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The Cost/Benefit Analysis Of A College Degree In One Chart

Tyler Durden's picture




 

For all the debate about a college education, its opportunity cost, the trade off of only having a high-school diploma, the impact of a record amount of debt on an entire generation's spending habits, and, of course, the alleged lack of inflation everywhere expect in those critical things that 99% of Americans must spend on daily, perhaps the simplest chart is the following, courtesy of the WSJ: it shows the average annual tuition - call it the "upfront investment", whether funded by debt or equity or both - for both a Bachelor's and an Associate's degrees from 1970 until 2013, as well as the average wages of those with each type of degree, once again expressed in real dollars.

In a nutshell:

  • The change in tuition costs expressed in real dollars from 1970 to 2013, amounts to a roughly 275% increase
  • The change in real wages for a graduate with a bachelor's degree over the same period amounts to a roughly 10% increase (and an outright decline for Associate's degree wages despite a doubling for Associate's degree tuition costs).

Is there any wonder then why the US middle class, and certainly both Generations X and Y, are hopelessly drowning in debt and why the economy can barely survive from one QE episode to the next?

Read more at the NY Fed which clearly tries to put a pleasant spin on the above chart.

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Sun, 06/29/2014 - 21:29 | 4908434 LetThemEatRand
LetThemEatRand's picture

I'd say learn a trade, but who is going to pay the tradesmen?  There are only so many mansions to plumb.  And funny how a college degree is now a ticket into debt slavery, instead of a ticket out.  

Sun, 06/29/2014 - 21:31 | 4908441 rehypothecator
rehypothecator's picture

Anyone want to guess when the fedgov started subsidizing tuitions?  

Sun, 06/29/2014 - 21:34 | 4908452 LetThemEatRand
LetThemEatRand's picture

No doubt this has helped cause college tuition to skyrocket.  But it also coincides with offshoring.  And not coincidentally.  There have been fewer and fewer good paying blue collar jobs for the last generation or so, so society shifted to jobs that require formal education.  Now those are going, gone too.  Welcome to neo-feudalism.

Sun, 06/29/2014 - 21:55 | 4908504 NoDebt
NoDebt's picture

People are just now starting to have suspicions that paying for a college degree is the same game as buying the biggest house you can get and then tapping the equity to live on over and over as home prices rise.

When this one blows, it's gonna blow big like the housing crash.

All those well-paid higher ed "administrators" and other ancillary staff will be getting laid off in big clumps and bunches and their ability to spend and support their lifestyle will be threatened.  Paul Krugman will weep and pray for more hurricanes so more windows will be broken to replace the lost GDP all those academics can no longer support.

Or maybe that's just my wishful thinking.

Sun, 06/29/2014 - 22:05 | 4908532 markmotive
markmotive's picture

You're told to go to college for good reason. Debt.

In Debt We Trust Documentary - How Money and Credit Control Your Life

http://www.planbeconomics.com/2014/04/in-debt-we-trust-documentary-how-m...

Sun, 06/29/2014 - 23:00 | 4908654 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

It is all about how you play the game. If you want to go to college and party 4 years with a basket weaving degree..well... moron you deserve to starve. Get something useful from a state run university to start a meaningful career. Most kids don't want to suck it up and work hard so they waste their lives away in debt servitude. 

Sun, 06/29/2014 - 23:20 | 4908696 LetThemEatRand
LetThemEatRand's picture

Fuck that.  Drink now and weave baskets, for tomorrow the well may be dry.  The kids are smarter than all of us oldsters who got on the hamster wheel to nowhere.  Toga, bitchez.

Sun, 06/29/2014 - 23:53 | 4908749 SafelyGraze
SafelyGraze's picture

what's missing in this analysis is the probability of getting one of those prestigious govt jobs 

with the pensions

and the creation/enforcement of regulations

and the collection of fines and fees und so weiter

because you are going to want to go ahead and get the 4-year college degree rather than the 2-year degree or the the 0-year non-degree in order to position yourself for one of those plum job offers

 

Mon, 06/30/2014 - 01:05 | 4908783 economics9698
economics9698's picture

Put the money into a business and skip the degree if you are poor.  Degrees only count for the rich. 

