SIO486: Good News! According to The Economist, College Is Totally Affordable!

Transcript

This transcript was generated automatically and may contain errors — the audio is the record.

0:00:13 Thomas: And welcome to Serious Inquiries Only. This is episode 486. I'm your host, Thomas Smith, and got a fun one for you today. Jenessa Seymour is here to debunk a really terrible article by The Economist. To The Economist, there actually is no student loan crisis. There is no college affordability crisis. None of that. Good news, everyone. It just doesn't exist. How in the world are they making that claim? Well, you'll find out. In addition to looking into that, we talk a lot about, and Jenessa brings a lot of numbers to bear on whether or not education, going to college, whether or Not, it's like worth it just purely in a financial sense. So much that's great about it in a non -financial sense, but just because numbers are quantifiable and this is kind some of the claims that Are being dealt with in the article. It worth going to college? Does it the in end make you more money? It Does even out, especially when you properly account for costs and all that? Lot of interesting stuff. Plus, why in the world is the economist telling us that there is no college affordability crisis. Very bizarre.

0:01:13 Thomas: The show at patreon.com/seriouspod. you can lose the ads and get occasional other goodies. So much to everyone who supports the show. After this break, we'll be on with Jenessa to figure out why the economist is saying this. And are they right?

0:01:39 Thomas: Dr. Jenessa Seymour. I'm excited that you're now becoming a regular. Really excited to have you. This sounds like a really interesting slash maybe frustrating debunk. Um, did you get onto this one? Tell us, tell us the origin story here.

0:01:43 Jenessa: Awesome yeah I used to be, I don't want to say like a fan of The Economist because that sounds really, really lame.

0:01:59 Thomas: Huge fan. Issue.

0:02:01 Jenessa: To subscribe. I would like, attention to the stuff they wrote. I thought I was getting like pretty good. Like, I don't want to say unbiased. I don't think anybody is truly unbiased, but I would get like fact reporting numbers.

0:02:11 Thomas: Yeah. I didn't associate them with being bad in any way.

0:02:15 Jenessa: Yeah, I didn't either. Then it' years two ago, almost to the day that this article we're going to talk about today came out. And I read it and well I'll give you the headline and you'll see why I was immediately confused it's American universities have an incentive to seem extortionate with the subheading they are much cheaper than the crisis of college affordability suggests uh Ah, yeah.

0:02:42 Thomas: Have an incentive to seem. Would, hmm. Okay. Well, here's the thing. I know me. Me I always like to be fair try to make sure I'm getting the best version of the arguments I will say that like when I went to uh university it did find it weird that like felt like the tuition back then and this will probably sound quaint it was like 35,000 a year and that was murder like that was absolute extortion at the time and it was and it like felt like with everybody they did a thing where it was like everybody got some amount of help so So that it sort of felt of there like, why not just reduce that number for everyone? Like, it feels like you're giving everyone help anyway. So why is it that price? Is is it anything like that that? Being

0:03:18 Jenessa: Congratulations. You just wrote the article. You're done. Done! Hooray!

0:03:22 Thomas: That's it. All right.

0:03:23 Jenessa: Yeah, so that's, was the thought process in my head was I'm like, always open to a like, well, actually on numbers that we've misunderstood, but I'm thinking I'm coming to The Economist. I'm going to get opportunity costs. You could have spent those four years in a career. Instead, you went into debt. Talk about who's paying cash, which means you just paid for it, and who's going into debt, which we know the say the crisis of college affordability. It's the student debt crisis is the words we've been using, right?

0:03:50 Thomas: Yeah.

0:03:50 Jenessa: So what about that? And what about, you vested in a retirement account four years earlier than everybody else because you've been working? And whatabout the upper limit on jobs you just can't get without a bachelor's and which degrees? Like, I'm thinking we're going to get an economic like, yeah, give me the like, oh, nitty gritty.

0:04:07 Thomas: And most importantly, what the one thing that stuck out at me was like, forget how you phrase it, but is there an incentive for universities to want to appear expensive? Like, what does that do? Is it prestige or something like that?

0:04:18 Jenessa: So they are going to argue that that that essentially what has happened it's only a paragraph in there that justifies that part of the heading but they're going to say well uh and students get to say well the college is so expensive but I got a scholarship. I went to the fancy school. And they're not wrong, I don't think.

0:04:42 Jenessa: I think there's a logic to this. What they will argue all the way throughout, they're nicht just going to say that college is cheaper than you think. They're literally going to argue we don't have a student debt crisis they're going to say it is like worth it to go to college and that then you quit complaining is the the vibe all the way throughout that like we're wrong about this and they're gonna take these numbers and be wrong about the numbers that they report and not take into account all of the things I think you should take into account that we just talked about.

0:04:55 Thomas: Well, what that? Sounds like the opposite of what a thing called The Economist should do. Like, that article, whoever wrote that article should be like, that should be the target audience of The Economists.

0:05:29 Jenessa: And yes, exactly. I came here thinking I would get the stuff I was thinking of and more. And literally all we are are going to get is here is the sticker price. Here is the average price that people typically pay. I'll come back to that. Here's the average lifetime increased earnings. They did break that out by gender. I appreciate that they remembered that's a factor. Oh, there you go. You make more money and you didn't pay as much as the sticker place. And what are you all bitching about? That's the whole article. And I was like, are you kidding me? I could have written that in two minutes. And instead I spent hours researching the factors I wish they researched. You're welcome. I'll tell you all about it. Deep breaths. It's fine.

0:06:12 Thomas: Is so much of our media environment just assigning Jenessa work? Like, why, that shouldn't be. Us too.

0:06:16 Jenessa: Know it's so frustrating when I'm like, I want to be able to trust reporters anymore.

0:06:23 Thomas: This part of the enshitification? Can we call it part of that? I don't know if that's a different thing technically, but boy.

0:06:28 Jenessa: Has to be. It has to to be because it's all about clickbait. That headline is the clickbaitiest thing you've ever heard in your life. You click on it and God damn it. Oh, everybody. The economist is also guilty of it. They don't give you sources. They're just going to say, according to the college board and I have to go lose my mind for an hour trying to figure out where these numbers came from. They're going to round all of these numbers. So I can't just Google like 29 K college board.

