The primary factor for picking a College/University is out of pocket cost

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nigel_ht
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The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

From another thread IvyGirl shared this article.
Ivygirl wrote: Sun Apr 11, 2021 6:32 am A quick search tells me that over 40% of people who go to college don't graduate. How many of those took out student loans, which can't be discharged in bankruptcy, and have no degree to earn the money to pay them back? How many lost years is that, working at low wages for nothing just to pay on a mistake. What if they had followed Mr. Ramsey's common-sense advice instead: https://www.ramseysolutions.com/saving/ ... CNL_180617
Rather than get caught up with that thread I think this deserves another look.

Oneal writes:

"When it comes to choosing a school, the only relevant factor is if you can pay for it without student loans."

I would change it to:

"When it comes to choosing a school, the primary factor is out of pocket cost."

Say you're like me, rising senior and looking at school. There are lots of threads here on whether parents should pay, how to save, is Harvard worth it, etc but in my quick search I didn't see a topic title in terms of strategy or selection criteria in the first few pages of the search results.

In my case we make too much for aid (beyond loans) and he's not getting a full ride anywhere so my assumption is that everything is coming out of the money I've saved. Outside of some place like Harvard with a large endowment and lots of financial aid options this isn't likely too rare for Bogleheads.

Using this random google hit on the costs of college here's my assessment:

https://www.valuepenguin.com/student-lo ... of-college

Scenario 1 - 4 years private, live on campus = $203,600
Scenario 2 - 4 years flagship state school - in state, live on campus = $101,160
Scenario 3 - 2 years community college (live at home) + 2 years in-state university (live on campus) = $18,360 + 50,580 = $68,940
Scenario 4 - 2 years community college + 2 years state school (live at home all 4 years) = $18,360 + 28290 = $47,340

Scenario 5 - 4 years University of Michigan = $273,980 (An elite out of state public)
https://admissions.umich.edu/costs-aid/costs

If you can swing Scenario 4 because you happen to live near your flagship great. I'll assume many cannot so Scenario 3 is likely the cheapest reasonable option.

Cost deltas:

Scenario 3 vs 1: $134,660
Scenario 3 vs 2: $32,220
Scenario 3 vs 5: $205,040

Invested in VTI between 2000 and 2020:

Scenario 3 vs 1: $709,302
Scenario 3 vs 2: $169,714
Scenario 3 vs 5: $1,080,019

(I used PV)

So theoretically, assuming you had saved $273,980 for college and could invest the cost difference between community college + state university vs one of the best public university in the US as out of state in VTI, your kid could have a million bucks extra before age 40.

Now we are fortunate enough to be able to afford option 2 AND save money them in the future but we understand that 4 years on campus is a luxury experience we can afford. We happen to be lucky enough to be able to do option 4 if we wanted so for us the cost delta is $53,820 or $283,489 after 20 years. Which is a nice sum to be honest...

This quick and dirty analysis does highlight that out of pocket cost, at least for folks that prioritize saving and investing, should be the primary driver in college selection.

It is also probably not unreasonable to save for Scenario 3 and go though this with your kids and tell them anything more than that they would have to come up with and no, you're not going to agree to a loan. They'll have to earn a scholarship or cashflow the delta with a part time job if they want the option to live on campus the first two years.
chazas
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Re: The primary factor for picking a College/University is out of pocket cost

Post by chazas »

Best for you, not necessarily for your kids. This kind of pure cost/benefit analysis of college makes me queasy.

The difference for the right kid between going to two years community college and then a local school, vs. an Ivy, is incalculable, and it will follow them the rest of their lives. It’s obviously a privilege and not everyone can afford it but always prioritizing savings vs. your kids’ experience seems wonky to me.
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nigel_ht
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

chazas wrote: Sun Apr 11, 2021 10:19 am Best for you, not necessarily for your kids. This kind of pure cost/benefit analysis of college makes me queasy.

The difference for the right kid between going to two years community college and then a local school, vs. an Ivy, is incalculable, and it will follow them the rest of their lives. It’s obviously a privilege and not everyone can afford it but always prioritizing savings vs. your kids’ experience seems wonky to me.
How is giving my kid a high probability of having a million bucks at age 38 not best for them?

I'm not going to pocket the savings...I'm planning on sticking it in a taxable account to jumpstart their savings.

Ivys are different.

One they have enough endowments that even we might get some aid.
Two, they are hard to get into so a kid able to make it into Harvard can probably get a full ride at the local flagship state school.

But the cost analysis is really between getting into your local flagship versus a slightly higher ranked public out of state university or your average private university. Neither the improved education or social networking is likely to produce a $500K-1M ROI delta to offset just saving the money in VTI for the kid.

If the kid is frugal and saves another million by 38 they will have a $2M portfolio and if not totally FI pretty close. At that point the difference of 2 years of community college + local state school vs 4 years of mid ranked private university is THIRTY YEARS of FI before retirement age.

What makes me queasy is losing a million bucks for them by not doing a cost/benefit analysis.
livesoft
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Re: The primary factor for picking a College/University is out of pocket cost

Post by livesoft »

nigel_ht wrote: Sun Apr 11, 2021 10:29 amBut the cost analysis is really between getting into your local flagship versus a slightly higher ranked public out of state university or your average private university.
I like your thoughts.

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hoofaman
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Re: The primary factor for picking a College/University is out of pocket cost

Post by hoofaman »

Another benefit of paying more than you think you should for an education is that it can’t be taken away from your child in the future. It’s an investment with guarenteed protection. On the other hand, money you give them could be taken from them due to no fault of their own: lawsuits, divorce (indirectly syphoned via alimony), medical issue, etc
MMiroir
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Re: The primary factor for picking a College/University is out of pocket cost

Post by MMiroir »

nigel_ht wrote: Sun Apr 11, 2021 10:04 am
Using this random google hit on the costs of college here's my assessment:

Scenario 1 - 4 years private, live on campus = $203,600
Scenario 2 - 4 years flagship state school - in state, live on campus = $101,160
Scenario 3 - 2 years community college (live at home) + 2 years in-state university (live on campus) = $18,360 + 50,580 = $68,940
Scenario 4 - 2 years community college + 2 years state school (live at home all 4 years) = $18,360 + 28290 = $47,340

Scenario 5 - 4 years University of Michigan = $273,980 (An elite out of state public)
https://admissions.umich.edu/costs-aid/costs

If you can swing Scenario 4 because you happen to live near your flagship great. I'll assume many cannot so Scenario 3 is likely the cheapest reasonable option.

