I want to approach this question concretely and with the average student in mind. I will also focus on finding means and expected values rather than variances to keep the amount of calculation manageable and easy to read. As of late it has become popular for people to throw out figures like "college grads earn one million more over their lifetime" or "many college grads are underemployed and can't pay back their huge debt" to show that college is either a good investment or a bad investment.
A few preliminary assumptions:
-The interest earned on debt and investments are both 5%. This is erring on the side of going to college, since the stock market has historically earned more than 5% and many private student loans have interest rates greater than 5%. I'll also assume that college grads aren't using a special federal loan forgiveness program.
-I only want to look at 4 year colleges. I'm too lazy to look up the 2 year numbers and I don't know if the transfer stats are well documented.
-I'll use average salaries. This overestimates returns for both groups since salaries go up over time.
-The best way to measure the quality of an investment is its total lifetime return assuming that all returns (including salary) are invested. Of course in reality one doesn't invest their salary, one spends it on things, but I don't think that this affects the comparison. For either side, no matter how much money you have, spending X amount of money in any given year should have an equal impact on total lifetime return. I don't have an accounting background, but this approach makes sense to me. If any accountants want to weigh in, that would be awesome.
So without further ado let's get thing started. Person A doesn't go to college after high school. Workers with only a high school salary earn 33k on average and have a 10% unemployment rate. This works out to an average salary (for all HS grads) of 30k. Normally one might work for about 40 years, but someone who doesn't go to college can work for 4 extra years. So this works out to 44 years of income with an average income of 30k. This works out to a total return of $4,761,004.68 (remember that you'd never actually see this amount of money). If we use 10% interest, it's $17,742,020.
Person B decides to go to college after high school. There are two cases: they either graduate or they don't graduate. The average 4-year institution 6-year graduation rate is only about 60%. For those who do graduate, let's use 4.5 years as the average time to graduation (source gives 4.3 for private schools and 4.8 for public schools).
So let's work on the assumption that person B doesn't graduate. The average "some college, no degree" income is 37k and their average unemployment rate is about 9%. So for all "some college" people the average income is 34k. Let's assume that our dropout has gone to school for two years before dropping out, for lack of a better statistic. The average tuition at 4 year schools is 20k (not looking at cost of living because it needs to be paid whether one goes to college or not) so this person has paid 40k in tuition before they enter the job market after 2 years. This person can work for 42 years. The total return works out to $4,517,773 for 5% interest. It's $17,917,623 with 10% interest.
Let's instead say that our student graduates after 4.5 years. He pays a total of 90k in tuition and works for 40 years. But in return, he has an average income of 54k and a 5.4% unemployment rate. So the actual average income for all college grads is 51k. This works out to a total return of $5,869,828 for 5% interest and $19,929,442 for 10% interest.
So combine that with our graduation rate statistics and we arrive at the following expected values:
Using 5% interest
No College
$4,761,004
College
$5,329,006
Using 10% Interest
No College
$17,742,020.
College
$19,124,714.
Conclusion
In short: college wins, and by a greater margin than these calculations would suggest. Jobs for college grads are more likely to have benefits like health and dental insurance that aren't included in the salary figure. Also, many people prefer white collar office work over blue collar "working" work even if it pays the same amount of money. Retirement benefits and paid vacations are also more common for college grads.
Another issue that I ignored is the difference in how much colleges cost. 20k is a common figure for in state flagships, but some people pay a full 40k per year in tuition plus really overpriced on campus housing. These people are in a very bad position, especially if they are among the 5% of all college grads who are unemployed.
One thing that surprised me is that changing the interest rates didn't affect the results as much as I thought it would. Perhaps I calculated something incorrectly.