0:06:56 Jenessa: It's because the number is not 29K. So I'm never going to freaking find it. And I got it. Oh my God, I was losing it. But I did eventually find the numbers. So allow me to explain what's actually happening here. Sticker price. The U.S. has the second highest tuition among OECD countries. I think that's just like wealthy countries .I don't really understand that part.

0:07:20 Thomas: All right. Still have the LCD. I don't, I haven't gotten an LED yet. I hear they're awesome though.

0:07:25 Jenessa: I gave up on some of these acronyms to be honest but we're behind england apparently england sticker price of college also very expensive I don't know um we'll see we're second among wealthy countries this probably won't surprise you because a lot of wealthy countries it's free so like it's kind of hard to you know the bar is low they tell us, according to U .S. News and World Report, link, good luck finding it, average sticker price for a public college is $10K, for a private college is 40K. 77 % of students are going to public school. Hooray, public colleges, they're cheaper, you're getting the same quality education.

0:07:39 Thomas: That's true. That really sounds cheaper than I thought. 10K. Wow. All right.

0:08:05 Jenessa: A critical thing we're going to miss all the way throughout. I'm going to just spoiler alert you right now. We're going to talk about tuition and fees. We are not going to Talk About Room and Board, which is double the price.

0:08:14 Thomas: Oh, I don'T remember how they accounted for that. I think that was part of the, 35K the number. Number okay gotcha

0:08:21 Jenessa: Almost certainly. When I went to the cheapest public school in the New York State public college system, my tuition after my whole 1K scholarship was, I think I paid 4K in tuition, and it came to 14K a year once you added a room and board like I have to eat and sleep and this costs money for a person who's not working a job and also they the amount of money they charged me to sleep in a four foot by four foot room with a stranger is like no kitchen shared bathroom yeah right like oh god compared to like getting an apartment that whole ass house is like much cheaper in half of these places, whatever. To remember, a lot of schools will force freshmen to live on campus. You have to pay that room

0:08:33 Thomas: Congrats buy dinner for now right

0:09:12 Jenessa: And board at least one year. You take into account the total cost of attendance, which colleges are going to publish because if you need to take out student loans, you can't just do tuition. You can't just do room and bored. It's books. It is keeping yourself alive with other bills. The cost of attendance, will they have used the 2021 College Board Report. Was an article in 2023. The 2022 report was already out. Why are we using 2021? I don't know. I had to check all of them to figure out which numbers they were using.

0:09:44 Thomas: Was just to fuck with you yeah

0:09:46 Jenessa: Clearly just to ruin my night. Um published cost of tuition at a private non-profit for a year was it's looking like on this graph about 58 000 yeah whereas when we got to our published tuition and fees it was just under 40 so it's almost a 20K gap and they're going to tell us the sticker price is going to be more like 15. Oh. And they're doing it wrong. The biggest problem is they're going to use averages. Going tell us, well, the average cost is 40k sticker price. On average, the discount people get is 50%. So you would think, okay, so the average person pays 20. then I think to myself, what I always think when we are talking about a financial thing, is that we probably need to look at the median, not the mean,

0:09:58 Thomas: That sounds like what I would guess, okay

0:10:40 Jenessa: I somehow doubt this is normally distributed. I bet you we don't have the average person getting a certain discount and then like a nice even drop off on either side, where like most people get a medium scholarship and then some people get lot and some people get none, but most get no, not really, right?

0:10:59 Thomas: Yeah so you thinking like a lot of people have a full ride and nothing something rather or

0:11:03 Jenessa: What I was thinking. And it turns out uh happened is um in eight eight people get a scholarship at all yeah yeah so

0:11:08 Thomas: That's it. Wow. And sorry, was this for all or was this public private?

0:11:12 Jenessa: This is um much across the board um we are talking about institutional grants so this is scholarships from your school your this will keep getting phrased as like a discount which I would assume is not some stranger or the government giving you money right that's it's not a pell grant it's a scholarship yes

0:11:31 Thomas: Yeah. This is the one that sort I was talking about where it's like, you well, could kind of think of it either way. I mean, you Could, you can charge me a million dollars a year and say, but we're going to grant you 970 ,000 or something, you know, it's it's like, I don't really know what the point of that is.

0:11:44 Jenessa: That part yeah so I'm only looking at that I'm not looking at like if the government gave you a pell grant that's a separate issue right so one in eight are going to get that kind of institutional scholarship 97 will get 2500 or less so that's their their institutional scholarship.

0:12:00 Thomas: Of anything. Institutional still. Okay, sorry. I thought you switched it.

0:12:06 Jenessa: So they can still, obviously people apply for financial aid, which is the federal loan. Can also apply for that financial aid where the government will, there's the parts, right, where they're giving you a loan and they're going to charge you interest and put you into debt for the rest of your life. And then there's part where they just like grant you a certain amount of aid, federal grants.

0:12:23 Thomas: I feel like that changed since I did it. So I don' t remember what we had, but I I had subsidized loans to some amount of that.

0:12:31 Jenessa: So the subsidized are think it's essentially that like gonna give the school more money than they're going to charge you is essentially how I understand it

0:12:38 Thomas: Subsidized. I though was when they're will pay a bank to lend me money at a lower interest rate and So they're subsidizing interest. Was that what I thought it was?

0:12:46 Jenessa: What am I thinking of I'm thinking of the grants I'm looking into the grants

0:12:48 Thomas: I think you're thinking. Yeah, probably. I'm just thinking of the loan. So like the loan, there was the Pell Grant thing thing where there was like a small amount of money. I don't want to say it was like five thousand a year or something. Fifty five hundred. I know something like that where that's the government, I you money. Then if I remember right. And then there was The government loans that was actually those were super interest.

0:13:08 Thomas: And Yeah. Those might've been the subsidized ones. So, and then I still had to take out the private loans, which were obviously higher interest. So I had a certain amount that was pretty low interest rate because they were subsidized a certain about that was a a higher pretty interest rate.

0:13:20 Jenessa: I don't fully understand that whole process, I'm gonna be honest with you. Most I can say is yes, there's the subsidized ones, which is like it's the, essentially a loan from the government. Government there's the private loans obviously which everybody understands what a private loan is and then there's The Grants which are genuinely it's like a scholarship from the government which is a totally separate thing but

0:13:40 Thomas: Only part I thought was different is I think the subsidized one would just be the government subsidizing interest rate, but I don't know if that matters.

0:13:47 Jenessa: So it's like privatized because it's a loan with a private company

0:13:50 Thomas: It's still a private bank. Yeah? Yeah. It's not like a government bank.