Cost deltas:

Scenario 3 vs 1: $134,660
Scenario 3 vs 2: $32,220
Scenario 3 vs 5: $205,040

Invested in VTI between 2000 and 2020:

Scenario 3 vs 1: $709,302
Scenario 3 vs 2: $169,714
Scenario 3 vs 5: $1,080,019
The math is useful to keep in mind, but at best it is starting point.
MMiroir
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Re: The primary factor for picking a College/University is out of pocket cost

Post by MMiroir »

hoofaman wrote: Sun Apr 11, 2021 10:45 am Another benefit of paying more than you think you should for an education is that it can’t be taken away from your child in the future. It’s an investment with guarenteed protection. On the other hand, money you give them could be taken from them due to no fault of their own: lawsuits, divorce (indirectly syphoned via alimony), medical issue, etc
You left out stupidity. A high school acquaintance of mine inherited $125,000 when he was in college, and used the inheritance to buy a $100,000 Porsche that he parked in front of his fraternity house.
AnEngineer
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Re: The primary factor for picking a College/University is out of pocket cost

Post by AnEngineer »

Be careful about assuming 2 years CC + 2 years state. It's easy to end up taking more than 4 years. I met one student who succumbed to particularly bad advice at the CC and was looking at 3+3.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by crefwatch »

When you're talking about elite schools, both wealthy and low-income families tend to be very poorly informed about saying what four years at the school will actually cost them. Aside from the mythology of a "free-ride" for athletes whom parents have been reverently driving to meets for years, merit scholarships are quite common. But it's an opaque market.

I wonder if "... perceived/imagined out of pocket cost" would be a better subject line.
stoptothink
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Re: The primary factor for picking a College/University is out of pocket cost

Post by stoptothink »

There are two very divergent camps about college on this board. I 100% agree with the OP and I attended (for undergrad) what is currently ranked as the top public university in the country. My sister, who attended an Ivy (then Oxford, then NYU) would agree even more. Unless my kids are HYPMS bound, there is no way I am remotely considering paying more than the cost of local U (one of the cheapest options in the country), so I hope they have a plan (or get some scholarships) if they decide the environment isn't ideal for them. They both have $28k in their 529s (slightly more than current cost of tuition + fees for 4yrs at local U) and we're done funding. I would much rather stick the cost difference in a brokerage account that they can have access to when they become young adults.

Academia becomes a bigger game each year, and I'm not paying several times more than I have to so my kids can be involved or get that "college experience" (which after 12yrs of education at 3 universities, and several years of teaching at a 4th university, I simply do not understand or value).
Normchad
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Normchad »

It’s kind of a shame that for most people, the primary factor isn’t the quality of the education.

Costs matter, certainly. But I rarely hear anybody talk about the purpose of going to school is to get an education.

For our family, we saved enough for a full 4 year education for the kid. We told her early in high school that we had saved this money, and it was up to her to figure out the rest. If she needed more money, she’d have to get it somewhere else. And if she didn’t need all that we saved, she would get the leftover amount at graduation.

She worked her tail off a d got admitted to lots of schools. She accepted a full ride to a less prestigious school. And when she graduated, she was debt free and had $70K in the bank. So she was definitely looking at out of pocket cost. :)
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Re: The primary factor for picking a College/University is out of pocket cost

Post by HIMcDunnough »

nigel_ht wrote: Sun Apr 11, 2021 10:29 am Two, they are hard to get into so a kid able to make it into Harvard can probably get a full ride at the local flagship state school.
This is going to vary some depending on where you live, but for many states, if your kid can't get a free ride or something close to a strong in-state school, the other, more expensive, schools your kid can get into probably aren't worth the money. I'm obviously discounting the student experience part of things, but I'm constantly amazed by the amount of money people pay for "non name brand" private schools.
stlrick
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Re: The primary factor for picking a College/University is out of pocket cost

Post by stlrick »

You might want to take a look at graduation rates. At the highest price private schools, Ivy League or otherwise, graduation rates are in the area of 90% after 4 years. At their tuition levels, the university has to offer the courses the students need for timely progress. The best 4-year graduation rate at a state university is 80% at U Michigan Ann-Arbor, and at even the best other state schools, it is lower (68% at Penn State, 70% at Illinois Urbana-Champaign). It gets down below 50% at many branch locations. That is why these schools, even Michigan, advertise 150% (6-year) graduation rates that get up to the 90% you find at the privates for 4 years. This problem is worse if your child chooses a highly desirable lab-intensive major. Access to enrollment in upper level courses begins with the students in the most advanced year and works down. Technically focused majors require courses in a sequence. It is an every-day occurrence for a junior to be unable to take a course they must take. They wait for the priority that comes with their senior year, and then have to stay to take the next level required course.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by stoptothink »

HIMcDunnough wrote: Sun Apr 11, 2021 11:54 am
nigel_ht wrote: Sun Apr 11, 2021 10:29 am Two, they are hard to get into so a kid able to make it into Harvard can probably get a full ride at the local flagship state school.
I'm obviously discounting the student experience part of things, but I'm constantly amazed by the amount of money people pay for "non name brand" private schools.
One of my neighbors paid $36K in tuition (not including room & board) to send her son to private U because he felt it was a "better fit" for him than the local U which is within easy biking distance from our neighborhood (and $6,600/yr tuition + fees). The private U is ranked lower in most programs (including the one son was entering), but it is what he wanted. After a year he decided it wasn't for him and transferred to local U, where he will graduate from this year. That was an expensive life lesson...for mom.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by afan »

This assumes that all college, community vs flagship state vs elite private is equal for all students.

As others have noted, the elite privates have enough seats in required courses for everyone who needs them to take them on time. So their engineers, for example, graduate in 4 years. Your community college 2 years might not even get the student the perquisites for a desirable major, let alone actually to be permitted to enroll. They may need another year, or two, at the state U before they can start on their major. Again, assuming they can get in to the major at all after community college.

Many of the elite colleges not only offer more money but they have more support services for kids who are struggling and ability to go on to financial aid if parents finances deteriorate while the student is enrolled. They have more availability of dedicated advising and more contact with professors. For those who are headed to graduate or professional school, the advising and faculty contact are crucial. Look at the proportion of grads of the elite privates versus even the public ivies who get advanced degrees.