People who should get a degree, minorities (government hires), rich kids (daddy will hire you), and single mothers who can brag the rest of their life they beat the male dominated world.

Poor white males with brains would be well advised to get a degree on line for 1/10 the cost and invest the extra money into a business.  There will be a huge shift in the coming years to on line degrees as people realize college is at best a gamble if you are not in one of the above protected classes of citizens.

College was probably the worst decision I made in my life, right up there next to my first wife.  It cost me time and money.  I was taught bull shit that was useless.  When I learned real knowledge I was ostracized by universities I taught at.  Like the first wife I wish I had never went there.  A complete waste of time and money.

 

I would have been much better off staying a thug, selling drugs, and ending up dead, rich, or in jail.  I like to think I would have ended up rich but being a thug does have its appeal.  The profit margin on drugs is incredible.  Should have stayed there.

Mon, 06/30/2014 - 01:24 | 4908822 SF beatnik
SF beatnik's picture

But but but.... pretty soon you'll need that MBA just to get the greeter job at the 24-hour Walmart in Union City. (And of course, you must be fluent in Spanish, too.)

 

 

Mon, 06/30/2014 - 09:22 | 4909248 insanelysane
insanelysane's picture

Vamp completely missed the point of the chart.  The costs have gone up 275% and wages only 10% on average.  Even the kids getting degrees in engineering and science are paying 275% more than I did and even if we want to be generous, those salaries have only increased 50%.  

I earned an engineering degree from a public college in the 1980's that cost me $5k per year tuition and my starting salary was $26k per year.  Kids coming out today are paying $20k a year and a good starting job is paying $50 or $60k per year.  See where my salary in my first year was larger than my total tuition over 4 years and where the kiddies of today's isn't?

Mon, 06/30/2014 - 09:33 | 4909292 economics9698
economics9698's picture

BSCE will get you a $40,000 job.

Mon, 06/30/2014 - 09:18 | 4909241 sessinpo
sessinpo's picture

SafelyGraze    what's missing in this analysis is the probability of getting one of those prestigious govt jobs

----

What is also missing is data that includes deflation and a reset of the system.

Sun, 06/29/2014 - 23:43 | 4908735 -.-
-.-'s picture

Do you live in the NE U.S. or the west coast? Or, more aptly stated, where were you educated?

 

BTW...Hitlisted sucka

Sun, 06/29/2014 - 23:58 | 4908755 TexasAggie
TexasAggie's picture

This might be a very good advice, but by the time these high school students realize thatmath and science are fun, they have sabotaged their ability to take the hs courses that are required to start a science or engineering career track in college.

Sun, 06/29/2014 - 22:02 | 4908523 DanDaley
DanDaley's picture

The libs (like author Daniel Pink -best bud of Al-I'm-A-Bore-Gore) keep telling me that America will be the place of imagination and that all of those ant-like Asians will just make the things that we dream up, and eveything will be okay. No need to manufacture, no need for engineers, just imagination, that's the key. What BS!!!

Sun, 06/29/2014 - 22:34 | 4908585 LetThemEatRand
LetThemEatRand's picture

You see, the problem is that the sheeple blame the libs or rebuplicats or whatever flavor.  You are feeding the machine, my friend.  The oligarchs sent the jobs overseas for wage arbitrage.  The student loans enriched the bankers.  But you blame the libs and someone else will blame the conservitards, and let's all have a party in the slums.

Sun, 06/29/2014 - 22:35 | 4908595 DanDaley
DanDaley's picture

I get it, thanks.

Mon, 06/30/2014 - 09:26 | 4909264 Not My Real Name
Not My Real Name's picture

You can say red/blue are same, Rand. However, you cannot claim that true conservatives and libs are identical. They are not. Dan is right. The libs are to blame.

Mon, 06/30/2014 - 10:11 | 4909375 TBT or not TBT
TBT or not TBT's picture

Guess who received even more of the student loan money than the bankers?    Well gosh, the sellers of that which was purchased with the loan principle.  The drivers of those Demprog bumper stickered vehicles in the faculty and administrator parking lots.  They teach progressive and give progressive.  The fedgov rewards them with money released by public largesse.   The students in turn end up dependent, which is also a great ROI for progressives.  People should should be dependent on government after all, and beholden to it, and vote for ever more of it.   University employees everywhere fully agree.  