0:13:52 Jenessa: But this is still not a scholarship this

0:13:54 Thomas: Right. Of course. None of that. Yeah except the grant maybe is none of that could be considered scholarship yeah

0:13:55 Jenessa: Is yeah yeah right The Grant you would consider it it's scholarship but it is not scholarship from the school. Not a discount by any means. So, okay. So what I find when I go to look this up and I'm like, I would like the median, please. What I found is the median tuition paid, actual paid and not sticker price at a public school, it's $10 ,270. At a private of its school, it's somewhere between $33 ,000 and $51 ,000. Not quite sure why they couldn't give me an exact. Maybe the public schools, it was probably exact because that's publicly available, like FOILable information. I guess FOIA is the federal.

0:14:04 Thomas: Foyer bowl yeah

0:14:37 Jenessa: FOIL is in New York. So that's why I'm familiar with...

0:14:39 Thomas: Gotcha I thought you just said it weird

0:14:41 Jenessa: No, no, it'S FOIL, F -O -I -L in New YOrk.

0:14:43 Thomas: Got you because new york starts with l yeah gotcha

0:14:47 Jenessa: Knows? I don't even know what any acronym stands for anymore. For the privates, the median actual paid is somewhere between 33 and 51K. How could it possibly be that we're going to say the average sticker price is 50 but the average discount is 50K? Shouldn't the average be 20, but The Median is somewhere between 33K and 51? It's because clearly this is not normally distributed. Clearly the median is a better number to look at not the average so when we see only one in eight people get any scholarship 97 get 2 500 or less 0 .2 get 25 000 or more a very small percentage of people are getting like a full ride to the most expensive school you've ever heard of And you look at that sticker price that, yeah, maybe the vast majority of people do not pay full sticker price. Then most of them get a slight discount, a slight institutional grant, and a small portion of them gets a massive number. What we have is a very skewed distribution where the average is pulled way up into the tail. And the median reality is that people going to private schools, the typical what you can expect to pay is somewhere between $33 ,000 and $51 ,000 a year. Going to vary a lot. Lot

0:16:13 Thomas: So the difference being rather than it feeling like not to use specific numbers, but feeling like roughly, uh, it's a lot on sticker price, but you know, roughly on average, people get like half of that back. It's more like, no, a select group of people get a lot. Then most people get, like, whatever it was, it wasn't much, like 5 % or something. I don't know.

0:16:29 Thomas: They get a little bit. Okay. Yeah. I still wonder how that drags the average. Cause it feels like, it one thing when you're talking about you like, United States and income or something where or the whatever, the wealth, where it's like, yeah, the people at the top have so much that that really does pull the average way up. Another one. It is like, are there really that many students that get these like full ride things that it would pull average that much? But I guess apparently it is.

0:16:31 Jenessa: Pennies yeah yes it's kind of the same concept right we have like 40 what billionaires but they make a billion right

0:16:58 Thomas: But the there thing that is confusing me is there is nowhere near the range of difference in college tuition. It isn't like there are some colleges where it is a billion dollars a year and somebody gets a $999 million scholarship. Like, it seems hard to but it could be about the quantity as well, I guess, of the people getting those big ones.

0:17:16 Jenessa: Actually kind of works that that way if you you pull kind of crunch it more where the range of tuitions is you I'm just gonna throw some numbers out there like roughly 80 and like there's private schools that are down at like 10 but if the median sticker presumably you the average sticker price and the median stick sticker price would be roughly the same. I don't know. Let's say it's 40, but the median person is paying somewhere around 40. You're actually paying what that average sticker price looks like. How could that be happening? Well, if a small number of people are literally getting a full ride to a school that costs $70 ,000, that's a data point that is 70K discount. How many people does it take to pull that average from 70K to only 20K? How many zero dollar discounts do you put to weigh against them? Have to look at the numbers to see. All I know is those averages and those medians are not adding up to make sense. Is what makes logical sense to me, And I found sources that make more sense with the numbers that we're seeing in terms student debt and in terms of places I've worked and what they cost. Just wouldn't expect average to make sense here. And when I look at the numbers of who gets scholarships, again, it starts making sense that a small percent get a huge amount, most get a very small amount. I expect something a system like that to create a skewed distribution not a normal distribution and therefore for the average to be closer to a tail and the median to be closer to the middle of the the bump in that skewed distribution yes

0:18:55 Thomas: Refreshing on what the article is actually claimed, are you saying they use the average people pay in order to try to minimize, like, the crisis, the whatever you want to call it?

0:19:02 Jenessa: Precisely they're gonna say this is the average sticker price but average discount is 50 percent so and they'll get they'll give you an example here which I actually think is some of the worst cherry picking on the planet so okay schools with large endowments are particularly generous that's not necessarily true okay to u .s news and world report the average student again where it averages uh princeton university University pays $16 ,600 for tuition and fees, notice we're not including room and board, compared with a $56 ,010 price tag. Okay, obviously a huge gap, right?

0:19:43 Thomas: -mm. Right.

0:19:44 Jenessa: Is free for families making $160 ,000 a year or less. Impressive. These tuition discounts, private colleges can sometimes cost less than public, although public are usually cheaper. OK, what happened here is Princeton College is absolutely the best one you could possibly pick to try to make this point.

0:20:03 Thomas: Cherry -picked.

0:20:05 Jenessa: Has a combination of two factors that are contributing to this. They have need blind admissions. So that means as we go through our pool to admit people, we are not going to look at your ability to pay. And then we will meet 100 % of your demonstrated need with an institutional grant, not federal, not state. If we admit you having never looked at how much you make and then find your family can't afford it, which they're saying their cutoff is if your family makes 160, ,000 a year or less, your family is too poor to pay for Princeton, then yeah

0:20:39 Thomas: Mean, in this day and age, that's not as much as it seems like. Honestly, combined family with everybody having to work two jobs. Daycare is $110 ,000 a year. So, you know, sure, sure.

0:20:50 Jenessa: Not wrong um but that is their cutoff for too broke remember what the government considers too broke to start getting aid yeah so princeton is gonna say if you are below well it's

0:20:56 Thomas: It's like $12 ,000 per year. Is. The poverty line thing is so stupid, but topic for another time.