At my alma mater, above 70% of graduates go on to advanced degrees, and as noted above, almost everyone who enters frosh year graduates. So about 70% of those who initially enroll end up with advanced degrees. Given the return on this kind of education, the odds are in the students' favor.

Cost definitely matters. But you need to take into account all the costs, including years of attendance and opportunity costs down the road.
When you look simply at cost, you need to adjust for total years as a student. If it is more than 4, then factor the costs of the extra years
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nigel_ht
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

Normchad wrote: Sun Apr 11, 2021 11:50 am It’s kind of a shame that for most people, the primary factor isn’t the quality of the education.

Costs matter, certainly. But I rarely hear anybody talk about the purpose of going to school is to get an education.
My point of view is that:

The purpose of going to college is to be able to make a better living as an adult.

The luxury of going to college is everything else...

If a college education cannot help you meet the physiological needs in the Maslow hierarchy then any other benefits higher up the pyramid will be ephemeral.

That doesn't mean that I believe that the only path to (financial) success is college but it is a one well travelled so the benefits and pitfalls are reasonably well known.
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othery factors for picking a uni

Post by Bogle7 »

As a parent who sent our daughter to college, I think a purely cost focus is not broad enough.

I feel that there are 2 important non-finance aspects to potential schools:
1. Brand name. A "better" brand name (e.g., Stanford) is more helpful to the graduate than a "weaker" (e.g., Univ of Wyoming) brand.
2. The average IQ (for schooling purposes) at the school. The student will be unhappy being either at the top of the class or the bottom. Bored to [metaphorical] death or failing at keeping up.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by livesoft »

I thought the purpose of going to college was to meet a future spouse that would provide for you in the manner to which you are accustomed.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by anon_investor »

Outside of Ivy (or Ivy level) schools, I think choosing the in-state flagship makes the most sense. Why pay an Ivy league price tag for a mediocre education from a lesser private school? Advanced degrees, in particular professional degrees, completely change the importance of undergrad. For example, if you go to an elite law school your undergrad is a lot less important.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by 30west »

We just went through this with DD. Her top choice has a gorgeous campus but offered nothing in merit aid, cost $55k/yr. #3 Choice offered enough in scholarships and housing $ to make the first year oop costs less than 20k. Since they were both out of state public universities, there was no way i could justify a $100k+ premium for a BS at a prettier school.

I watched the Admissions Scandal movie on Netflix last night. It reminded me to keep everything in perspective. The best quote was from a retired Stanford admissions counselor who said "there are 3000 colleges in this country, you can get a great education anywhere, if you really want it" . In other words, an expensive school wont make your kid into someyhing he's not.
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anon_investor
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Re: The primary factor for picking a College/University is out of pocket cost

Post by anon_investor »

30west wrote: Sun Apr 11, 2021 12:55 pm
I watched the Admissions Scandal movie on Netflix last night. It reminded me to keep everything in perspective. The best quote was from a retired Stanford admissions counselor who said "there are 3000 colleges in this country, you can get a great education anywhere, if you really want it" . In other words, an expensive school wont make your kid into someyhing he's not.
Yet some rich and/or famous people paid hundreds of thousands of dollars in bribes (some even went to jail too) trying to get their kids into elite schools (even if their kids could care less)...
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Re: The primary factor for picking a College/University is out of pocket cost

Post by fwellimort »

anon_investor wrote: Sun Apr 11, 2021 12:49 pm Outside of Ivy (or Ivy level) schools, I think choosing the in-state flagship makes the most sense. Why pay an Ivy league price tag for a mediocre education from a lesser private school? Advanced degrees, in particular professional degrees, completely change the importance of undergrad. For example, if you go to an elite law school your undergrad is a lot less important.
I'll agree (Columbia grad).

I would be willing to pay for a degree from Princeton (depending on the degree).
But I would not pay the prices for NYU, etc.
The top private schools for many are more affordable due to financial aid but this isn't the case for everyone.

It also depends which in state school OP has.

Anyways, I know two friends (personal anecdote). One went to Stanford for CS and the latter went to in state full ride.
The former during college had internship at both Google and Hudson River Trading. And interns in those places earn $30~55k each summer alone. Guy is currently at AirBnb (starting total compensation out of college of about $240k).
The latter who I think to be more talented in coding is earning $85k at a more local firm.

Don't discount brand name advantages for motivated students.

Plus, the guy at Stanford enjoyed his four years. The latter hated college. Figures.
I assume Stanford also provided better education and better 4 year experience over the in-state friend.

Life is unfair. Sometimes, paying the premium for every ounce of advantage is worth it depending on the degree and the type of student.

That said, this really depends on the field. If your kid wants to become a doctor no matter what, save costs in undergrad.
Each field and each student is different. Don't over generalize. That said, if your son/daughter wants to do traditional fine arts, then my personal recommendation is save costs.
Last edited by fwellimort on Sun Apr 11, 2021 1:07 pm, edited 1 time in total.
Pikel
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Pikel »

I drive by Colgate fairly often. All the kids there already drive $60,000 vehicles. Impressive!
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Re: The primary factor for picking a College/University is out of pocket cost

Post by esteen »

nigel_ht wrote: Sun Apr 11, 2021 12:32 pm
My point of view is that:

The purpose of going to college is to be able to make a better living as an adult.

The luxury of going to college is everything else...

If a college education cannot help you meet the physiological needs in the Maslow hierarchy then any other benefits higher up the pyramid will be ephemeral.

That doesn't mean that I believe that the only path to (financial) success is college but it is a one well travelled so the benefits and pitfalls are reasonably well known.
This is where you and I disagree. That is a primary purpose but by no means the only one. College undergraduate experience it's transformative in a lot of ways. The kid will never be able to experience that again, it's night and day compared to coming back an adult to get a degree. It's a unique set of freedom, responsibilities and experiences at that age. As someone jokingly said it's where you can meet your spouse, but there's a lot of truth in that. I think the answer is going to be different for each child and cost should be a driving factor, but ignoring all other factors is at the expense of your child's (non-monetary) growth.

This might be unpopular to say on a financial forum, but there's a lot more to life than dollars and cents.

All the best with your and your child's (because they should have a say too) decision.