Sun, 06/29/2014 - 21:35 | 4908457 Son of Loki
Son of Loki's picture

Rand is right. My plumber makes more then my neighbor's son who has tons of debt and practices family medicine. Kids need to weigh all options...old rules don't apply anymore.

Sun, 06/29/2014 - 22:00 | 4908514 NoDebt
NoDebt's picture

My next door neighbor's kid (mid 20s) never went to college.  He's an HVAC tech.  Kid cranks out $80K/yr and (this is not a joke) just moved out of his parents' basement this weekend.  

He told me a couple years ago he felt a little weird he didn't go to college.  He was thinking about taking a couple years off to get a degree.  I broke a 2x4 over his head and then calmly explained why that was a really REALLY bad idea in his situation.  I told him to start saving up instead (hence, living in his parents' basement for a while) and now he's spending a little of that money to move out on his own.  He's gonna do fine.  I told him today I was proud of him.

Sun, 06/29/2014 - 22:51 | 4908632 James_Cole
James_Cole's picture

Why are random libertarians so obsessed with HVAC workers and insist they earn way more than they do? It's the go to job for some reason.

http://www.payscale.com/research/CA/Job=HVAC_Service_Technician/Hourly_Rate

K bitchez? Stop making shit up.

Sun, 06/29/2014 - 23:07 | 4908674 NoDebt
NoDebt's picture

I'm not a libertarian, although I have definite tendencies that way.  Stop assuming everyone earns the "average".  And stop assuming everyone works 40 hours a week.  He's a kid and he's single.  Got nothing better to do than put in the hours.  I wake up every morning at 6am to the sound of the engine of his truck firing up as he heads out to work.  He's leaving when I'm waking up.  Sometimes he doesn't get home till 10pm.  He hustles and that's really what I like most about him.  I've NEVER seen him roll home drunk late at night from some party (and his family has lived next door to me since he was a young teen).  No rowdy friends showing up at the house.  He's clean-cut and has an obvious work ethic.  Got a steady girl friend for about 4 years now who also works.  He's stable, knows how to bust ass and has goals.

What he's REALLY saving the bulk of his money for is to start his own company.  Nobody ever got rich punching a clock (at least not in the private sector).

Wanna call me out as a liar on this?  You think people like this don't exist?  Say it, and we'll be having a whole different kind of discussion.  Eagles don't flock.  This kid's an eagle, college degree notwithstanding.

Sun, 06/29/2014 - 23:23 | 4908706 James_Cole
James_Cole's picture

Ok those with libertarian tendencies lol. I just often hear hvac for some reason and have yet to discover why. Even had exact same point of contention come up with someone else claiming their 'friend' (HVAC tech) was pulling in 'easily' 60k. Sorry folks. That aside, actually posted the wrong link, went to Canada instead of US, here:

http://www.payscale.com/research/US/Job=HVAC_Technician/Hourly_Rate

If he's making 20$ an hr yet working 'extra hrs' how much he putting in extra? Another 40hrs? Is his boss paying double time? Not in the private sector!

I'm not saying you're lying, but you are almost certainly wrong.

Sun, 06/29/2014 - 23:39 | 4908727 NoDebt
NoDebt's picture

James, I don't know what state you're living in (aside from denial) but if you think you can hire a commercial HVAC tech for $20/hr. I wish you luck.  Not in the concrete jungles of the northeast anyway.  They'll take unemployment before they work for $20/hr.

Putting that aside, if you earn $20/hr, 40 hours a week, 52 weeks a year you're already at $40K/year.  He's beyond that in pay and hours worked.  He gets a little for OT, but nothing like 2X.

I don't think you're grasping the idea that you CAN earn more than an EBT card and disability will pay you.  Yes, even in today's fucked up economy.  As long as you work in a field where there is plenty of demand (you can put in plenty of hours).  And those fields, many of them, don't require a 4 year college degree.  Just the proper training and some experience.

There's not enough of this kind of stuff out there to carry the whole economy, but there's plenty out there to support those willing to do it.