0:21:06 Jenessa: Bizarre bizarre so princedon will say we will admit you not even looking at it and And then if your family makes $160 ,000 a year or less, we won't charge you a dime. We will just pay that out of our institutional grant pool. Of the time that article was published, when I did this research, they are one of seven colleges in the entire country with those two combined policies.

0:21:29 Thomas: Yeah and many students even can there? Is it a lot? Oh on yeah

0:21:34 Jenessa: No, no. No. Actually, they have a class size of 1 ,300 students a year and a 5 .8 % admission rate. So good luck taking advantage of these policies. Are other schools who do need blind. There are others that do matching your need. But for schools that do both, that's extremely rare. I a school that was extremely expensive to go to, and I was told that they were working towards becoming need -blind. They do meet 100 % of demonstrated need, but if they were to become need - blind, they couldn't fund the school. So in order to meet 100 % of demonstrated need for the students they admit who do in fact need an institutional grant, % of students were full pay at a school where the tuition was 60K a year. They had estimated their parents could afford that, no problem. Them so

0:21:44 Thomas: That's tiny yeah easy

0:22:30 Jenessa: Yeah it school had more students from the upper one percent of income than the bottom 60 so uh is not normal to pick out princeton and be like look the sticker price is 56 but the average person pays 16 no yeah

0:22:38 Thomas: That's crazy things are fine yeah I guess I've also like so confused do you think that everyone's just like up the student loan debt crisis like they're just yeah everyone's kind of complaining like for no reason I

0:22:55 Jenessa: Like what what what do they think basically gonna say that essentially it's gonna get worse so we hit a point here where they start referencing these college board things that the report I told you about from 2021 um of the big problems in here is um all adjusted for inflation to 2021 dollars dollars. You might remember there was a bit of an inflation thing going on.

0:23:22 Thomas: I don't remember exactly when that took hold. Was it that early? I can't remember.

0:23:27 Jenessa: It was 20. around that area. Um I can tell there's a gap and I'll tell you why. Because I happen to look at, um, starting in 2020 is when college boards started putting out these reports where they compare the 06 -07 school year is where it starts, and then it starts showing for every year the published tuition and fees, published tuition in fees plus room and board, published for cost of attendance, the grant aid per student, then by subtracting that net tuition and views, net tuition, room and board net cost of attendance. Do that for 06, 07, all the way through to the data available for that school year in that year's dollars. Started that in 2020. We're looking at 2021, even though this article is from 2023 and the report for 2022 is out. Was just like, let me look. Why are they comparing the 06 -07 school year to 2020 -2021? Because that's the the first and last year in the report. There you go. There's no logic to this when you should have looked at a trend. And if you look at the trend lines, it's like line go up, thing more expensive. You don't need to, whatever.

0:24:33 Jenessa: We start doing these subtractions. And If I just looked at 06, 07 versus 19, 20, because then I can do that for each of the years. We look at The Net Cost after we took out grant aid, college either got less expensive by 2K or less expensive by 1 ,000 or more expensive by $190, depending on which inflation rate you use. It's still 06, 07 to 19, 20. So really, it's almost like we took this number in the past and inflated it, if you will, and then subtracted the current number, which has not been adjusted very Because it's very recent. Going to use this to say college has gotten, even though the sticker price has gone up, that the actual expense has gone down by $2 ,000. And I'm like, yeah, if you use this weird inflation correction, that

0:25:24 Thomas: Right. Because it's like, there's going to be definitely a lag between when we see inflation because the costs of several staples have gone up due to COVID and all that crap. Mean you can be like, like, well, that means 2021 dollars are one point two dollars and therefore apply this tuition that, by the way, has probably been the same for or gone up marginally because they maybe do an incremental increase every year. There's gonna be a big lag in if ever, bytheway, if you see those correspond, it might be that the doesn't correspond correspond to inflation at all if it's like a real short term inflation.

0:25:56 Jenessa: Precisely. So we have in the same 06, 07 school year, if you look at these three reports that are a year apart, the net tuition and fees is either $15 ,800 or $16 ,550 or $18 ,060. Remembering that nobody cut a new check because of inflation. This number is just changing because of an equation. So it literally flips it from negative to positive, depending on which inflation calculation you're doing. They're going to tell you college got 2K cheaper. Did not, my friend. Way they did this is so bizarre. Is a nitpick, but I had to say it because it's going to drive me up a fricking wall. Rounding. Of all, we're adults and we can read numbers and you don't have to do this. But if we're going to round things, we should maybe not always round them in favor of my argument. We should maybe have a rule about how we round things.

0:26:56 Thomas: I ran to the nearest. I'm right.

0:26:58 Jenessa: Yeah, literally that's what's going to happen. So when we look at the sticker price, they're going to say it went from in 06 -07 school year to 2021 to 2022 school year. That's what we're going stick with here. This is for private nonprofit four four -year school. Went from $29 ,000 to $38 ,000 sticker price. 29, the real number is $29 .750. we just didn't round that up to 30 because whatever. It shrinks it from, yeah.

0:27:28 Thomas: Heads. I ran down. Tails. You round up. No, I don't.

0:27:32 Jenessa: Okay. If we were just going with the thousands and not rounding, whatever. But then when we go to the net price. They say it decreased from $17 ,000 to $15 ,000. The way they got there was that $16 ,550, they rounded up to $17. We didn't round $29 ,750 up to 30. So we inflate the gap.

0:27:57 Thomas: It feels like it's not, I guess, a huge point, but seems pretty fucking deliberate to me.

0:28:04 Jenessa: The thing when I was reading this article, this is what started me down the path, is I read this paragraph that said it went from $29 ,000 to ,000. I was like, these are extremely round numbers. And the net price decreased from $17 ,000 to $15 ,000, and that's where we have this rounding is totally just as needed. Story is similar for public colleges. Published tuition and fees were nearly $8 ,000 in 06 -07 and rose to nearly $11 ,000 in, in 21 -22, but the net cost fell by $730. I was like, why do we have precision all of a sudden? Like, why was that necessary? Well, because if you rounded by any logical rule to the thousands place, it would have been no change. You had to like round one way or the other or just actually subtract because it's less than $1 ,000 difference.