-es
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Re: The primary factor for picking a College/University is out of pocket cost

Post by otinkyad »

The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.

The conclusion is unsupported. There are differences in the costs of different schools, therefore costs should be the primary factor. That's just random noise.

Colleges, professors, programs, and students are not fungible. They matter. I got a great education from a non-brand name private school, paid for by loans I paid off the first year I had a job out of college, and every bit of it, including classes outside my majors, remain useful to me thirty years later. Students who would excel at one school may flounder at another. (I did both.)

Community college results are hard to assess, but the bachelor's degree rates are abysmal. The various numbers I've seen say that 25% of CC students transfer to a four year school, and that of those that do transfer, 60% get their bachelor's degree. I haven't been able to find data for the cohort that went to CC *purely* for the cost savings. Notice that the graduation rate for students entering a four year college as a freshman is also 60%, and since the plurality of non-graduates leave before their sophomore year, that means that CC transfers are significantly less likely to graduate than their cohort.

Transferring schools is an excellent way to cut off friendships. Most of my friends met most of their life-long friends freshman year. I have a few friends from college, but most of the friends I made freshman year I never talked to again after I transferred. This is obviously just personal experience, but it matches that of most people I know that transferred.

Costs matter. No one denies that. But shopping for anything based purely or even primarily on cost is caveat emptor.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

afan wrote: Sun Apr 11, 2021 12:27 pm This assumes that all college, community vs flagship state vs elite private is equal for all students.

As others have noted, the elite privates have enough seats in required courses for everyone who needs them to take them on time. So their engineers, for example, graduate in 4 years. Your community college 2 years might not even get the student the perquisites for a desirable major, let alone actually to be permitted to enroll. They may need another year, or two, at the state U before they can start on their major. Again, assuming they can get in to the major at all after community college.
Many state universities have a 4 year path for local community colleges transfers to complete their major. This, of course, assumes that the student has an idea of what they want to do. If they don't you can easily spend 5 years at an elite private by switching majors after sophomore year as well.

https://www.statista.com/statistics/941 ... tion-rate/

83-90% graduate in 4 years.

While the average for all four year universities is 33.3% it is 88% at the University of Virginia and 83% at William and Mary. 76% for Berkeley.

Which indicates that if your local flagship is relatively selective you'll likely see similar 4 year graduation rates for the same level of student as in an Ivy.
Many of the elite colleges not only offer more money but they have more support services for kids who are struggling and ability to go on to financial aid if parents finances deteriorate while the student is enrolled. They have more availability of dedicated advising and more contact with professors. For those who are headed to graduate or professional school, the advising and faculty contact are crucial. Look at the proportion of grads of the elite privates versus even the public ivies who get advanced degrees.
There is a large difference between the value of most "elite privates" and HYPMS. I'm willing to pay for HYPMS. Less so for say, Brown or U Penn if my local flagship was decent.
At my alma mater, above 70% of graduates go on to advanced degrees, and as noted above, almost everyone who enters frosh year graduates. So about 70% of those who initially enroll end up with advanced degrees. Given the return on this kind of education, the odds are in the students' favor.
Certain majors require advanced degrees to make a career out of so whether an advanced degree has significant value depends on how much of the Maslow hierarchy it actually supports.

A BS Computer Science is likely more remunerative than a PhD in Asian Studies. It is easier to find a job with a BSCS than a PhD in Asian Studies.
Cost definitely matters. But you need to take into account all the costs, including years of attendance and opportunity costs down the road.
When you look simply at cost, you need to adjust for total years as a student. If it is more than 4, then factor the costs of the extra years
An extra year will run around $25K at the local state university which is about half the annual cost of a private 4 year using the listed numbers. While those numbers may not be exact, they probably are in the ballpark.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by fwellimort »

All I can add is, 'birds of the feather, flock together'.

And there is more to life than just money.
Money is just an abstract representation of finite time. All the money in the world does not substitute life experiences.
For instance, I have an earphone in which its retail price is $2k (64 Audio U12T). No regrets and love it.

Just be reasonable (not extreme) when it comes to college and cost.
Don't go $300k in debt for some random degree in a private school. But don't also cheap out completely when given a choice of attending Princeton and some random school given the cost burden isn't extreme.
Last edited by fwellimort on Sun Apr 11, 2021 1:17 pm, edited 1 time in total.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by winterfan »

A big part for my kid is the environment and the quality of education. Honestly, I don't want her at home for CC and then in state (has nothing to do with how much I love her, lol). It's a good way to save if you can't afford to go away, but I think it's good for kids to spread their wings in a somewhat controlled environment. I'm glad we will be able to fund that experience. Of course, I don't want to just throw money away.

Sometimes, I don't think in-state flagships are the best environment. Ours is spread out and I think they have to find apartments to live in off campus after their freshman year. That's not cheap where we are.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by anon_investor »

fwellimort wrote: Sun Apr 11, 2021 1:00 pm
Life is unfair. Sometimes, paying the premium for every ounce of advantage is worth it depending on the degree and the type of student.
+1. Sometimes the premium is worth it. Sometimes it is not. I can say personally, since I ended up going to law school, my undergraduate has basically been meaningless for my career. For law school it was definitely worth it to go the best school over the multiple full-rides at lesser schools
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

otinkyad wrote: Sun Apr 11, 2021 1:06 pm The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.

The conclusion is unsupported. There are differences in the costs of different schools, therefore costs should be the primary factor. That's just random noise.
The primary point remains: out of pocket costs should be a primary consideration because compounded over 20 years the difference can be very large.

Out of pocket is in the title. And I deliberately made the point where many BH'ers likely make enough that loans are the financial aid they likely qualify for with an average student.

If you can go to a private for cheap, then there's no reason to pursue a different option. Great for you, the cost difference was minimal.

However if the cost difference is $100K then the ROI of that higher cost option should be $1M higher over 20 years than the lower cost option.

My feeling is a lot of the push back is a lot like my kid's soccer coach telling me his top players have gotten $20K in scholarships by being great soccer players in the program. That's awesome but anyone who has a kid in club soccer knows your annual costs are like $5K between club fees, travel games, clinics, etc. If I wanted $20K worth of "soccer scholarships" the 100% guaranteed option was to play rec league and bank that money in a 529.

