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Report on ROI for college costs
Old 05-09-2013, 11:29 AM   #1
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Report on ROI for college costs

This is an interesting report on the costs and value of going to college these days.

Should Everyone Go To College? | Brookings Institution

To me, all the data in here seems to be common sense but putting it all together in this report is pretty effective. They point out that:

More selective colleges have higher graduation rates. This means that less selective colleges, which draw lower income students, have lower graduation rates and therefore the people who can least afford it pile up debt without getting a degree.

It also matters what kind of degree you get and what kind of occupation you ultimately work in.

They acknowledge that the value of a college degree isn't only about ROI but that prospective students should know about the ROI as part of the mix of data used to make a decision about going to college.

They suggest that vocational school is a better investment and that the messaging to students that they must go to college is doing a disservice to many people.
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Old 05-09-2013, 06:15 PM   #2
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Good subject...
For balance, on who should go to college, is the question of who benefits from those who do go.

Sallie Mae Profit Boosts College Endowments And Pension Funds As Students Pay More
Quote:
University endowments and teachers’ pension funds are among big investors in Sallie Mae, the private lender that has been generating enormous profits thanks to soaring student debt and the climbing cost of education, a Huffington Post review of financial documents has revealed.

The previously unreported investments mean that education professionals are able to profit twice off the same student: first by hiking the cost of tuition, then through dividends and higher valuations on their holdings in Sallie Mae, the largest student lender and loan servicer in the country, which profits by charging relatively high interest rates on its loans and not refinancing high-rate loans after students graduate and get well-paying jobs.
more...
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Old 05-10-2013, 09:51 AM   #3
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Quote:
Originally Posted by martyp View Post
This is an interesting report on the costs and value of going to college these days.

Should Everyone Go To College? | Brookings Institution

To me, all the data in here seems to be common sense but putting it all together in this report is pretty effective. They point out that:

More selective colleges have higher graduation rates. This means that less selective colleges, which draw lower income students, have lower graduation rates and therefore the people who can least afford it pile up debt without getting a degree.

It also matters what kind of degree you get and what kind of occupation you ultimately work in.

They acknowledge that the value of a college degree isn't only about ROI but that prospective students should know about the ROI as part of the mix of data used to make a decision about going to college.

They suggest that vocational school is a better investment and that the messaging to students that they must go to college is doing a disservice to many people.
Thanks. I get very tired of the "College grads average $1 million more than HS grads, therefore everyone should go to college" nonsense. I heard that again on a local news channel just a couple days ago.

This report is a ray of common sense.

College may be worth the money just for "broadening your horizons", IF your parents are willing to foot the bill. Kids who need to borrow to go to college need to think about how they are going to repay those loans.

The report lists some things to consider. They could be written as questions:
- do you have the talent and motivation to graduate?
- are you interested in a high-paying occupation, or a low-paying occupation?
- will you be at a school where most of your fellow students graduate?
- do you know how many of the grads from the schools you're considering actually get jobs that use their degrees?
- and, what they earn?
- have you looked at enough schools to find the best combination of cost and opportunity?
- do you understand how much you'll have to pay back if you borrow?
- have you thought about using your talent and motivation in a two year technical program instead of in a four year school?

Colleges, that benefit from multiple taxpayer subsidies, don't seem to be very motivated to answer those questions.
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Old 05-10-2013, 09:58 AM   #4
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Every institution of higher learning should be required to require prospective students to successfully complete a free online course on this topic as well as a section on the significance and long term cost of student loans.
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Old 05-12-2013, 03:27 PM   #5
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Bottom line college isn't for everyone, you can tell a kid it is the best choice and spout stats on lifetime income all you want but some kids just aren't ready for college. It might be they have more maturing to do and it might be they just have different strengths where college will never be their best choice for spending money/time in hope of future payoff.

I also think many underestimate the earnings potential of skilled trades. Many a welder and machinist make twice the salary of the college graduate.
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Old 05-14-2013, 11:01 AM   #6
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None of the millionaires I've met (in person) had college degrees. What they had was a passion to succeed in their chosen business (real estate mostly, but lots of small businesses too).