0:28:58 Thomas: Usually you might like subtract first and then round, you know, maybe. I'm thinking about this, too, because it almost feels like an even double whammy. Now, maybe I'm wrong. Remind me how they're calculating or what or what price index they're using. Using but one thing I know to be true is that you can look at oh yeah oh twenty twenty five dollars versus twenty ten dollars or whatever it's like prices you're using like a price index that might be one thing but have wages gone up we don't actually pay tuition with prices it's actually the opposite prices take away from our ability to pay tuition so I would just want to look at wages now maybe maybe they did I don't know but like if wages are the same uh they're they're pretty stagnant. I know that. Using a price index to adjust dollars would be almost a double double whammy effect of making it this point wrong.

0:29:45 Jenessa: Hmm. I completely agree because the real crisis is the debt. And the real crisis is our parents could go to school, work a job, and use the money they were making making right that minute to pay their tuition. And we can't do that. So we have to take on debt and therefore the debt climbs with an interest rate. That is the discrepancy, right? It's that wages have not matched the growth here. And that's why a random correction is not going to do the job. And when you look at this college board report, it just says in 2021 dollars, I tried I defined what that meant in this like 100 page report? I don't know. They're still using averages. They don't put error bars anywhere. Campaign do I have to go on to get people to give me error bars again? I just want one standard deviation. There's no standard deviation or range anywhere in here. So I'm being given the average cost, not the median. And I'm not being told the range. Yes, the average published tuition is like $38 ,000, but what is the range? What's typical? I don't know. This was intended for internal purposes or for general purposes of thinking about what colleges are up to, that's one thing. But applying this to the individual, it's freaking useless. It doesn't tell me the individual spread. Then add on top of all of this? How are we getting this net number? We're taking the published cost and we're subtracting grant aid. What is grant aid? Institutional grants and state grants and federal grants. Economist is portraying this as a discount you're getting where they publish a sticker price and they have no intent to ever charge that. Appearing extortionate so that you can say, my son got a giant scholarship at the super expensive school, which would imply that the school has no intent on collecting that number. The reality of this grant aid calculation is they charged the federal government most of that money. So they got that money

0:31:49 Thomas: Important.

0:31:49 Jenessa: In dollars.

0:31:50 Thomas: Now, it might be, yeah, if you're looking at cost of the student, maybe that doesn't necessarily factor in. But if you look at this kind of cost crisis, which it sounds like this article is incorporating incorporating that, like is important to know, like, if it's on paper and they're overbilling the government, that's still, I would still want to know that. And I think we should do something about that as as a government.

0:32:08 Jenessa: Yeah, we should talk about this differently, right? Like, it's not exactly the same thing if it's, oh, these prices are just 100 % made up, nobody intends to collect, versus only one in eight students gets an institutional grant. The other seven in eight, any discount they got was from the federal government, my tax dollars. Like, that matters, right. That number becomes real all of a sudden, that sticker price.

0:32:29 Thomas: Was this article written by big school?

0:32:35 Jenessa: My god let me go off on a tangent for a second about how the economist does not name the authors of their articles they don't they they don' list the authors no they have a whole they have whole article justifying this practice that oh it's all written by the hive mind and we all collaborate I

0:32:45 Thomas: I didn't realize that. Okay. Well, who's in their their stupid fucking hive mind, apparently. Is it big school?

0:32:55 Jenessa: Literally was like you mean there's no accountability for this precisely

0:33:02 Thomas: Mean, if there's a tight, small cadre of writers, then okay, fine. Who is it? What is it, who does it?

0:33:08 Jenessa: Precisely. On the positive end, people should get credit for their freaking work. No, instead, you build no resume because you can't... I guess you're allowed to tell people which ones you wrote, but good luck proving it. Your name's not on it when people Google you. And maybe that's a good thing because you don't know how to round a number. I would never want my name on this in 100 million years. If someone else on my team did that and I'm just stuck on on your article, I'd be like, take me off of this.

0:33:38 Thomas: Yeah, they must all have to sign off or something. I'm

0:33:40 Jenessa: I don't know how it works, but there is a quality control issue happening for sure. Right, we, we have this problem, of right, we are misrepresenting the actual price paid by talking about averages instead of medians, by talking about average discounts instead of the discount that most people get, by portraying grant aid from the federal government as a discount from the school, just overall pulling this together in a way that cherry picks and rounds it it in really weird ways. Are we going to justify any of this? Going to also talk about, well, how much do you earn as a benefit from getting the degree? Which, to be fair, that's obviously relevant.

0:34:35 Jenessa: Yeah. All right. So we got college -educated men earn $587 ,400 more over their lifetime than men who graduated from high school. It'll be $425 ,100 100 more, much greater than the equivalent premium in Britain. So apparently for some reason in England, college costs more, but you get less benefit. I don't know. I didn't check that. England, good luck. Have fun with this article. They're saying the expected gain from a college degree is, oh God, you're going to hate this. Schuman from the OECD is quoted here. Expected gains from having a college degree are actually quite high in the US because the US is also one of the countries where income inequality is the highest.

0:34:35 Thomas: Relevant, yeah? Yeah, awesome, cool.

0:35:22 Jenessa: Yeah. Go to college, take advantage of income inequality.

0:35:27 Thomas: Don't be one of the unwashed poor masses that no no one cares about.

0:35:30 Jenessa: Yeah, yeah, absolutely. So I was like, okay, so that's my my lifetime earnings, I'm just going to real quick divide that out for myself.

0:35:40 Thomas: Also we're dying earlier. So that means you're getting more per year.

0:35:44 Jenessa: God, I don't want to know how many gray hairs I got in my grad school. All right. So if we take.

0:35:48 Thomas: More like actual American capitalist dystopia stuff presented as good.

0:35:53 Jenessa: Yeah, absolutely. Literally, like have less lifetime to begin with. So I'm going to say, okay, over a lifetime. So first of all, $587 ,400 more for a man who graduated from college. Of all that's approximately the cost of sending your 2 .5 kids to college. So I guess congrats, they don't need a loan. Yeah, basically. If you divide that over 43 working years after college, so let's say ages 22 to 65, let's Say right out of college you get a job, you work to to age 65, no gap in employment. Men, that would be an extra $13 ,660 a year. Women, it's $9 ,886.

0:36:11 Thomas: A pyramid scheme. Yeah. Significant.

0:36:34 Jenessa: Depending on where you live, that's anywhere from the difference between poverty and comfort, or it could be within the range of the salary you were already going to get. You negotiate around that.

0:36:45 Thomas: Maybe. That's quite a bit of money. I don't know. I think that's quite about it.

0:36:48 Jenessa: It's decent. It's not bad. Is without subtracting the cost of college or student loan debt.