This analysis is no different. if I want my kid to have an extra million bucks by age 38 I can either roll the dice by going to a no-name private for $100K more over four years or taking that same $100K and putting it in VTI and sending my kid to state school.

Recreation league soccer may be less competitive and the coaches aren't professionals but for the average kid its the far better deal.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by anon_investor »

nigel_ht wrote: Sun Apr 11, 2021 1:22 pm
otinkyad wrote: Sun Apr 11, 2021 1:06 pm The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.

The conclusion is unsupported. There are differences in the costs of different schools, therefore costs should be the primary factor. That's just random noise.
The primary point remains: out of pocket costs should be a primary consideration because compounded over 20 years the difference can be very large.

Out of pocket is in the title. And I deliberately made the point where many BH'ers likely make enough that loans are the financial aid they likely qualify for with an average student.

If you can go to a private for cheap, then there's no reason to pursue a different option. Great for you, the cost difference was minimal.

However if the cost difference is $100K then the ROI of that higher cost option should be $1M higher over 20 years than the lower cost option.

My feeling is a lot of the push back is a lot like my kid's soccer coach telling me his top players have gotten $20K in scholarships by being great soccer players in the program. That's awesome but anyone who has a kid in club soccer knows your annual costs are like $5K between club fees, travel games, clinics, etc. If I wanted $20K worth of "soccer scholarships" the 100% guaranteed option was to play rec league and bank that money in a 529.

This analysis is no different. if I want my kid to have an extra million bucks by age 38 I can either roll the dice by going to a no-name private for $100K more over four years or taking that same $100K and putting it in VTI and sending my kid to state school.

Recreation league soccer may be less competitive and the coaches aren't professionals but for the average kid its the far better deal.
If you want your kids to be rich, have them pick schools and majors that give them the highest chance of will landing high paying jobs.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

fwellimort wrote: Sun Apr 11, 2021 1:14 pm
And there is more to life than just money.
Money is just an abstract representation of finite time. All the money in the world does not substitute life experiences.
How many life experiences can you afford with an extra million dollars by age 38?

What is the value of being able to FIRE by age 38 because of that extra million? How much more can you live not being tied down to a 9 to 5 job in your forties vs your sixties?

The analysis isn't to say that nobody should pay $200K+ for college expense but that the opportunity costs of doing so vs paying $100K could be around seven figures.

Everything above what you would pay at a local flagship state university is a luxury. I pay lots for luxury but I try to be aware of need vs want when I do so. Seems pretty BH to me.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

anon_investor wrote: Sun Apr 11, 2021 1:30 pm
nigel_ht wrote: Sun Apr 11, 2021 1:22 pm
otinkyad wrote: Sun Apr 11, 2021 1:06 pm The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.

The conclusion is unsupported. There are differences in the costs of different schools, therefore costs should be the primary factor. That's just random noise.
The primary point remains: out of pocket costs should be a primary consideration because compounded over 20 years the difference can be very large.

Out of pocket is in the title. And I deliberately made the point where many BH'ers likely make enough that loans are the financial aid they likely qualify for with an average student.

If you can go to a private for cheap, then there's no reason to pursue a different option. Great for you, the cost difference was minimal.

However if the cost difference is $100K then the ROI of that higher cost option should be $1M higher over 20 years than the lower cost option.

My feeling is a lot of the push back is a lot like my kid's soccer coach telling me his top players have gotten $20K in scholarships by being great soccer players in the program. That's awesome but anyone who has a kid in club soccer knows your annual costs are like $5K between club fees, travel games, clinics, etc. If I wanted $20K worth of "soccer scholarships" the 100% guaranteed option was to play rec league and bank that money in a 529.

This analysis is no different. if I want my kid to have an extra million bucks by age 38 I can either roll the dice by going to a no-name private for $100K more over four years or taking that same $100K and putting it in VTI and sending my kid to state school.

Recreation league soccer may be less competitive and the coaches aren't professionals but for the average kid its the far better deal.
If you want your kids to be rich, have them pick schools and majors that give them the highest chance of will landing high paying jobs.
Well that's easy. Computer Science at the local flagship has probably one of the highest ROI for college education around. More engineers have probably FIRE'd than any other profession.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by fwellimort »

No amount of money can repeat 4 years being surrounded by highly motivated peers.

Also, $100k is a chump change in some fields.
Some of my friends almost saved that much in the first two years out of college working at Google.
(Some of whom I'm absolutely confident wouldn't get into Google out of college had they attended another school.)

You make $100k sound like a lot. I'm less than 3 years out of college (Columbia Univ in NY) and I don't think it's much at all. There are fields out there in which ROI can be quite extreme out of college even in a pure financial perspective.

And at the current pace, I wouldn't be surprised to be a millionaire by early 30s. And I love my job. What's there to even do when you retire at say age 32? My relative who has almost ten million and doesn't spend money still works. Says life is more fun with the work she does. I agree. Not every 9 to 5 job is working at McDonald's. Some jobs are actually enjoyable. Plus, all I need in life is family + friends + bed + laptop + food. Having more money to me isn't worth it after a certain threshold.
Last edited by fwellimort on Sun Apr 11, 2021 1:46 pm, edited 4 times in total.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by anon_investor »

nigel_ht wrote: Sun Apr 11, 2021 1:36 pm
anon_investor wrote: Sun Apr 11, 2021 1:30 pm
nigel_ht wrote: Sun Apr 11, 2021 1:22 pm
otinkyad wrote: Sun Apr 11, 2021 1:06 pm The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.

The conclusion is unsupported. There are differences in the costs of different schools, therefore costs should be the primary factor. That's just random noise.
The primary point remains: out of pocket costs should be a primary consideration because compounded over 20 years the difference can be very large.

Out of pocket is in the title. And I deliberately made the point where many BH'ers likely make enough that loans are the financial aid they likely qualify for with an average student.

If you can go to a private for cheap, then there's no reason to pursue a different option. Great for you, the cost difference was minimal.

However if the cost difference is $100K then the ROI of that higher cost option should be $1M higher over 20 years than the lower cost option.

My feeling is a lot of the push back is a lot like my kid's soccer coach telling me his top players have gotten $20K in scholarships by being great soccer players in the program. That's awesome but anyone who has a kid in club soccer knows your annual costs are like $5K between club fees, travel games, clinics, etc. If I wanted $20K worth of "soccer scholarships" the 100% guaranteed option was to play rec league and bank that money in a 529.