Sources:
Graduation rates: http://www.american.com/archive/2010/apr il/how-bad-are-our-graduation-rates
Salaries: http://www.bls.gov/emp/ep_chart_001.htm
Years to graduate: http://askville.amazon.com/years-average -student-graduate-college/AnswerViewer.d o?requestId=13007524
"The mountain is a quarry of rock, the trees are a forest of timber, the rivers are water in the dam, the wind is wind-in-the-sails"
-Martin Heidegger
At 6/4/11 01:56 AM, Al6200 wrote: -I only want to look at 4 year colleges. I'm too lazy to look up the 2 year numbers and I don't know if the transfer stats are well documented.
Good call. Every employer I've seen is either looking for a bachelor degree for reasonable pay or no education for minimum wage (and in one instance a bachelor degree for minimum wage, which is bullshit). Seems no one hires two-year degrees.
As for your question: yeah, it's worth it. See paragraph above, second sentence.
There are a lot of thngs I am skeptical of/disagree with in this, but you should really check it out (don't let the title put you off).
One major criticism of your argument that I will make is that it assumes relatvely stable economic conditions in the future such as employment rates and wages, when it's clear that things are going to be a hell of a lot worse in america over the next decade compared to the past decade.
I mean, technically this may make colelge and even better investment, because the un-college educated by be disadvantaged by a greater degree by these conditions than they are now, but it definitely needs to be considered.
The only good mike brown is a dead mike brown.
At 6/4/11 03:27 AM, Dawnslayer wrote: Good call. Every employer I've seen is either looking for a bachelor degree for reasonable pay or no education for minimum wage (and in one instance a bachelor degree for minimum wage, which is bullshit). Seems no one hires two-year degrees.
It depends on the 2-year program. A 2-year or 3-year vocational program from a community college can actually be super useful, especially if it involves some sort of apprenticeship.
Basically, a college degree or diploma is useful in the job market if it provides you with vocational skills that you couldn't otherwise get. For example, if I want to be a professional engineer in Canada, I actually need a degree in engineering from an accredited institution. However, a degree in say, art history from my university would be a lot less practical (and much more expensive) than a program in masonry from the community college a few kilometers away.
There are a couple elements the flat study didn't take into account. Oversaturation and overqualification.
In places where BAs are extremely common the value of such a degree is greatly diminished. In place like Seattle, Minneapolis, and so on where the % of people holding BAs is close to if not above 50%. In these places BAs are so common that the demand cannot keep up with the supply.
On the other end, many lower end jobs actively avoid people with degrees. These jobs may be looking for long temr people, or employees that will take the job seriously. They feel that a person with a higher degree will either fly the coup the minute a better offer comes, or that they will not be all there because they resent the job. This sentiment occurs everywhere.
In places where you have oversaturation, the combination of these two can be devastating. In Seattle there are numerous college grads who are unemployed because of this combination. With overqualification serving as a barrier to lower level employement, and over saturation pushing the employees closer and closer to that employment, the opportunities and pay are severly diminished.
Take the right course and don't do it on a student loan. Thats best course of action.
ya hear about the guy who put his condom on backwards? He went.
I honestly believe Engineering is one of the few degrees that will get you anywhere in college, otherwise you'd probably be better off going to a trade school.
First, you should think about what you want to do. Does it require a degree? If not, then don't worry about it, if so, get busy. Just a few things however. Go to school the least expensive way you can. Go to community college for your first 2 year and then to a state school. I wish I would have done this. If I did, my loans would be less than half of what they are. Second if you don't go to school, it is very difficult to get into any kind of a job with decent pay that is not a trade. In addition, even if you do get in, you may be passed over for promotions, even though you are qualified, if not more so than others, because you do not have a degree. Just things to ponder.
Good Luck to you!
I agree with Camarohusky on this. A problem with your argument is that it assumes a constant rate of college educated work force, which isn't happening. As more and more online programs become available, the worth of a BA decreases tremendously. Furthermore, especially in law school and past in the legal field, there are people who are being paid less than 50% from their piers, some of whom (like myself) have only been there maybe 5 years longer than them.
