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Old 06-30-2010, 06:33 AM
 
Location: Virginia Beach, VA
5,522 posts, read 10,203,775 times
Reputation: 2572

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Came to work today, and saw this article from Business Week

college-big-investment-paltry-return: Personal Finance News from Yahoo! Finance

According to this, a large majority of college graduates would be better off bypassing college, and simply investing the money they spent on it.

The ROI on the S&P over the past 30 years was more then 466 of 554 colleges in the study.

Just more evidence that if you arent going to a top school and a top program, or you dont have a free ride, you probably shouldnt even bother with college at all. Youd be better off working at McDonalds and investing the money you would have spent on your piece of toilet paper, then fueling the higher education racket.
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Old 06-30-2010, 07:58 AM
 
22,768 posts, read 30,751,535 times
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Quote:
Originally Posted by Randomdude View Post
Just more evidence that if you arent going to a top school and a top program, or you dont have a free ride, you probably shouldnt even bother with college at all.

^ this is a ridiculous statement, and the study was a bit silly.

it spends all this effort trying to paint a picture that the school you attend is the determining factor in this "ROI."

Not all data analysis produces useful conclusions. Anyone with good sense can see that what you study, what skills you build while in college, are much better indicators of what a person will earn. the article even concedes this, by saying, "Advanced and professional degrees, however, may be a bigger differentiator in the labor market, with bigger payoffs."
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Old 06-30-2010, 08:37 AM
 
Location: Virginia Beach, VA
5,522 posts, read 10,203,775 times
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Quote:
Originally Posted by le roi View Post

^ this is a ridiculous statement, and the study was a bit silly.

it spends all this effort trying to paint a picture that the school you attend is the determining factor in this "ROI."
No, its actually trying to paint a picture that its largely a myth that a bachelors degree is lucrative, and often simply a bad investment. It proves this by pointing out that the return on investment for 85% of schools graduates was lower then what they would have obtained by making what the average high school grad does, and investing the money they would have otherwise spent on school.





Quote:
Originally Posted by le roi View Post
Not all data analysis produces useful conclusions. Anyone with good sense can see that what you study, what skills you build while in college, are much better indicators of what a person will earn.
No they arent. I have no doubt a graduate with an English degree from Harvard has more earning potential then a graduate with an Engineering degree from a third rate college.


Quote:
Originally Posted by le roi View Post
the article even concedes this, by saying, "Advanced and professional degrees, however, may be a bigger differentiator in the labor market, with bigger payoffs."

The only reason for this is because the labor pool is much smaller. Without a large labor pool to select from, wages will tend to shift upwards for all graduates.

What this is illustrating is that the value of a bachelors degree, around 85% of the time, isnt worth the paper its printed on. Most of us with bachelors degrees would have done better just investing the tuition, and getting a job flipping burgers.
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Old 06-30-2010, 08:59 AM
 
22,768 posts, read 30,751,535 times
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Quote:
Originally Posted by Randomdude View Post
No, its actually trying to paint a picture that its largely a myth that a bachelors degree is lucrative, and often simply a bad investment.
right, and the WAY it attempts to do this, is using the flawed method i described.

Quote:
It proves this
it doesn't prove dick. not only does it include people who did not actually FINISH college (state U's have to maintain diversity in freshman classes, leading to high attrition rates), it also sweeps the uselss majors in with the useful ones, and it also doesn't include financial aid in the ROI calculation. furthermore it does not account for cost of living disparity in the US. Absolute wages are a poor metric. Using this metric gives colleges in California and New England inherent advantages by not adjusting for cost of living. A toll booth operator in San Francisco earns more than a lawyer in rural South Carolina.

Quote:
No they arent. I have no doubt a graduate with an English degree from Harvard has more earning potential then a graduate with an Engineering degree from a third rate college.
well, i have my doubts. i don't see anything special about an English degree from Harvard. in the absence of data, i guess we'll never know which cohort has a greater ROI.

Quote:
The only reason for this is because the labor pool is much smaller. Without a large labor pool to select from, wages will tend to shift upwards for all graduates.
which is a good thing, and reinforces my point that the real issue here is not which college you attend, but what course of study you choose.

Quote:
What this is illustrating is that the value of a bachelors degree, around 85% of the time, isnt worth the paper its printed on. Most of us with bachelors degrees would have done better just investing the tuition, and getting a job flipping burgers.
where do you get the figure of 85%? I don't see that in the article.

Last edited by le roi; 06-30-2010 at 09:08 AM..
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Old 06-30-2010, 09:15 AM
 
2,714 posts, read 4,283,772 times
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Quote:
Originally Posted by Randomdude View Post
No they arent. I have no doubt a graduate with an English degree from Harvard has more earning potential then a graduate with an Engineering degree from a third rate college.
So you really think a graduate from Harvard with a BA in English can somehow pull in $70K+ a year starting out? How?

Its fairly easy to get a good job with a BA or BS, here is how:

1. Find a school with a highly ranked specific program (not just highly ranked school)... for example, computer science at UT Austin is ranked 7th in the nation, while computer science at Harvard isn't even ranked
2. Only pick a program (i.e. computer science for our example) at this school that has a very high job placement (i.e. 80%+)
3. Only pick a school that has the resources to guide you straight into your field of employment (good career center)

However, I think if you do get a degree in a major with a low job placement, you can still make good money, but you will probably need to get an advanced degree (masters or phd)

But the fact is, you can almost never get a high salary without a college degree. While if you follow my steps you will certainly get a high salary with a BA or BS or if you end up in grad school you can work towards your high salary.
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Old 06-30-2010, 09:45 AM
 
Location: Virginia Beach, VA
5,522 posts, read 10,203,775 times
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Quote:
Originally Posted by le roi View Post
it doesn't prove dick. not only does it include people who did not actually FINISH college (state U's have to maintain diversity in freshman classes, leading to high attrition rates),
What does this have to do with anything? College dropouts arent calculated and shouldnt be.