Sun, 06/29/2014 - 23:47 | 4908741 -.-
-.-'s picture

Austin, Texas: the rate is near $18.75 per hour unless you go to a small business then it is near $20.00 per hour

Mon, 06/30/2014 - 01:01 | 4908804 FEDbuster
FEDbuster's picture

My HVAC guy charges $75. just to show up and figure out what $100+ part needs to be replaced.  Then goes picks up the part or orders it, and charges me $75/hour labor to put it in. 

Car mechanic (non-dealership) $80./hour labor, plumber about the same, etc....  Good self-employed tradesman should clear $100K+/yr. after tax with no problem.  My plumber takes a week long scuba diving trip every three months.

College is mostly a scam, but in some professions you need the degree to get your foot in the door.  The government and student loans have fucked up the cost curve.

Mon, 06/30/2014 - 06:52 | 4908982 FrankIvy
FrankIvy's picture

Yeah, no.  Just no.  "Self-employed tradesmen" do not make 130K a year before taxes.  Unless they're working on the gold cost of connecticut or in manhattan.  It's ridiculous to suggest that conclusion based on posted labor rates.  It would be a rare individual who is working steady 40 plus BILLABLE hours per week who has low enough costs to clear that kind of money.  But it's probably a nice delusion.

 

For comparison, the going rate for lawyers in your typical small city may be 200 an hour.  But those lawyers are making nowhere near 400k a year.  They're not billing 40 hours a week, they have a lot of costs associated with working, and they have to write off some of their billing.

 

Conclusion - posted rates do not dictate yearly take home.  The local contractor I use, sometimes, charges, nominally, 80 an hour.  Guy drives a beat up truck, lives in a dump, and never has 2 nickles to rub together.  By your accounting, he should be making 100 plus a year.  Unless he likes old cars and run down houses and prefers investing in stocks, no way.

Mon, 06/30/2014 - 07:40 | 4909045 SmackDaddy
SmackDaddy's picture

Yeah you're right.  Because you know it's impossible to mow a lawn or frame a garage without a brand new custom f-350

Mon, 06/30/2014 - 08:07 | 4909078 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

HVAC is probably the most regulated of the building trades, both at the state and federal (EPA) level. A tech that doesn't have a good grasp of heat transfer/HVAC or electrical theory and just "remove and replace" until the problem is fixed-they are a dime a dozen. The guy that can troubleshoot a system in a few minutes and fix it the first time will always have a job and do well. Just like a lot of other things in life.

Mon, 06/30/2014 - 06:52 | 4908983 Haus-Targaryen
Haus-Targaryen's picture

Last time I got my old car serviced at the dealer in the US, I saw a "Help Wanted" sign in the BMW dealer for a mechanic after 1 year of the BMW technical school.  Technical school costs $10k, and you START OUT at $35 an hour. 

Jesus Christ.  What a horrible decision I made to go to school. 

35*40= 1400*52 = 72.8k

fuck me. 

Granted, that was at Rusnak BMW in Thousand Oaks, California -- so COL is pretty high, but if you move 3 miles to the West you get out of LA county and into Ventura county, which is much less insane. 

Mon, 06/30/2014 - 08:37 | 4909144 post turtle saver
post turtle saver's picture

and that gig is like any other... you get a solid tech foundation then move into sales, you'll make serious lettuce...

Mon, 06/30/2014 - 11:34 | 4909642 Hopeless for Change
Hopeless for Change's picture

The mechanic gets $35/hr and the dealership charges $135/hr.  

Luckily, I found a mechanic who works at a dealer and does side jobs.  He makes more and I pay less.  Win/Win, except for the dealer.  But seriously, fuck them.

Mon, 06/30/2014 - 08:33 | 4909134 post turtle saver
post turtle saver's picture

the difference you're missing is the guys just getting into the gig vs the guys that have been doing it for 20-30 years... buddy of mine who owns a small HVAC company here in Austin just bought his fourth in a long line of top end sports cars, bought a house in Round Rock in a very nice neighborhood (Dellionaires) for cash and has more money left over than he knows what to do with... but, he's up at oh-dark-thirty every day and the cell phone never leaves his ear... has a team of seven techs that he runs and is a Carrier distributor... and this is just residential, he has no commercial contracts

I think the common theme to all this is, regardless of whether you go to college or not, this shit doesn't just fall into your lap - you gotta put into whatever you pick to get something out of it

Mon, 06/30/2014 - 06:34 | 4908968 RafterManFMJ
RafterManFMJ's picture

OT really is the decider. My base is X which is in fact quite respectable.