On the flip side, best major to go into as an undergrad? Petroleum Engineering. HAH
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"Question everything generally thought to be obvious."-Dieter Rams
At 6/4/11 03:38 PM, BrianEtrius wrote: As more and more online programs become available, the worth of a BA decreases tremendously.
I have to disagree with this. Savvy employers see the difference between a DeVry degree and a regular degree.
At 6/4/11 03:46 PM, Camarohusky wrote: I have to disagree with this. Savvy employers see the difference between a DeVry degree and a regular degree.
You're assuming that everybody's a savvy employer. That's not true. College degrees, for the most part, influence your first job. That's about it. 10 years later, no one really cares what college you went to.
Look at it this way: The first job interview will care if you went to a State University opposed to say Northeastern. Your next professional interviewer probably won't care as much. Why wouldn't it be different with an online degree? Companies are looking for proven workers, not whether or not mommy and daddy could put you through an Ivy League.
New to Politics?/ Friend of the Devil/ I review writing! PM me
"Question everything generally thought to be obvious."-Dieter Rams
At 6/4/11 03:27 AM, Dawnslayer wrote:
Good call. Every employer I've seen is either looking for a bachelor degree for reasonable pay or no education for minimum wage (and in one instance a bachelor degree for minimum wage, which is bullshit). Seems no one hires two-year degrees.
You haven't been looking very hard then.
This is assuming all Bachelor Degrees are the same. Asides from the obvious issue of grades, Final Year Projects are a make or break an engineer. One Electrical Engineer with an impressive project (Such as maybe embedding meta-data in audio or video) is far more likely to get the job than his peer who did the same degree but an awful project (A simple logic based circuit, or even a scientific study).
Those who go into a subject and do a bad project or specialize in an obscure or impractical field become untouchables in the employment world. No one wants an Engineer who did a scientific study, no one wants a Bioligist who did a social study. They're looking for a skillset and they want to see what you can do with it.
I think it's pretty pointless to average out all colleges and careers.
There's highly useful degrees and highly shit ones. For instance my sister went to optometry school for 5 years and is starting on a 5 figure income at 23. That program has 100% placement.
That's a good investment.
Meh I sort of look at it from a work vs. freedom perspective, sure you might get a good job as say a scientist, but if the hours are long, the work is long and hard, and your pay is shrinking over the years then it's lost much appeal, my friend is an meteorlogist for example, and before I was trying to get her to quit smoking, but she's always so stressed out it would seem not quiting is a better idea because its the only thing that gives her any relief. Sure she's a single parent but still, she's not rich at all even though she works at one of the most well known laboratories in the nation.
I looked up a top 10 most happiest jobs and I remember 3 main ones, teachers, surgeons and lawyers. But I'd say if you're a successful buisnessman you have the best job ever, you're your own boss, you get a shitton of money and you have influence against the government, as opposed to say a scientist where the government or company has influence on you, on top of this you get away with alot of bullshit and can have as many vacation days as you want, I don't see the downsides to it.
"If you don't mind smelling like peanut butter for two or three days, peanut butter is darn good shaving cream.
" - Barry Goldwater.
I'm just curious, do the income stats for college graduates adjust for IQ? Do they adjust for the fact that some students who go to college are possibly more intelligent, creative, and/or productive than the average individual and so would probably earn more anyway even if they did not go to college?
There are obviously some professions that require bachelors, graduate, or even doctoral degrees, but still, we have to be careful not to confuse CAUSE with effect.
I'm also wondering if this takes into account the difference between 1. Going to college 2. Not going to college but getting vocational training [like my parents did] or an internship, or an apprenticeship, etc. 3. Not going to college and going straight into a job
On a moving train there are no centrists, only radicals and reactionaries.
At 6/4/11 11:26 PM, SmilezRoyale wrote: I'm just curious, do the income stats for college graduates adjust for IQ? Do they adjust for the fact that some students who go to college are possibly more intelligent, creative, and/or productive than the average individual and so would probably earn more anyway even if they did not go to college?