Time was on their side too. No college "distractions" ... they had a 4-6 year jump on the rest of us.

Never seen an educational institution that taught how to make money. At a minimum students should be told what they can expect to make in their chosen field BEFORE they commit (but that would eliminate a lot of teaching jobs).

Also don't hear much about the 50% that never finish college but are strapped with the incurred debt.
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Old 05-14-2013, 11:46 AM   #7
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There are some things that benefit from 4 yrs of college education. I was a mechanical engineer. There are few opportunities (these days) for people getting into the technical side of engineering without a concentrated 4 yrs of college classes. PhD's in engineering? I saw plenty of them and they were nothing special.
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Old 05-14-2013, 04:56 PM   #8
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None of the millionaires I've met (in person) had college degrees. What they had was a passion to succeed in their chosen business (real estate mostly, but lots of small businesses too).
....
My experience is close to the other end of the spectrum: Most, definitely not all, of the millionaires who I have met in person did attend college. The shared characteristics: Practical degrees (law, medical, engineering, etc.), years of living below their means, intersection of planning/luck with regard to choice of spouse/partner (no messy, expensive divorces), and most would not be quickly identified as millionaires by a casual observer.

There have been notable exceptions include a couple who started a trucking company on a shoestring and grew it for many years as well as a gentleman who rose to CEO of a fairly large company and invested very well along the way.

I definitely encouraged dear daughter to obtain an undergraduate degree. We may never know if that was the best financial decision; but, I believe there are enough other benefits to have made it worth the time and expense. (And, more importantly, she seems to feel the same.)
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Old 05-14-2013, 08:59 PM   #9
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Originally Posted by imoldernu View Post
Good subject...
For balance, on who should go to college, is the question of who benefits from those who do go.

Sallie Mae Profit Boosts College Endowments And Pension Funds As Students Pay More

more...
Now I know where Dave Ramsey was coming from when he said "student loans are a cancer".
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Old 05-14-2013, 09:05 PM   #10
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We talk a lot about 'plan B' on this board. I think that if things don't work out too well for a person who gets a 4 year degree, at least they'll land the best entry level resturaunt job :-)
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Old 05-14-2013, 11:24 PM   #11
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Everyone (it seems) always talks about people going to college and the benefits of it as if everyone was the same with the same aptitudes and interests and as if every college degree was of equal value.

The thing is that not everyone is the same. Not everyone has the intellectual ability or interest in academic subjects to either want to or be able to obtain a Bachelor's degree. The near constant recommendation that I see to tell everyone to become an engineer or to major in some science or math is even more nonsensical. Does anyone who seriously thinks about it reallybelieve that everyone has the ability or inclination to become an engineer?

It is fine to encourage obtaining a bachelor's degree for those with the ability and interest in doing so. However, it is pernicious to constantly beat the drum for 4 year college for everyone.

The reality is that a large group of students who attend a 4 year college will be unsuccessful. For some, it will be because they lack the aptitude to study whatever they are studying. For others, many others, it will be because they don't have a genuine interest in doing the type of academic work that a 4 year degree requires.

And going to a 4 year university and coming out without a degree may enrich the university but will not enrich the student or the student's parents. It is bad to spend 4 (or more!) years at university and end up with a bachelor's degree and a large student loan at the end. It is infinitely worse to spend less than 4 years at university and end up with no degree and a somewhat smaller student loan at the end.

So - no - not everyone can or should be an engineer and not everyone can or should obtain any bachelor's degree.

And, for those who will obtain a bachelor's degree, I personally think it is asinine to spend, say, 4 years at a 4 year school if doing so requires student loans. If someone (or parents) can pay for all 4 years at a 4 year school without loans, then fine. I may not think it is a good use of money but people can do what they want.

However, in most (probably almost all) instances those costs can be cut substantially by attending a community college for 2 years. I would submit that for those people obtaining a college degree the return on investment will be far greater for those who attend community college for 2 years. And, if the student decides that a 4 year degree is not for him or her, then the cost investment will be much lower. And, if that decision is made, the student is already at a community college and can easily switch to an associates degree in a career area or to a certificate program in a career area.
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