Saw this on linkedin and thought i'd bring it over here for discussion. As a banker, when someone came to me for a loan, i'd evaluate the ability for the business to generate cash to repay the loan. I imagine the college landscape would look completely different if that was the case.

The "red" degree programs all have merit...but an 19 year old should understand that $100k+ in college debt will do more harm than good if that's the path they take.

Okay I have the dumbs.

I'm a Psychology major.

What does it mean -$19k. I see the ROI on the top, but I don't understand it.


Does it mean had I not gotten a degree, I would be making $19k more?

That's my understanding- but it assumes you took out loans to pay for that degree.

I see it more like this, but I dunno their assumptions to back into the -16k number

"Compared to working after high school..." Is the tricky part for me. I assume they are just using some generic job with annual earnings of, let's just say, 65k.

So option 1 - highschool then job (no college debt, lower earnings)

65k x 47 working years = 3,055,000

option 2 - college, debt, higher earnings

-300k (college debt) + 85k x 42 working years (psyc majors usually take a year to backpack in europe ) = 3,270,000

I'd be showing positive ROI using these numbers where they show negative...but I think my method makes based on how I'm interpreting their chart.

ETA: I missed CollegeNPV at the bottom. They're doing the net present value of future cashflows if that's to be taken at face value. That throws in a discount rate that would be another assumption to make.

I Am A Critic said:

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JMac03 said:

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Okay I have the dumbs.

I'm a Psychology major.

What does it mean -$19k. I see the ROI on the top, but I don't understand it.


Does it mean had I not gotten a degree, I would be making $19k more?

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The graphic clearly shows -$16k. There's your first sign.

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Touche

It's a good thing I don't follow that statistic.

Sims said:

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ETA: I missed CollegeNPV at the bottom. They're doing the net present value of future cashflows if that's to be taken at face value. That throws in a discount rate that would be another assumption to make.

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How can a NPV of future cash flows be negative if you had no outflow at the beginning? I bet some computer science major created this.

Just glad to be a part of the biggest circle on there

Social sciences number is very inflated by the insider trading of our elected officials on Capitol Hill.

engineering seems massively undervalued to me

sts7049 said:

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engineering seems massively undervalued to me

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same here.
call it $100k for degree.
that's $670k more in earnings over a career, say 40 years, so only $15k more a year compared to non degree?

They must be using some other assumptions/formulas.

An engineer will make several million more than a typical HS grad over a career.