IQ tests only convey the persons ability to perform IQ tests. College exams are intended to show the persons knowledge/ability in a skill. Their projects show application of skill.
The effect is more important than the cause in an industry scenario. They want to see how well you will work and not how well you could work.
At 6/4/11 11:00 PM, Warforger wrote:
But I'd say if you're a successful buisnessman you have the best job ever, you're your own boss, you get a shitton of money and you have influence against the government,
The problem is becoming a "businessman" in the first place , unless you were born into a rich family or one which already has a family business in the first place it takes a lot of hardwork and frankly luck to get into that position regardless of personal skill.
Also some people aren't just cut out for that type of life, you need to be a people person and if your not willing to take advantage of people you will be at a constant disadvantage against your competition.
"Work hard, sleep hard, play hard!"
At 6/5/11 02:10 PM, Chris-V2 wrote:
IQ tests only convey the persons ability to perform IQ tests. College exams are intended to show the persons knowledge/ability in a skill. Their projects show application of skill.
IQ tests do test intelligence but only induction and not any kind of emotional or social intelligence which correlate more highly with success then IQ.I agree with smiley though, these factors need to be controlled for. I imagine students who go to college come from richer and more connected family's on average , and probably are willing to work harder and on average are smarter then there peers.
"Work hard, sleep hard, play hard!"
From actually looking at the job growth statistics for Pennsylvania (maybe its similar in other states) You should at least get some college education because that's where the vast majority of job growth will be. Even if you only got an associates degree you would have a huge advantage over someone who only went to high school.
I don't think the question is if you should go to college, but what you should study at college. It's very easy to spend a huge sum of money on a BA because you're interested in the subject only to find out you've severely limited your career path. Stay away from the humanities if you're more concerned with career preparation than intellectual enrichment. Do not be taken in by fascinating literature and philosophy courses.
At 6/4/11 11:26 PM, SmilezRoyale wrote: I'm just curious, do the income stats for college graduates adjust for IQ? Do they adjust for the fact that some students who go to college are possibly more intelligent, creative, and/or productive than the average individual and so would probably earn more anyway even if they did not go to college?
No, that isn't taken into account. However, in my experience, it doesn't make that much of a difference. Dumb college students get hired to great jobs all the time, since getting a high GPA and passing an interview usually does not require very high intelligence. On the other hand, I've never seen a firm willing to hire a smart high school student onto a professional career track (even though they're probably willing to hire a college grad with an irrelevant major). Even if the high school grad performs exceptionally well in their low level career track (say, as a sales associate at Wal Mart), it won't matter. Low level career tracks almost never promote to professional career tracks and bosses aren't really looking for intelligence in their low level staff, anyway.
At 6/4/11 09:53 PM, poxpower wrote: I think it's pretty pointless to average out all colleges and careers.
There's highly useful degrees and highly shit ones. For instance my sister went to optometry school for 5 years and is starting on a 5 figure income at 23. That program has 100% placement.
That's a good investment.
No, I think that averages are useful, even if they don't tell that much to above-average students. You might also notice that I left out students who went to graduate school.
I have no idea what optometry school is. If it's an undergraduate program, than it's pretty good if most of its students are earning 100k+ after graduation. It's also probably really competitive, and not all that relevant to the students who are borderline academically and not sure if they want to go to college.
At 6/5/11 04:17 PM, adrshepard wrote: From actually looking at the job growth statistics for Pennsylvania (maybe its similar in other states) You should at least get some college education because that's where the vast majority of job growth will be. Even if you only got an associates degree you would have a huge advantage over someone who only went to high school.
I think that this is true. A lot of places won't even consider you if you don't have some kind of a college degree.
I don't think the question is if you should go to college, but what you should study at college. It's very easy to spend a huge sum of money on a BA because you're interested in the subject only to find out you've severely limited your career path. Stay away from the humanities if you're more concerned with career preparation than intellectual enrichment. Do not be taken in by fascinating literature and philosophy courses.