0:36:56 Thomas: Loans. Yep.

0:36:57 Jenessa: And it's without subtracting room and board and cost of attendance. Yeah, this is just the median. The quote is college educated men earn $587 ,400 more over Over their lifetime than men who graduated from high school. It's just what you earn more.

0:36:57 Thomas: Yep, that's fair. Right. Right. OK, but that that amount of money and of incredibly ridiculous like grad school ballooning loans, you're not going to pay five hundred thousand dollars for your student debt. I mean, maybe sometimes, but like, yeah, yeah.

0:37:27 Jenessa: Yeah. Most people I would think that's pretty extreme. So it should still like come out positive for sure. Sure.

0:37:33 Thomas: That's all I'm saying.

0:37:34 Jenessa: Okay. So that's fine. Subtracted this out, but in mind, for four years, median actual pay at a public school plus room and board, you're going to be at 80K. And at a private school, you are going to at 172 to 244, if you have no scholarships. A lot of people at that point are relying on public student loan forgiveness and things like that.

0:37:55 Thomas: Are you factoring in the cost of the woke mind virus, though? Because like, Yeah,

0:38:00 Jenessa: Well, actually, we should because some of these degrees are really going to set you up for success and some aren't. I don't want to be a jerk about it, but some these have extreme intellectual value and very little value to the capitalist machine.

0:38:14 Thomas: Yeah. Well, my degree in woke mind virus studies is not paying off or is it? I don't know. I guess it is for me. It's like podcast for living about it.

0:38:26 Jenessa: The real deal is when you take into account, even before student loan interest, for women at the median private school, you need to cut that average lifetime benefit in half. It's still a lot of money, but it's still not like a bazillion dollars that was like no opportunity cost. Again, I have come to the economist.

0:38:44 Thomas: And, I they factoring in the four or five years of additional income in the beginning of your life possibly kind of significant yeah

0:38:52 Jenessa: Would assume when it's just earning over your lifetime, that that's taking that into account. It is average. So I

0:39:01 Thomas: The but based but on how you said the years at like it sounded like you were describing a certain number of years or something so I wasn't sure oh

0:39:08 Jenessa: Did that math where I said, okay, if that's how much more you earn over your lifetime, I'm going to assume you work 43 years, 22 to 65. And I just divided it by 43, therefore, and said, what's your, yeah.

0:39:19 Thomas: You were just giving a per year you weren't so the number you're given from I forget if you're saying it's from the economist or you're looking this up yourself that's a lifetime and so okay so we'd have to assume that that that incorporates that difference

0:39:28 Jenessa: The economists gave us lifetime, which sounds like a, yeah, yeah I would assume they have already incorporated the difference. And then I just, yeah

0:39:38 Thomas: Because they're just taking some, yeah, some data from the, you know, IRS or some shit. And it's like, this person didn't go to college. Here's their lifetime. This person did. Okay. Got it.

0:39:42 Jenessa: Something. Something like that. And I just divided it over 43 for perspective because for me, when I look at a certain amount per my life, I'm like, ah, this means nothing to me.

0:39:56 Thomas: And that also could be a difference in timing too. So, you you know, is that distributed over the years differently, but it's setting all that aside. Yeah.

0:40:02 Jenessa: Certainly not. Right? Yeah. Almost certainly not. It will probably accumulate far more by the end of your career, I would assume. So even with the median actual cost plus room and board plus cost of attendance without student loan interest, we're still getting like half the quoted benefit there, which is still a lot of money. Loan interest is still going to become a problem because people are getting buried under accumulating interest. This is why we don't call it a college cost crisis and we call it college debt crisis. But okay, set all of that aside. Devote a singular sentence to the problem that a lot people drop out of college and have accumulated debt with no benefit.

0:40:47 Thomas: Yeah. Good point.

0:40:48 Jenessa: So at public colleges, the four-year graduation rate is 33.3%.

0:40:53 Thomas: What?

0:40:54 Jenessa: At six years, it's 57.6%. I was shocked by these numbers when I went through it. At private colleges, the four-year graduation rate is 52.8% and the six-year rate is 65.4%. That's if you didn't graduate in four years, but let's start accumulating more people. People who needed an extra year need an extra two years.

0:41:06 Thomas: What is a six year? That's what? So it's, it's percentage of people who have graduated by four years from starting and six years from starting okay

0:41:22 Jenessa: So within four years at a private school, 52.8% will manage to have graduated. If we extend that limit to six years, 65.4%, we are still looking at a third of students who paid private school tuition for six years didn't graduate.

0:41:29 Thomas: Gotcha private school yeah yeah oof

0:41:40 Jenessa: Thirds at the public college, a third at the private colleges will need to multiply that cost where I multiplied by four to give you an estimate. They have to multiply by five or six for their annual cost because they spent five to six years there, not four years.

0:41:55 Thomas: Well is that true or did they take a year off and not incur costs in that year I think that's

0:42:01 Jenessa: Possible. They're still going to take six years to graduate. So they got to come back at some point, right?

0:42:05 Thomas: I know but I they doubt paid full tuition for a year that they didn't use

0:42:09 Jenessa: I'm sure that's true. Yes. So in theory, they could have graduated in five years of tuition paying and taken six years to do it. That's

0:42:17 Thomas: Maybe yeah or even like if years of tuition, but taken six years, depending on course load or if there's other ways they discount it or something. But anyway, point is, it does sound like if you were trying to make some sort of evaluation as to like, the average person, but like what you could expect if we're setting it up in a, was it Rawlsian or whatever, where you're like, okay, if I, or maybe for my kids, if I don't know who I'm going to be in this system, you just look at, oh, lifetime earnings of college graduate versus lifetime earnings of not, you got to be like, take the, almost the discount rate of like, okay, but sounds it like there's a one third probability I get no benefit from this. And you could do that cost calculation, just very rudimentary by, you

0:42:25 Jenessa: True. That's possible. Yeah,

0:42:56 Thomas: Know, you'd have to discount the benefit or vice versa in order to see like, that's even less of a benefit. Benefit uh and again you haven't incorporated in student loan uh it sounds like right

0:43:05 Jenessa: So yeah, exactly. So let's game theory this thing as to, you know, obviously we would all love to presume that not my baby is not going to drop out. Of course not. But like, I mean, I've had students that with like a senior. I'm always going to be like, please just this thing done. But somebody in their first semester, freshman year, I have counseled students that like, not because I don't think you can do it, not because they think you're dumb. It is not right for you.