Factor in OT and I round out for the year at 2X. In fact my gross from my primary was 1.98X of my base due to OT - worked around 800 hours of OT last year.

While the sun is shining, you make hay.

Mon, 06/30/2014 - 08:04 | 4909071 plane jain
plane jain's picture

Si.  And the young HVAC guy that I know, besides earning hourly and OT from his company, also gets a commission on sales and has his own customers on the side.

I have no idea what he makes a year.  Just saying that 40 hours at X isn't the whole story.

Sun, 06/29/2014 - 23:30 | 4908717 Frostfan1
Frostfan1's picture

No offense but giving me a Canadian chart of wages isn't what I would use to prove a point here.

Mon, 06/30/2014 - 10:56 | 4909523 DadzMad
DadzMad's picture

Depending on where her lives, ND may not be far off.  I have a large electrical contracting company and with OT, plant shutdowns, etc. a good journeyman wireman can easily break 80k per year.  Granted these are our key people, but even an average worker pulls down 65-70.  We have foremen who run large projects pulling down 100k and they are worth every penny. 

Sun, 06/29/2014 - 22:42 | 4908610 patb
patb's picture

1945.

Sun, 06/29/2014 - 22:33 | 4908586 Thirtyseven
Thirtyseven's picture

I have a college degree (thanks taxpayers!) and happen to work in the trades.  I work, I am gaining usefull skills, I am happy.  In part this is my way of "going Galt" and becoming more self-suffieient in as many ways as possible.

I can garden. I can shoot.  I keep my body and mind in shape.  The Oligarchs can suck my Kielbasa and lick my Pierogis.

Mon, 06/30/2014 - 09:26 | 4909261 insanelysane
insanelysane's picture

I'm guess you live in the Rhode Island area.

Sun, 06/29/2014 - 22:59 | 4908653 PiratePiggy
PiratePiggy's picture

... de plumb in Detroil.   "de plumb"  - that's French, isn't it?   :)

 

 

Mon, 06/30/2014 - 01:58 | 4908841 Escrava Isaura
Escrava Isaura's picture

My two pennies worth:

Strongly recommend that you check this link about this topic

And ‘economics9698’ looks like hit a home run…… in more ways than one

Sun, 06/29/2014 - 21:29 | 4908436 TeamDepends
TeamDepends's picture

If you get your college degree online, no one can hear you scream.

Sun, 06/29/2014 - 21:31 | 4908444 mjcOH1
mjcOH1's picture

Not all degrees are created equal.

Petroleum engineer?   Expect a good salary.

Black/Women's studies?   Expect a good cut of the petroleum engineer's salary and the EBT.

 

 

 

Sun, 06/29/2014 - 21:34 | 4908454 prains
prains's picture

Yes but which is worth more? somebody who has a better chance at understanding people or someone who has a better understanding about how to ruin what's left of the earth's environment?

Sun, 06/29/2014 - 21:49 | 4908487 Five8Charlie
Five8Charlie's picture

If you don't like petroleum engineers, please stop driving. Also, please stop eating. You're gonna feed a few billion people without oil? Good Luck. (Yes, the day will come when we face that - but the engineers kept the gig going for a while longer).

I assume you're making a larger point about the value of a liberal education versus a technical career.  I think you should choose a better example for the value of a liberal education than the ones given to you.

 

Sun, 06/29/2014 - 22:19 | 4908555 logicalman
logicalman's picture

Can't blame a person for the society he/she is FORCED to live in.

Sun, 06/29/2014 - 22:26 | 4908567 BobTheSlob
BobTheSlob's picture

Yes indeed forced. And hey, Guatemala needs to replace some of those feral children that have migrated north. I'm sure that GMala is far more "green" than the US...so this clown (F8C) can happily relocate.

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