This analysis is no different. if I want my kid to have an extra million bucks by age 38 I can either roll the dice by going to a no-name private for $100K more over four years or taking that same $100K and putting it in VTI and sending my kid to state school.

Recreation league soccer may be less competitive and the coaches aren't professionals but for the average kid its the far better deal.
If you want your kids to be rich, have them pick schools and majors that give them the highest chance of will landing high paying jobs.
Well that's easy. Computer Science at the local flagship has probably one of the highest ROI for college education around. More engineers have probably FIRE'd than any other profession.
Have your kids do that and hand them a pile of cash. Thread solved!
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Tingting1013 »

fwellimort wrote: Sun Apr 11, 2021 1:39 pm No amount of money can repeat 4 years being surrounded by highly motivated peers.

Also, $100k is a chump change in some fields.
Some of my friends almost saved that much in the first two years out of college working at Google.
+1.

$100k vs $300k is chump change when you consider lifetime earnings in the mid seven figures.

The college experience is much more important.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Vulcan »

nigel_ht wrote: Sun Apr 11, 2021 1:31 pm
fwellimort wrote: Sun Apr 11, 2021 1:14 pm
And there is more to life than just money.
Money is just an abstract representation of finite time. All the money in the world does not substitute life experiences.
How many life experiences can you afford with an extra million dollars by age 38?

What is the value of being able to FIRE by age 38 because of that extra million? How much more can you live not being tied down to a 9 to 5 job in your forties vs your sixties?

The analysis isn't to say that nobody should pay $200K+ for college expense but that the opportunity costs of doing so vs paying $100K could be around seven figures.

Everything above what you would pay at a local flagship state university is a luxury. I pay lots for luxury but I try to be aware of need vs want when I do so. Seems pretty BH to me.
Our elder son could attend Vanderbilt on a prestigious "full-tuition plus" merit scholarship (less than $100K out of pocket over four years for room and board, books, and personal expenses).

We instead sent him to his first choice (MIT), which is about $50K/yr after need-based aid.

And if our younger is so lucky in admissions, we'll do the same for him.

May not be very BH ¯\_(ツ)_/¯
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Broken Man 1999 »

OP, there are those in their 40ties who have a NW of $1mil and attended a variety of universities, from private to public. They reached their NW the old-fashioned way, they earned it.

I think the best approach to college might be for student to determine their desired field of studies, THEN look at universities. First, find the fit for the student, then find the fit for your money.

The student should be focused on their studies, not thinking of investments growing for 15-20 years, the future gift that could very well be expected, but never received.

We offered our daughters the best that we could afford. I imagine the same type decision will hold true for the grandchildren, as well. Their parents and both sets of grandparents are very supportive of education, as all are college educated. We all want them out with no debt.

Turning to the two year at community college option... I attended a community college that coordinated curriculums very tightly with the public universities. If you followed the correct track, you would be able to transfer to the university as a junior. My end goal was a business degree, so I had to take accounting, economics, etc., pretty much the same courses a freshman or sophomore would be taking at a university. My transfer was smooth as it could be, all courses taken were correct for the undergraduate degree I was pursuing.

I believe I received an excellent education at my community college, I had no issues with the upper level courses that required a strong base knowledge to build upon. I think some look down on the teachers at community colleges, but one difference I realized when I hit the university was so many of the teachers at my community college were working jobs in their area of instruction. Real world exposure. Not always the case at the university. Plus, the class size difference, not to mention courses being taught by graduate assistants.

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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

esteen wrote: Sun Apr 11, 2021 1:05 pm
nigel_ht wrote: Sun Apr 11, 2021 12:32 pm
My point of view is that:

The purpose of going to college is to be able to make a better living as an adult.

The luxury of going to college is everything else...

If a college education cannot help you meet the physiological needs in the Maslow hierarchy then any other benefits higher up the pyramid will be ephemeral.

That doesn't mean that I believe that the only path to (financial) success is college but it is a one well travelled so the benefits and pitfalls are reasonably well known.
This is where you and I disagree. That is a primary purpose but by no means the only one. College undergraduate experience it's transformative in a lot of ways. The kid will never be able to experience that again, it's night and day compared to coming back an adult to get a degree. It's a unique set of freedom, responsibilities and experiences at that age. As someone jokingly said it's where you can meet your spouse, but there's a lot of truth in that. I think the answer is going to be different for each child and cost should be a driving factor, but ignoring all other factors is at the expense of your child's (non-monetary) growth.
The college undergraduate experience is wonderful and something I don't want my kids to miss. But it IS a luxury.

It is not a luxury worth crushing college debt and a major that can't provide a career that can fund a similar or better lifestyle than what they grew up with.

And I think we're WAAAAY past the point of thinking that any parent or student should believe that any part of the value of college is a MRS degree.

Even from the perspective of "life experience" which is better?

Spending $50K a year for a no-name private OR
Spending $25K a year for the local state U and $5K for a travel budget for your kid to use every summer and saving $20K for their future?

Or spending $25K to subsidize a gap year teaching English in some other country and traveling around?

I'm not rich and my kid isn't going to be able to get into Harvard. We're just an average family of average intelligence and average means that has to pick our luxuries and strategize for the future.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Vulcan »

anon_investor wrote: Sun Apr 11, 2021 12:49 pm Outside of Ivy (or Ivy level) schools, I think choosing the in-state flagship makes the most sense. Why pay an Ivy league price tag for a mediocre education from a lesser private school? Advanced degrees, in particular professional degrees, completely change the importance of undergrad. For example, if you go to an elite law school your undergrad is a lot less important.
I would agree that few schools are worth what they charge.

However, benefits of an undegrdaduate degree from an elite institution persist even after getting an elite graduate degree, if this research from Vanderbilt is to be believed.