I used to agree with this, but now I think that it is not always true. There are a handful of very good jobs for students with humanities/liberal arts degrees at banks, consulting firms, hedge funds, business analysis and think tanks. In terms of exit opportunities, pay, and experience, they are stronger than pretty much all technical/engineering jobs. However, realistically, they are only accessible to students who go to top 10ish schools or have connections before going to school.
"The mountain is a quarry of rock, the trees are a forest of timber, the rivers are water in the dam, the wind is wind-in-the-sails"
-Martin Heidegger
At 6/5/11 09:58 PM, Al6200 wrote:At 6/4/11 11:26 PM, SmilezRoyale wrote: I'm just curious, do the income stats for college graduates adjust for IQ? Do they adjust for the fact that some students who go to college are possibly more intelligent, creative, and/or productive than the average individual and so would probably earn more anyway even if they did not go to college?No, that isn't taken into account. However, in my experience, it doesn't make that much of a difference. Dumb college students get hired to great jobs all the time, since getting a high GPA and passing an interview usually does not require very high intelligence. On the other hand, I've never seen a firm willing to hire a smart high school student onto a professional career track (even though they're probably willing to hire a college grad with an irrelevant major). Even if the high school grad performs exceptionally well in their low level career track (say, as a sales associate at Wal Mart), it won't matter. Low level career tracks almost never promote to professional career tracks and bosses aren't really looking for intelligence in their low level staff, anyway.
Anecdotes are not helpful if you are trying to be concrete about this.
My point is that, with someone like Bill Gates or Mark Zuckerberg, was the fact that they had gone to Harvard the reason they became billionaires, or was the fact that they were exceptionally creative individuals with a fair degree of intelligence why they became billionaires and ALSO why they got into Harvard?
We know there is a strong correlation between IQ and income, so the college education argument MUST adjust for this as well.
On a moving train there are no centrists, only radicals and reactionaries.
I did not go to college and I make more money than ALL of my rather large group of friends all of whom have gone to college barring one. Now factor in that I was am out of work on workers comp and only making 2/3s of what I normally do(for a short time) and yet still make more. I also have no debt and have climbed farther up the corporate ladder than my fellows. That 4 years has given me a leg up on my college going friends. Now this may just be the current economic times but I have to say while my friends all are working in jobs they don't like and that there degrees were not meant for. Where as I am already in a career that I enjoy.
NG Autism Club
At 6/7/11 02:12 PM, GarvielLoken wrote: I did not go to college and I make more money than ALL of my rather large group of friends all of whom have gone to college barring one. Now factor in that I was am out of work on workers comp and only making 2/3s of what I normally do(for a short time) and yet still make more. I also have no debt and have climbed farther up the corporate ladder than my fellows. That 4 years has given me a leg up on my college going friends. Now this may just be the current economic times but I have to say while my friends all are working in jobs they don't like and that there degrees were not meant for. Where as I am already in a career that I enjoy.
Actually, that is completely fine. Not sure when, but it seems to be the theme now a days, once you finish high school, go to college. I had a teacher once that actually said, "You know, it's ok not to want to go to school any more." I actually appreciated that comment. In the US, you are forced to be in school for almost a decade and a half by the law in most circumstances. When you remove that force, students feel liberated and happier. I had a football coach that said once to a guy who was failing his classes and was OBVIOUSLY not going to finish college "You know, you might of been better off just getting a job. At least if you did that, you wouldn't of wasted 2 year of your life and have this debt you didn't need". That is harsh, but true.
HOWEVER, I will say I don't agree with just not having a back up plan like you did. I work at a technical school at a financial aid office. I routinely see people like you. They just got a job straight out of school, worked there for a number of years with a great salary (some were doing 50k for just wielding!!!). The economy went busted now, and now they can't find anywhere and now coming to school to now look for a career. And since they waited so late, most of them have children or bills they can't afford any more, and wish they actually went to school instead of waiting. So, pretty much now they filpped flopped. Their friends are actually doing better, because they have a degree and can easily move on somewhere else.
