In this case, I don't think your data is that strong. The parent could get them an entry level job in tech, conceivably one comparable with one one would obtain fresh out of college.
Separately from this specific case, remember, to pay off 200k in debt (cost of many good public schools), you need to make about 2M! If you save 20%, then you need an EXTRA 1M over not going to college just to break even. I'm not even factoring in interest that many students are getting these days. And then you have the opportunity cost of not investing the money you did make when you didn't have debt by skipping college. So when you consider these things, a 900k bump in lifetime earnings doesn't look good.
Now if you get a scholarship or if you factor in the intangibles the parent mentions then I think it's a no brainer. But strictly from a lifetime earnings standpoint it's oversold. You have to factor in the foregone earnings, the debt, the interest and the opportunity cost of not being able to save and invest money.
Personally I think it's worth it but best for most people to go to a lower tier university that won't start them off with a mountain of debt.
You can certainly accumulate a mountain of debt and one should factor that in.
Not all degrees at all colleges make economic sense or have the same rate of return. That said, there are plenty of net present value calculations that include opportunity costs including in the links I have provided.
I want to correct a few things though.
Leaving the opportunity to take 2 years of community college and finish at a university aside, the most expensive public school in the USA (for in-state students) is the University of Pittsburgh at about $19k a year.
Your $200k debt for public education is either grossly exaggerated, is for out of state tuition and/or includes other factors such as housing and food (items that you would have had to purchase regardless of college status). In fact, the average graduation debt for those at public institutions was $25,550 not $200,000.
The opportunity cost to invest the cost of college is also unrealistic. Unless you are a Thiel Fellow, no one is going to loan/give you $200k to "play the market" as a high school graduate.
You do get an economic advantage of entering the workforce sooner than a college graduate, but that advantage lasts for about 10 years on average and by that time a college graduate typically catches the earnings of a high school graduate (cost of degree and opportunity included).
You might also be interested in this Brookings report comparing investing is stocks, bonds, or university
That $25,550 average for college graduation debt is out of date. As of 2016, that number is up to $37,172, which itself was up from $35k the previous year. It's probably up to close to $40k as of this year.
It breaks it down further in there. For combined undergraduate and graduate programs, getting an MS brings it up to $50k, Law is $140k, Medicine is $160k.
And Law doesn't even pay that great if you're not at the tippy top of your class anymore. The average salary for that is at $82k a year. I'm making more than that, and my student loans (that were only $25k at their max) have been really annoying. I can't imagine being able to pay $140k of loans for a Law degree while only making $82k a year.
Ok yes if you attend in-state then 20k (tuition, books) is doable for a good school.
But let's say 60k in debt though, saving 10% isn't even easy for most people especially if you're in an expensive area where most the jobs are. So you'd need 600k extra. Most people only save 2.2% of their income.
> In fact, the average graduation debt for those at public institutions was $25,550 not $200,000.
The average graduation debt probably includes payments made by parents. Yes if your education is being subsidized that will change the analysis. You can't really answer the question of whether college is a good idea unless you know if there are any subsidies for a person. Also your numbers are outdated. It's 38k in 2017.
I looked at your Brookings report but it's from 2011 and factors in an average 4 year degree at only 48k. If they update it to 2018 their 15% return would crumble.
Additionally, Brookings says "On average, 18 and 19 year olds right out of high school earn about $11,600 per year, while 20 and 21 year olds with a high school degree average about $15,400 per year".
Anyone that can get entry level in tech (as the parent suggested) will be multiples of that. If you can only obtain a 11-15k yr annual salary, then yes I agree college is a good investment (if you go in-state). But if you compare it to entry level tech as the parent suggests or an electrician or other trade rather than minimum wage fresh out of high school, no I don't think it's wise for most people unless someone is helping you pay for it (scholarship, parents, company, etc.). A 2 yr or cheap online degree is probably better for most people in my opinion.
Separately from this specific case, remember, to pay off 200k in debt (cost of many good public schools), you need to make about 2M! If you save 20%, then you need an EXTRA 1M over not going to college just to break even. I'm not even factoring in interest that many students are getting these days. And then you have the opportunity cost of not investing the money you did make when you didn't have debt by skipping college. So when you consider these things, a 900k bump in lifetime earnings doesn't look good.
Now if you get a scholarship or if you factor in the intangibles the parent mentions then I think it's a no brainer. But strictly from a lifetime earnings standpoint it's oversold. You have to factor in the foregone earnings, the debt, the interest and the opportunity cost of not being able to save and invest money.
Personally I think it's worth it but best for most people to go to a lower tier university that won't start them off with a mountain of debt.