0:43:29 Jenessa: You obviously don't want to be here. And you've made it really clear to me about a career goal you aspire to that does not require college. I've known people who, you unfortunately were steered towards college when they had clear trade school career goals that would benefit them. And, oh

0:43:49 Thomas: God I thought you were gonna say they want to be content creators I feel like they probably do they just aren't telling you

0:43:52 Jenessa: God, I have never counseled anyone. No, at no point have I told anyone to be an influencer, but like, oh

0:43:59 Thomas: Person's like I don't want to be a plumber I want to make plumbing tiktok videos

0:44:04 Jenessa: My God. But there's so many people in trades that are making a ton of money. Is where that opportunity cost came in. I absolutely had students where it is extremely clear that there has been family and societal pressure that told them, you must go to college. If you don't go to College, you're dumb and worthless.

0:44:09 Thomas: Yeah why they even going then right your father got the woke mind virus your grandfather before him got the woke mind virus or

0:44:31 Jenessa: Yeah basically like you you have to go that's

0:44:34 Thomas: The opposite where it's like hey none of us have gone we have this trade family business but like we wanted you to be senator corleone or whatever.

0:44:41 Jenessa: A lot of people still feel that this is a way out of where you are but for somebody who is so obviously skilled and motivated towards a trade you can make a ton of money the union jobs you have great health care. You are like one of the only people. You opportunity cost the thing I wanted them to evaluate. You didn't take on debt. You started in a career. You have some of the best health care, you are one of only people who can't be fired at will, like unions have process set up for you. It can be amazing jobs.

0:44:57 Thomas: Lot less debt. Right.

0:45:16 Jenessa: And instead, we have about one in six students dropping out of four -year colleges acquiring the debt. And here's something The Economist,

0:45:26 Thomas: In six? I thought it was more.

0:45:27 Jenessa: I put together public and private, it's greater than one in six.

0:45:32 Thomas: Wait. Really? I thought you said the public was worse than the private, wasn't it?

0:45:36 Jenessa: Is worse than private. And when we kind of put it all together and include the four-year and the six-year graduation rate and take everything into account, than 1 in 6 will just drop out. Degree. That's the percent uh greater than one in six will leave without a degree period year for public is 57.6% and six-year for private is 65.4% so that's why the private is just below a third and for the public it's just it's like between third and a half how am I doing this math That's

0:45:51 Thomas: Was the percentage of graduation rates at six years for both of them? That's what I remember you giving me.

0:46:04 Thomas: Right. Yeah? Are both quite a bit bigger than a sixth is what I'm I think something might be wrong there. The amount that graduate. Yeah, not

0:46:20 Jenessa: So about a third are not graduating within six years from the private. So in theory, I suppose some of them could have graduated in like eight years.

0:46:29 Thomas: There a more? Yeah. Otherwise, this is

0:46:31 Jenessa: Probably.

0:46:31 Thomas: Not making sense because both those numbers included not graduating rates of higher than a sixth.

0:46:37 Jenessa: No, this is the graduation rate. So 65 percent within 65 percent graduate within a year so 33 would graduate would not graduate that's one oh wait that's 1 in 3 son of a bitch how does it you

0:46:39 Thomas: Still, still not there. Yeah. Graduate. True. Then the other one was what, 45 % or something? Yeah, one in three. Both of those were bigger than a sixth by a lot is

0:46:55 Jenessa: Know where do I uh shoot I wish I had my citation here I have my pilot citation somewhere I'll have to double check it

0:47:00 Thomas: I could say that it could be the additional years but I don't know how much more graduation you're going to gain from year six to you know ten

0:47:06 Jenessa: That doesn't make any sense you're right um will have to check that in one spot I have of it's greater not wrong. It's greater than one in six, if it's one in three.

0:47:13 Thomas: I just picked a random number for it to be greater than maybe you meant one in three anyway

0:47:19 Jenessa: It's possible. I'll have to drop the sources.

0:47:21 Thomas: It makes your case even better you know this is an opposite kind of mistake where you're not trying to skew anything in favor of your argument because it seems like the, yeah, yeah.

0:47:29 Jenessa: Rounded terribly against me.

0:47:32 Thomas: That's the kind of expert I want on this show. The kind that will round against yourself. So it sounds like possibly more than what you're even saying. Maybe like more like a third don't graduate. Don't finish that degree.

0:47:44 Jenessa: Yeah, the way I printed out my notes did not have my little footnotes on here with my sources.

0:47:48 Thomas: All right. We'll take it as roughly somewhere around there.

0:47:50 Jenessa: It's quite high. It's shockingly high. No matter what number we're at is shockingly high for how many are dropping out of these four-year colleges. And you know what would have been great to analyze? They get a benefit out of that? Did the employer consider some college to be good?

0:48:09 Thomas: I feel like I've seen this analysis at some point and it doesn't really work out. I don't think the numbers, at least in terms of pure numbers, like I remember seeing this, gosh, did we talk about this on dads? Did Tom, was this Tom's whole argument? Maybe it was. Because,

0:48:21 Jenessa: Know he I remember him talking about how like certainly only like the uh ivs are unless you are um for racial minorities to network it can be very helpful otherwise like do

0:48:31 Thomas: Oh, that was the other. That's the other component of it that we didn't necessarily talk about is you we can look at the numbers of people who goes to make this in their life. People don't make this. But is that, you know, I don't know that you've isolated all the variables. Variables, look at like, okay, the kinds of people whose parents were going to make sure they go to a university, would they have had higher income anyway, even if they didn't go to university, which will diminish this number even more. And I do remember thinking it was depressingly small. Like I want there to be a bigger benefit to going to college. And I worry that there's almost none in terms of finances. And that's obviously not the only reason, and maybe not even the most important reason, to education. And really wish our country looked at things that way and just provided free higher

0:48:37 Jenessa: Not do it right sure yeah

0:49:15 Thomas: Ed so that we could all get the benefit of that. Yeah, to say, this is consistent with other times I've been very disappointed with these numbers, when you look at them, that it seems like it's just not as much of a benefit as you think,

0:49:24 Jenessa: Exactly So if you think of the kind of person who their family has set them up to be able to go to college, they have low socioeconomic stress, they were able to do well in high school, they Were able to build up that resume with sports, and you know, all the other crap that goes into an application, whatever, they probably would have been fine anyway.