For Georgia, USA, the higher the degree, the more you generally get paid. If you just want to get a masters, your starting salary for teaching is around 40k just a community college. Looking, a lot of my friends did the just get a job route, while I decide to pursue a 4 year degree. For the first 5 years, they were better off. They had money, cars and enjoying life while I struggled just paying for books. However, two years after finishing, I'm 10x better off than they are. They either unemployed since the economy which tanked, or they are stucked at the job which now is not as appealing since the cost of living trippled in 5 short years. They are worried about getting milk for their children, and I'm more of less just worried about getting milkshake for my lunch.
I strongly believe that college is a good investment. Their are experinces that college will give you that you will miss out on if you go straight from high school into the adult world.
At 6/4/11 03:27 AM, Dawnslayer wrote:At 6/4/11 01:56 AM, Al6200 wrote: -I only want to look at 4 year colleges. I'm too lazy to look up the 2 year numbers and I don't know if the transfer stats are well documented.Good call. Every employer I've seen is either looking for a bachelor degree for reasonable pay or no education for minimum wage (and in one instance a bachelor degree for minimum wage, which is bullshit). Seems no one hires two-year degrees.
As for your question: yeah, it's worth it. See paragraph above, second sentence.
For a person who is from a developing country, going to college and finish a Bachelors degree is always a must. Its the only way we can improve our lives and compete in the corporate world.
At 6/8/11 04:22 PM, pt4me2014 wrote: I strongly believe that college is a good investment. Their are experinces that college will give you that you will miss out on if you go straight from high school into the adult world.
like being in debt up to your eyeballs and stuff, or getting skilsl relevant to actually working
seriously, if you take a college course in something that isn't going to be directly helpful in you getting a job, at this point in time, you're a complete fucking moron
The only good mike brown is a dead mike brown.
At 6/10/11 01:29 AM, SadisticMonkey wrote:At 6/8/11 04:22 PM, pt4me2014 wrote: I strongly believe that college is a good investment. Their are experinces that college will give you that you will miss out on if you go straight from high school into the adult world.like being in debt up to your eyeballs and stuff, or getting skilsl relevant to actually working
seriously, if you take a college course in something that isn't going to be directly helpful in you getting a job, at this point in time, you're a complete fucking moron
In some ways I envy the Art History majors at my school. They get credit for traveling to fun places like France and Italy and they spend a lot of their class time visiting museums and talking about what paintings they like. They also get to talk about interesting subjects with rich and interesting people who spend their free time collecting expensive pieces fo art. I doubt they ever have to pull an all-nighter or give up on having fun to go study.
For the Art History majors who can get good careers, it's a pretty sweet deal. However, if you can't land an elite career than you're pretty much screwed. For the children of the rich and connected, this isn't a big deal. But for a middle class guy like me who needs to take debt to go to school, it's unthinkable. I have to study a practical subject.
"The mountain is a quarry of rock, the trees are a forest of timber, the rivers are water in the dam, the wind is wind-in-the-sails"
-Martin Heidegger
This is why they're called the "liberal arts," i.e. study for free men. In other words, subjects to study for people who have enough time and money floating around to spare.
For myself college was not a good investment.
$80,000 for tuition and cost of flying minimum, and that's not including cost of getting a private pilot's license and living in a city of 1 million for two years, which is absurdly expensive when you're use to living in a town of 15,000.
Non-college route was around $50,000 including living and PPL, and I only lived in Lethbridge for 6 months, total time to complete my training was 9 months.
It cost less, took less than half the time, and I managed to beat other student pilots to the punch when it came to job hunting. The only downside is that I never got a certificate saying I went to a college. Which really doesn't matter once you have a job in a chosen field.
The real plus of going to a college is job placement. Last I heard, Mount Royal had a deal with Jazz Airlines where the top two graduates got hired on as co-pilots.
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