Catching Up Is Hard to Do: Undergraduate Prestige, Elite Graduate Programs, and the Earnings Premium

https://papers.ssrn.com/sol3/papers.cfm ... id=2473238
A commonly held perception is that an elite graduate degree can “scrub” a less prestigious but less costly undergraduate degree. Using data from the National Survey of College Graduates from 2003 through 2017, this paper examines the relationship between the status of undergraduate degrees and earnings among those with elite post-baccalaureate degrees. Few graduates of nonselective institutions earn post-baccalaureate degrees from elite institutions, and even when they do, undergraduate institutional prestige continues to be positively related to earnings overall as well as among those with specific post-baccalaureate degrees including business, law, medicine, and doctoral. Among those who earn a graduate degree from an elite institution, the present value of the earnings advantage to having both an undergraduate and a graduate degree from an elite institution generally greatly exceeds any likely cost advantage from attending a less prestigious undergraduate institution.
And that's before we even get into intanginbles.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: The primary factor for picking a College/University is out of pocket cost

Post by fwellimort »

nigel_ht wrote: Sun Apr 11, 2021 1:54 pm Spending $50K a year for a no-name private OR
Spending $25K a year for the local state U and $5K for a travel budget for your kid to use every summer and saving $20K for their future?
I too would take the $25k local state u any day.
No name privates are not worth that kind of tuition.

I'm just trying to state options aren't binary. It is possible a student is better in the former environment but if I were a parent, I too would opt for the latter.

Anyways, there's non Ivy like schools that can also be worth it. My middle school friend who graduated from Juilliard (undergrad and master's) seems to be doing very well in life as a flute-ist performing in Carnegie Hall, etc. But then again, Juilliard is basically the Harvard of the music world so that might not have been the best example.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

Broken Man 1999 wrote: Sun Apr 11, 2021 1:46 pm OP, there are those in their 40ties who have a NW of $1mil and attended a variety of universities, from private to public. They reached their NW the old-fashioned way, they earned it.
I'm not sure why this is a particular virtue.
The student should be focused on their studies, not thinking of investments growing for 15-20 years, the future gift that could very well be expected, but never received.
My kids will get X dollars for school. Everything else (inheritance, etc) is for the future. If they spend Y dollars for school where Y<X I'm not going to pocket the difference.

Why should they NOT think about $(X-Y) as an investment growing for the next 20 years?

Will this not reinforce the LYBMs concept and the value of Time in the Market?
Turning to the two year at community college option... I attended a community college that coordinated curriculums very tightly with the public universities. If you followed the correct track, you would be able to transfer to the university as a junior. My end goal was a business degree, so I had to take accounting, economics, etc., pretty much the same courses a freshman or sophomore would be taking at a university. My transfer was smooth as it could be, all courses taken were correct for the undergraduate degree I was pursuing.

I believe I received an excellent education at my community college, I had no issues with the upper level courses that required a strong base knowledge to build upon. I think some look down on the teachers at community colleges, but one difference I realized when I hit the university was so many of the teachers at my community college were working jobs in their area of instruction. Real world exposure. Not always the case at the university. Plus, the class size difference, not to mention courses being taught by graduate assistants.

Broken Man 1999
Yes, that's similar to my personal experience. I went to community college while in high school and had credits transfer over.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by GCD »

afan wrote: Sun Apr 11, 2021 12:27 pm Your community college 2 years might not even get the student the perquisites for a desirable major, let alone actually to be permitted to enroll. They may need another year, or two, at the state U before they can start on their major. Again, assuming they can get in to the major at all after community college.
This is certainly true, but it's not a mystery. Anyone who takes the time to research it can find out exactly how this works. I know of at least 3 states (IL, ID, VA) where the process is explicitly laid out and written in stone. Go to X CC, take Y courses, get Z GPA and all those classes will transfer and you qualify for a specific major at a specific state school. I assume that is the case for most states, but I haven't looked into more than the 3 I mentioned. This probably blindsides a lot of first-gen college students, but anybody who reads BH threads on paying for college is most likely doing their homework.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by MMiroir »

otinkyad wrote: Sun Apr 11, 2021 1:06 pm The calculations are with the wrong numbers (sticker price). The actual numbers are much harder to come by. For example, the cheapest 4 year option for my son was a solid out-of-state public school. Yes, it was cheaper than 2 years of local CC plus 2 years of in-state public school. Private schools can also easily be cheaper than public schools of similar ranking. Transfers from a CC typically lose out on all merit aid, which can be a substantial cost savings at both private and public schools.
That is what a lot of people miss when they promote the CC route. There are plenty of merit scholarships out there for above average students who can keep their GPA up and prep for the ACT/SAT. Flagship schools like Alabama, Auburn, Arizona, Arizona State, Iowa, ISU, Missouri, Kansas, KSU, Kentucky, and Utah among others offer in-state rates for OOS students with sufficient grades/test scores. Yes, it takes work on the part of the high school student to keep the GPA up and test well, but that is a much better life training than cheapening out and going the CC route.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by dewey »

Institutions that admit only the very best students have built in the likelihood of high success and graduation rates. Those students' past performance is predictive of future performance. Elite institutions likely get a bit too much credit for what those same students would likely have done at almost any college. The vast majority come from backgrounds with above average cultural capital, etc. The public regional universities, and to a lesser extent flagships, admit lots of students who are first in their families to attend college, and/or come from backgrounds of modest means, etc. When they earn a degree, it would seem there has been more 'value added' by the institution for that student's future than for those very likely destined to succeed from the outset no matter where they go to school.

Frank Bruni's book "Where You Go Is Not Who You'll Be: An Antidote to the College Admissions Mania" might be helpful in this discussion. As summarized by one review: "Bruni, a bestselling author and a columnist for the New York Times, shows that the Ivy League has no monopoly on corner offices, governors' mansions, or the most prestigious academic and scientific grants. Through statistics, surveys, and the stories of hugely successful people, he demonstrates that many kinds of colleges serve as ideal springboards. And he illuminates how to make the most of them. What matters in the end are students' efforts in and out of the classroom, not the name on their diploma."
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Re: The primary factor for picking a College/University is out of pocket cost

Post by lazynovice »

livesoft wrote: Sun Apr 11, 2021 12:42 pm I thought the purpose of going to college was to meet a future spouse that would provide for you in the manner to which you are accustomed.
I need to request a refund, please.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Big Dog »

to our family, the primary factor in choosing a college was "value" (as are most of my purchase decisions).

It all comes down to that fact that our instate flagship is $35k per year, so how much more value does a private offer for the increased price? My kids took classes at the junior college when they were in HS, so that was never an option.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by stoptothink »

Tingting1013 wrote: Sun Apr 11, 2021 1:41 pm
fwellimort wrote: Sun Apr 11, 2021 1:39 pm No amount of money can repeat 4 years being surrounded by highly motivated peers.

