lowest one available. Grad students and professionals all have to pay higher rates. I specifically went for the most conservative possible numbers to ensure that you couldn't argue that I used an artificially high number.
Which is for the subsidized loans. Which is capped at $3500 per year. Total cap is $9K per year for both for undergrad.
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized
The rest if you were to use your numbers would be on private loans, which are not at 4.3%. Not usually 8%, but not by much.
I understand. But I was erring on the side of being ridiculously conservative so that no argument could be made against the math... no matter how you adjust it for the "real world" the situation becomes worse for the university path. I wanted to ensure that the level to which it was, on average, returning a negative ROI could not be questioned.
If 4.3% is lower than possible, which I fully agree with, then it just makes the case stronger.
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Neither college grads nor high school grads make $60K with any frequency, even five years after college. It can happen, of course, but the average say that it is rare. Both parties are pretty poor, on average, for the first decade at least. Neither can save or pay off very much. But that's not really important. What is important is how they perform relative to each other.
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Also, just to note that I do read the articles, WSJ even states that they didn't do any research for the data in that article. That article is just interviewing a publisher who spouts off nonsense that is his opinion, like that degrees are as necessary today as they were decades ago. He says nothing to back it up and there is no reason that we are to expect that he's even versed on the matter. He's not an expert that we know of, it's just a random quote that the WSJ included for effect. That article is a paid advertising piece and doesn't even try to hide that fact. It's just a collection of quotes from their advertiser.
Even by WSJ standards it is poor, but the important bit is that the WSJ points out that no research was done very clearly in the article. At least in reference to the debt numbers provided. That's a one year old number that their advertiser claims to have figured out based on government data... which can't be accurate as the government does not have all of that data in a way that they could make that report. It only applies to certain subsets of that data (anyone putting college on a CC would be missed, for example, or anyone taking family loans.)
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The WSJ article, while I don't think much of it, ALSO had, if you kept reading, more information that the debt was split in two portions. So the full debt was $30,867 + $35,000 for a total average debt of $65,867+. That's a lot higher than you were thinking that it said.
And that's just average debt, a year old numbers (we expect this to be higher now) and doesn't include the cash payments made along the way which, we expect from the other numbers, to be close to the same as the debt numbers, which makes total sense from how we observe students in real life.
So if we want to work with this, we can do so. If the averages are the numbers that we had originally for cost we are able to work out the average cash to debt mix. But, we know that this doesn't change the overall situation. But it is very interesting to know where the average loan ratio falls along the curve in this case.
But we lack the numbers as to average interest rate... we only know that it is greater than 4.3%. But is it 4.4% or 7.9% or, likely, somewhere in between? Hard to say.
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@scottalanmiller said in Just How Hard is University to Overcome:
But we lack the numbers as to average interest rate... we only know that it is greater than 4.3%. But is it 4.4% or 7.9% or, likely, somewhere in between? Hard to say.
This is why I say don't spout about shit you don't know about.
You didn't even know the difference between subsidized/unsubsidized federal loans and private loans. Then there is what it says it costs and what you actually pay. Then there is the real amount you borrow to do school. Not to mention this magical money fairy bringing oodles of cash when you are 18.
Your research is flawed, that's all I'm going to say about this.
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@PSX_Defector said in Just How Hard is University to Overcome:
@scottalanmiller said in Just How Hard is University to Overcome:
@PSX_Defector said in Just How Hard is University to Overcome:
@scottalanmiller said in Just How Hard is University to Overcome:
The more that they have to borrow, the harder it is to pay back. So that's why I showed how devastating a student loan would be on average.
Then use the average, not some DeVry jizz fest number.
$135K is insane. $35K is nuts, but that's the cost of a new car now, not impossible to pay off. Repayment would be on 30 years, not 85, making the note somewhere around $1400 a month if the rate was good. Even if someone racked up a huge number, it would most certainly fall under the rule of allowing someone to discharge it in Chapter 7.
No matter how insane it feels, those are the average numbers.
Did you not read the WSJ article?
Average for 2015 is $35K. $135K is insanity, cherry picked bullshit numbers to make your argument.
@scottalanmiller said in Just How Hard is University to Overcome:
@PSX_Defector said in Just How Hard is University to Overcome:
$35K is nuts, but that's the cost of a new car now, not impossible to pay off. Repayment would be on 30 years, not 85, making the note somewhere around $1400 a month if the rate was good.
Absolutely, but keep in mind that those are payments that people not having gone to college can, on average, make as well.
Guess I wasn't clear.
$1400 a month would be for the $135K number you are throwing around with a nutso 30 year note at usury rates of 8%. $35K would be somewhere around $250 a month on a 30 year repayment plan. $35K would most likely be on a 10 year plan, making the payment $425. Same $135K would be $1600. Using the average, the real average, is much more realistic. Crazy, but not insurmountable. And certainly more possible with a BS from Texas A&M in your hand than a BA from the school of hard knocks.
Not getting into this magic saving of huge sums of money when you are starting to work. That's utter bullshit. The only way one could do that at 18 to 22 would be to either slang rock out on the streets or you came out of the golden crotch of someone already rich. Someone would have to be clearing $27K a year NET before that could even start to make sense. Assuming the standard deduction for federal plus a low tax state you would need to not have a single expense and make $16/hr from the get-go just to get to that number. And since we live in the real world, we need a place to live and eat, tack on ~$1500 a month for bare expenses.
Using all these numbers, you expect a person fresh out of high school, without a golden crotch to lean back on, to make $60K out the fucking gate?
No, only through nepotism would that happen. Which leads to the real crux of the argument. It doesn't matter how hard you work, or how good you are at what you do. Your fate is decided well before you even attempt it. Sure, some people can somehow break loose and become richer than astronauts. But the only surefire way to make lots of money is to come from money to begin with. Hence why I will probably never have millions.