0:49:45 Thomas: Possibly.

0:49:45 Jenessa: Like, possibly, right? So what percent, again, the economist, the place I would have gone,

0:49:50 Thomas: The marginal percent is exactly what the economist should be doing.

0:49:55 Jenessa: Yes, I would have loved for them to tell me, okay, in a world where we didn't have college, what percent of them probably would have been fine anyway? You could have looked at people of similar family background who didn't get the degree and looked at their lifetime earnings and subtract that out for me. And like fundamentally until we control for degree type I just I don't even want to hear this you know what I mean like you

0:50:17 Thomas: We should do that too.

0:50:18 Jenessa: I worked as a psychology professor and some of my students would go on to become a clinical psychologist and on the one hand that's quite a bit of debt between your bachelor's and you will need at least a master's um practice but that practicing is um it's decent you can do you know it all depends on how much debt you took on and yada yada, yada. But you can do pretty well. What you can do with a bachelor's in psychology, no one ever told me because I went straight to grad school. So I'm sure there are jobs. I struggled to figure that out myself for quite some time when I wanted to switch careers. So not quite sure if I some way set some students up for failure. Did they get... I gave them this bachelor's degree that cost them so much money and I don't know what I did I don't know what that degree is worth. Can't practice with it. That's all I know, at least in New York.

0:50:44 Thomas: Yeah nothing. Geez.

0:51:21 Jenessa: So, you haven't taken into account what degree you have.

0:51:25 Thomas: Is though I think these studies have been done largely but this then to me since we're talking about the economists who you'd think would either want to you know run these numbers or at least reference the best studies. Not doing that. And It they're doing this rounding that's very convenient and intentional. This feels like something that was written for a reason. Someone wanted to make a point and and it was written in that way, which sucks.

0:51:46 Jenessa: And you start to hear it by the end of the article. It becomes really obvious. It says, you know, plenty of citizens in countries with free or low tuition, such as Denmark, do in fact pay for college. Instead of paying a tuition bill, they pay over time with high taxes. You you -know -what -you -could -do? You could analyze for me the cost of what if we had free college and what my fucking tax bill would have been. The Economist!

0:52:14 Thomas: Yeah, especially. And not a question you can answer because there's all kinds of different ways you can tax people. And it could be that Jeff Bezos pays for all of us to go to college or, you know, know, joking, but like, it could be that only the people who will not even fucking notice it pay for a lot of other people to get this very valuable thing, this life experience that would make everyone better off, somewhat, uh, especially again, assuming we could all get it for free. College would make everyone, uh. I think most most people better off and it would make society better off. You know, having more, thinking um, skills, all, all this stuff. It's just, it's just one of those externalities too, where it's better for for everybody in a way that you can't even even necessarily put a number to.

0:52:51 Jenessa: Hmm. And that's exactly where we end up is like, oh, Americans pay less in taxes, but that lump sum tuition bill can be frightening. Frightening is understatement of the year for people who are buried under this debt. It's you know, they just offhandedly college doesn't benefit everyone. The quality is highly variable. You know, yeah,

0:53:14 Thomas: They are trying to make the case that actually things are great. These high prices are great because otherwise Jeff Bezos might have to pay a dollar in taxes. So the way we have it is great. Cool.

0:53:24 Jenessa: Yeah. Everything's fine. Don't even worry about it. Literally 36 % of Americans have a great deal or quite a lot of confidence in higher education. This is down from 48% in 2018 and 57 % in 2015. The perceived high cost of college could be driving down these results. College may be relatively affordable.

0:53:45 Thomas: So if we lied to people though and told them it was fine, then this number would go up, which it shouldn't because it's not fine.

0:53:52 Jenessa: Yeah. It might be worth the cost. We're struggling to believe it. Regardless of the reality, American confidence in college is declining. Regardless regardless of the reality, they're telling me the reality is it's cheap. It's not like I lost my mind reading this. And this was the beginning of my breakup with The Economist. And I

0:54:14 Thomas: Didn't know you guys were steady. Going you

0:54:16 Jenessa: Don't think they knew either, to be fair. I don'T think they know who the hell I am. But yeah, we're beefing one -sided very much yes yes officially 100 I cancel my subscription and maybe they'll notice someday um and I can tell you so much more about bad graphs they're doing next time we talk about it

0:54:23 Thomas: Know, officially marked it's complicated. Seeing other magazines. Yeah and it's just I love a good debunk and this is a particularly I think for this show especially it's like it's education it's economics it's it's numbers that people are using lying to lie and also just like this general in shitification that I mentioned the beginning and I don't don't know if that's the right word, but I have this feeling lately that it it just, just, our institutions are failing so hard.

0:54:54 Thomas: Like this media, I don't Know what the fuck fuck happened. It really, I used to have this Feeling like, okay, well, the country's gone crazy, but at least I've got like these, you know, I've Got, I got these sources. I've Got these, these media sources. I've had these other institutions that like still feels like you could go to a college and be like, oh, they at least know what reality is. And now it just feels like that's slipping a bit where where it's like they're buying into a lot of these really stupid anti -woke often storylines. And just another story of big money buying something off that we can't really see? Cause it's sort of shadowy in the background or it's what I, I just don't know, but it's something that I'm happy to have you continuing trying to get to the bottom of, and, uh, uh, uh, more debunks in the future.

0:55:32 Jenessa: And I think that's the problem that the economist when they they don't tell me who the authors are. I can't tell you if this is one person or if it is a systemic problem. Accountability, yeah.

0:55:42 Thomas: Think by definition, if they're all going to take credit for it then it's the whole place I don't know weird, ugh, sad alright, well the story is actually it's adding another actually they had an actually college is great and cheap and ours is actually actually not that

0:55:46 Jenessa: I guess so. Yeah. Sad. Real sad. No, I don't think it is.

0:56:02 Thomas: Jenessa Seymour, thanks as always any place you want to send people I feel like the answer is usually no but I don' t know

0:56:08 Jenessa: No, I'm just living my life over here. We're good.

0:56:12 Thomas: Forward to hearing more on this and other topics from you in the future. Thanks so much for joining.

0:56:16 Jenessa: Good. Thanks for having me. Line go up, thing more expensive. You

0:56:41 Thomas: What I ran to the nearest. I'm right.

0:56:50 Jenessa: The Economist!