Also, $100k is a chump change in some fields.
Some of my friends almost saved that much in the first two years out of college working at Google.
+1.

$100k vs $300k is chump change when you consider lifetime earnings in the mid seven figures.

The college experience is much more important.
I went to UCLA for undergrad (finished with zero debt and it costed my mom $0), can somebody use actual words to explain what this magical "college experience" is? It was my "dream school" because I ate up whatever my high school counselors were feeding (neither of my birth parents or my older brother graduated high school, so they couldn't help), I left with a degree but not otherwise some different person because of the environment. I turned down Ivy grad school opportunities because the money worked out better going elsewhere and I truly had better "experiences" (liked the area, environment, professors, my classmates, research opportunities...) at both of my grad schools (neither with same global cache as UCLA) than I did in undergrad.

Considering the field that I decided to study (exercise physiology/health sciences), whether I went to HYPMS or local U probably had little relevance in my opportunities and how much I ended up making, and I'm doing pretty well. It can obviously make a difference depending on the field, but I think those fields are fewer than many are willing to acknowledge. It's really out of touch to suggest that $200k is "chump change" for the general population; lifetime earnings in mid-7-figures isn't just the norm, even for HYPMS grads.
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Re: The primary factor for picking a College/University is out of pocket cost

Post by Tingting1013 »

stoptothink wrote: Sun Apr 11, 2021 2:27 pm
Tingting1013 wrote: Sun Apr 11, 2021 1:41 pm
fwellimort wrote: Sun Apr 11, 2021 1:39 pm No amount of money can repeat 4 years being surrounded by highly motivated peers.

Also, $100k is a chump change in some fields.
Some of my friends almost saved that much in the first two years out of college working at Google.
+1.

$100k vs $300k is chump change when you consider lifetime earnings in the mid seven figures.

The college experience is much more important.
I went to UCLA for undergrad (finished with zero debt and it costed my mom $0), can somebody use actual words to explain what this magical "college experience" is? It was my "dream school" because I ate up whatever my high school counselors were feeding (neither of my birth parents or my older brother graduated high school, so they couldn't help), I left with a degree but not otherwise some different person because of the environment. I turned down Ivy grad school opportunities because the money worked out better going elsewhere and I truly had better "experiences" (liked the area, environment, professors, my classmates, research opportunities...) at both of my grad schools (neither with same global cache as UCLA) than I did in undergrad.

Considering the field that I decided to study (exercise physiology/health sciences), whether I went to HYPMS or local U probably had little relevance in my opportunities and how much I ended up making, and I'm doing pretty well. It can obviously make a difference depending on the field, but I think those fields are fewer than many are willing to acknowledge. It's really out of touch to suggest that $200k is "chump change" for the general population; lifetime earnings in mid-7-figures isn't just the norm, even for HYPMS grads.
The “general population” doesn’t have a college degree. Only 30% of adults do.

Lifetime earnings for an average college graduate is $3M.

HYPMS grads are definitely getting at least $5M
Topic Author
nigel_ht
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Joined: Tue Jan 01, 2019 10:14 am

Re: The primary factor for picking a College/University is out of pocket cost

Post by nigel_ht »

Vulcan wrote: Sun Apr 11, 2021 1:57 pm
anon_investor wrote: Sun Apr 11, 2021 12:49 pm Outside of Ivy (or Ivy level) schools, I think choosing the in-state flagship makes the most sense. Why pay an Ivy league price tag for a mediocre education from a lesser private school? Advanced degrees, in particular professional degrees, completely change the importance of undergrad. For example, if you go to an elite law school your undergrad is a lot less important.
I would agree that few schools are worth what they charge.

However, benefits of an undegrdaduate degree from an elite institution persist even after getting an elite graduate degree, if this research from Vanderbilt is to be believed.

Catching Up Is Hard to Do: Undergraduate Prestige, Elite Graduate Programs, and the Earnings Premium

https://papers.ssrn.com/sol3/papers.cfm ... id=2473238
A commonly held perception is that an elite graduate degree can “scrub” a less prestigious but less costly undergraduate degree. Using data from the National Survey of College Graduates from 2003 through 2017, this paper examines the relationship between the status of undergraduate degrees and earnings among those with elite post-baccalaureate degrees. Few graduates of nonselective institutions earn post-baccalaureate degrees from elite institutions, and even when they do, undergraduate institutional prestige continues to be positively related to earnings overall as well as among those with specific post-baccalaureate degrees including business, law, medicine, and doctoral. Among those who earn a graduate degree from an elite institution, the present value of the earnings advantage to having both an undergraduate and a graduate degree from an elite institution generally greatly exceeds any likely cost advantage from attending a less prestigious undergraduate institution.
And that's before we even get into intanginbles.
There are intangibles from HYPSM that have value outside of this analysis.

Now it's weird that the author references Dale and Krueger in a footnote stating:

"Dale and Krueger find that, except for low income students, earnings are not affected by selectivity of undergraduate college once individual characteristics are accounted for. However, their research is based on data from students at a limited number of highly selective colleges and universities. This means that those students who were admitted to more selective schools than they ultimately entered were still attendees (and usually graduates) of highly selective institutions, and does not mean that the same individual would have been equally successful had they instead attended a nonselective college."

And then hand waved it away by claiming that these were elite schools anyway even though they were buried into the Tier 3 schools being compared against "elite" Tier 1 institutions.

It is clear that he is not controlling for similarly qualified students when he states:

"First, “scrubbing” a less prestigious undergraduate degree is rare—students who attend nonselective institutions for their bachelor’s degrees rarely move up to an elite graduate or professional school for a post-baccalaureate degree."

This means he's including ALL candidates and not just the ones that would have qualified for elite, highly selective, universities or his results would look more like Dale and Krueger. He's not controlling for student quality but instead using his tier classification as a stand in.

Take UVA or GT as examples. Highly selective Public Research I but in the same Tier 3 category as University of Utah or Arizona State. That the outcomes for the total population of Tier 3, of which few likely do end up in elite graduate programs is lower than his Tier 1 schools is expected.

But when taken against the better flagships which ARE selective the outcomes aren't going be nearly as pronounced...as seen in Dale and Krueger.

There are STILL advantages to HYPSM even for them but not to the point where going to UVA and then Stanford for grad school is likely to make much difference. Even if it does, certainly that study doesn't prove anything of the sort.
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