You and I suffered the same issue - Scott is only comparing a person who had cash in the bank to pay for college to themselves if they didn't pay for college, instead the money could go into an investment.
And that's a fine discussion on it's own - but it's a rather pointless one as the number of people that are in that situation are so small to not have a real impact on the college situation at all.So this leaves us with Joe average, who graduates HS with zero cash in hand. This person has two options - take a loan for college, or skip college until much later in life (if ever).
I think this discussion is much more worthwhile. It covers the mass majority of the US.As PSX said (and so did I earlier) the 18-22 year old will in most cases make next to nothing. Hell today they are often continuing to live with their parents, that fact would allow them to save a bit more of their near nothing take home.
Scott's numbers in the OP show that non college goers make 1.8 Mil lifetime while college goers make 2.4 Mil, that says that a non college (NC) averages 40K over 45 years (20-65) whereas the college goer (CG) makes an average of 60K/yr over 40 years.
What we don't know is, how rapidly the CG gets to 60K vs how rapidly the NC gets to 40K, and of course they both have to end up somewhere north of those numbers to account for the significantly lower incomes they'll make when they are younger.
I know I didn't get to the 40K number until I was 26, so my non college self spent 6-8 years well below that number.
Again, if the numbers were available to show that the earning timeline of NC vs CG, that would show this much better than the simple math, which while all of course true in it's own right, isn't anywhere near the whole story.
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@scottalanmiller said in Just How Hard is University to Overcome:
Neither college grads nor high school grads make $60K with any frequency, even five years after college. It can happen, of course, but the average say that it is rare. Both parties are pretty poor, on average, for the first decade at least. Neither can save or pay off very much. But that's not really important. What is important is how they perform relative to each other.
This is the linchpin. Does Joe, end up better after taking loans for college, or skipping college? Again it comes to earning averages, and I guess Scott's numbers say College Goers really don't make that much more than non on the averages across the nation. Though I still think it's more important to look more localized than that, and more income based than that.
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I think the important thing here is that no one is doing these calculations. Students aren't doing them for themselves, and guidance counselors certainly aren't doing them. It's almost criminal. Guidance counselors simply cite that "you'll earn more over time with a degree" and try to get the student in to the most prestigious college they can. High Schools keep track of how many of their graduates are going on to university and it's a feather in your cap if you're doing better than average.
We need to work with young people and support initiatives like Mike Rowe's :
http://profoundlydisconnected.com/ -
@Mike-Davis I like Mike Rowe, didn't know he had a foundation though!
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I must say, if i had not gone to college and racked up debt and started investing at 18 instead of 28, id be retired at 40 as a millionaire. Just a couple hundred dollars a month for ten years adds up quickly, even at the average of 8%.
Making up for that time means i have to put thousands away each month now, which is just about impossible.
Then again, try telling that to an 18 year old kid.
Also, when and why is college so expensive now? As recently as the mid 90s you could go to a state university for like a thousand dollars per quarter, max. Now it is ten times that much. Are kids getting ten times the value? I highly doubt it. -
@momurda said in Just How Hard is University to Overcome:
Then again, try telling that to an 18 year old kid.
I did once. I told my cousin when he got an inheritance available to him at 18 that he needed to skip college and put the money into retirement immediately. It was enough for him to retire at 65 without putting away another penny for the rest of his life. It was a guarantee of retirement. It would have meant freedom and no stress. He put it into college instead and didn't have quite enough to gradate. And ended up not even finishing college so it was extra bad.
So no luck telling the 18 year old.
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But, I ALSO told a fourteen year old the same thing and he listened. He didn't just listen to "dont' just go to college", he also listened to "don't wait until you are 18 to start your career." He jumped on it immediately at 14 and has been doing IT since then and is now 18. He now has a strong resume, tons of experience and is a non-entry level IT pro at just 18 years old while his friends that want to go into IT but demand to go to college and still three months away from entering college and then need four to six years until they will enter the work force. He won't just have 4-6 years jump on them in this case, but 8-10 years! Eight years longer career is enormous! And making money all that time, never going into any debt or wasting money where it isn't needed.
There is little chance, with that amount of a lead, that any amount of education can ever help his classmates to catch up. It's an insurmountable lead. It is likely going to be six to eight years FROM NOW before the kids in college are hoping to find a job like he has TODAY. That's insane.
Oh, and that's @Mike-Ralston
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Colleges are more expensive now because no one is holding them accountable to their value. Look at the cost difference between community college and some private 4 year schools. College can be done for less, but their is no motivation on the part of private schools to do it.
Imagine if they didn't have endless streams of unsecured loans that can never be defaulted on. They would look at each student and figure out the earning potential of the student and then decide if they would be able to pay back the loan. That would be a game changer.
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@scottalanmiller said in Just How Hard is University to Overcome:
But, I ALSO told a fourteen year old the same thing and he listened. He didn't just listen to "dont' just go to college", he also listened to "don't wait until you are 18 to start your career." He jumped on it immediately at 14 and has been doing IT since then and is now 18. He now has a strong resume, tons of experience and is a non-entry level IT pro at just 18 years old while his friends that want to go into IT but demand to go to college and still three months away from entering college and then need four to six years until they will enter the work force. He won't just have 4-6 years jump on them in this case, but 8-10 years! Eight years longer career is enormous! And making money all that time, never going into any debt or wasting money where it isn't needed.
There is little chance, with that amount of a lead, that any amount of education can ever help his classmates to catch up. It's an insurmountable lead. It is likely going to be six to eight years FROM NOW before the kids in college are hoping to find a job like he has TODAY. That's insane.
Oh, and that's @Mike-Ralston
Would that be the job he has at NTG?