Quote:
Originally Posted by le roi View Post
it also sweeps the uselss majors in with the useful ones,
What is your point? Does it really matter that a handful of people out of X college happened to make ok money, when a majority out of majors from that school didnt? The point is, most of the people who bothered to get a bachelors degree (regardless of what its in) wasted their money.


Quote:
Originally Posted by le roi View Post
and it also doesn't include financial aid in the ROI calculation. furthermore it does not account for cost of living disparity in the US.
Cost of living is not accounted for in the comparison data set either. What is your point? Its not like we are comparing cost adjusted salaries against the average. We are comparing average vs average.

Quote:
Originally Posted by le roi View Post
Absolute wages are a poor metric. Using this metric gives colleges in California and New England inherent advantages by not adjusting for cost of living. A toll booth operator in San Francisco earns more than a lawyer in rural South Carolina.
Unless you are making the argument that a toll booth operator in South Carolina is making almost as much as a lawyer in South Carolina, this argument is moot, and has nothing to do with the premise of the article.

If you are in fact arguing that bachelors degrees in most of the country are barely worth anything different then a high school diploma, then youve already proved the articles point.


Quote:
Originally Posted by le roi View Post
well, i have my doubts. i don't see anything special about an English degree from Harvard. in the absence of data, i guess we'll never know which cohort has a greater ROI.
You are heavily underestimating the prestige and connections a Harvard degree gets you. A third tier graduate from an engineering school has few to any good connections, while Harvard graduate probably has high connections in every major city in this country, if not the globe.

Quote:
Originally Posted by le roi View Post
which is a good thing, and reinforces my point that the real issue here is not which college you attend, but what course of study you choose.
No, it only reinforces that point, given the labor pool your studies drop you in is one that does not outstrip demand for you. In the case of almost any bachelors degree, that is not the case.


Quote:
Originally Posted by le roi View Post
where do you get the figure of 85%? I don't see that in the article.
554-88=466, 466/554=85%

85% of schools according to this article do not pay back their investment.

I would have to agree.

If you gave me my 20k to invest between 1999 and 2004, I likely would have turned that in to close to what Ive made in every year since Ive been graduated from college. Thats not even calculating in the fact that I probably would be in management making nearly what Im making now anyway, if I would have just went in to fast food or retail after high school. A couple people I know from high school are already general managers of movie theatres, and likely making way more then me.
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Old 06-30-2010, 09:50 AM
 
Location: Virginia Beach, VA
5,522 posts, read 10,203,775 times
Reputation: 2572
Quote:
Originally Posted by cyclone8570 View Post
So you really think a graduate from Harvard with a BA in English can somehow pull in $70K+ a year starting out? How?
When his buddy on Wall Street pulls him in to his hedge fund...yeah.

Quote:
Originally Posted by cyclone8570 View Post
Its fairly easy to get a good job with a BA or BS, here is how:

1. Find a school with a highly ranked specific program (not just highly ranked school)... for example, computer science at UT Austin is ranked 7th in the nation, while computer science at Harvard isn't even ranked
2. Only pick a program (i.e. computer science for our example) at this school that has a very high job placement (i.e. 80%+)
3. Only pick a school that has the resources to guide you straight into your field of employment (good career center)
You just proved exactly what the article stated. If you dont go to a top school, or at least a top program, you have a pretty excellent chance of your degree not paying a better ROI then simply working out of high school, and investing that money you would have spent on school.


Quote:
Originally Posted by cyclone8570 View Post
But the fact is, you can almost never get a high salary without a college degree. While if you follow my steps you will certainly get a high salary with a BA or BS or if you end up in grad school you can work towards your high salary.
However, the majority of people cannot get in to top schools or programs. They are highly selective and very competitive. That doesnt stop everyone and their brother from still going any how. Most of these graduates, regardless of major, can look forward to wages that will never justify the initial outlay of the expense of the degree.
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Old 06-30-2010, 09:54 AM
 
5,758 posts, read 11,642,546 times
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If you want to make good money right out of undergrad, the traditional routes are still consulting or investment banking. But consultancies like McKinsey only actively recruit at a handful of undergrad institutions.
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Old 06-30-2010, 09:54 AM
 
2,714 posts, read 4,283,772 times
Reputation: 1314
Quote:
Originally Posted by Randomdude View Post
When his buddy on Wall Street pulls him in to his hedge fund...yeah.
But if he has no buddies on wall street?



Quote:
Originally Posted by Randomdude View Post
You just proved exactly what the article stated. If you dont go to a top school, or at least a top program, you have a pretty excellent chance of your degree not paying a better ROI then simply working out of high school, and investing that money you would have spent on school.
Unless you go to grad school, but you need a college degree to get there! Once out of grad school, liberal arts degrees...etc. can make good money.
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Old 06-30-2010, 09:59 AM
 
3,695 posts, read 11,376,879 times
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Yes, please don't go to college. It'll make things less competitive for the good jobs.

The worth of everything isn't based on how much money it makes, you know. There are other things to consider.
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