{"items": [{"author": "Jess", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972707179892", "anchor": "fb-972707179892", "service": "fb", "text": "Very thoughtful post. Also, the straightness of that line is crazy. As is the combination of perfect price discrimination with a status oligopoly.", "timestamp": "1544997023"}, {"author": "Ben", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972715907402", "anchor": "fb-972715907402", "service": "fb", "text": "Great post, thanks.

Do you know if it's possible to take out a loan (perhaps a mortgage) to donate to charity, and then subtract the interest from your income in subsequent years? If combined with a DAF the effect cash-timing for the charities could be reduced as well.", "timestamp": "1545001684"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972715907402&reply_comment_id=972725827522", "anchor": "fb-972715907402_972725827522", "service": "fb", "text": "→ Ben I believe mortgage interest is deductible, even if the reason you need the loan is because you donated money. HELoC interest is deductible only sometimes, depending on what you do with the money (renovations are ok, donations aren't).

Since CSS profile considers home equity to be an asset, borrowing against your home to donate helps there too.

On the other hand this is risky, and you could lose your home if your income comes down too much by accident and you can't make payments.", "timestamp": "1545007170"}, {"author": "Nathan", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802", "anchor": "fb-972730178802", "service": "fb", "text": "Nice post and some good thoughts. It is something how much tuition is going up and even more so for lower cost schools. Have you considered that part of the benefit of the sliding scale of college costs (paying what you can) is so that people who can only afford a little bit can still attend, while wealthier people pay more of the total cost of running the institution. Thus in a way a parent earning more and paying more is effectively sponsoring the tuition of less well off families. While this doesn\u2019t have the tax benefits of charitable giving it does seem to provide a substantial good to the society as well as to the diversity of the colleges your kids go to. Thus it might be reasonable to simply continue to \u201cearn to give\u201d but instead of giving to a charity organization, have that money go to the college supporting the education of others as well as your own by paying full tuition rate. It seems like the outcome in the end for money to other orgs might even be better in that case too since you wouldn\u2019t need to adjust your income several years beforehand and you would continue in a higher pay bracket career after your kids finish school.", "timestamp": "1545009303"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802&reply_comment_id=972737364402", "anchor": "fb-972730178802_972737364402", "service": "fb", "text": "→ \"Thus it might be reasonable to simply continue to \u201cearn to give\u201d but instead of giving to a charity organization, have that money go to the college supporting the education of others as well as your own by paying full tuition rate.\"

One way to look at this is, what do you think the benefit of $1 to the college compared to $1 to say GiveWell's top charities is? My expectation is that the money to GiveWell's recommended charities goes *much* farther.

Specifically, I think most of the benefit of college is positional: people definitely do better if they go to college compared to if they don't, but this is mostly due to employers using college status to choose between applicants. [1] By expanding the economic range of people who can go to college you help reduce societal inequality, which is good. But I would be very surprised if this benefit were even 1/100th as valuable on a dollar per dollar basis as something like distributing antimalarial nets.

[1] I think Bryan Caplan's book, The Case Against Education makes a strong argument here https://press.princeton.edu/titles/11225.html", "timestamp": "1545011957"}, {"author": "Ben", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802&reply_comment_id=972739175772", "anchor": "fb-972730178802_972739175772", "service": "fb", "text": "→ In particular, it seems unlikely that Harvard suddenly becomes the best place to donate money when Jeff's kid gets in... and then stops being the best place once he graduates.", "timestamp": "1545012919"}, {"author": "Nathan", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802&reply_comment_id=972778127712", "anchor": "fb-972730178802_972778127712", "service": "fb", "text": "→ Yes, I see some of your points, but you still seem to believe there is value in enabling your kids to go to a top private school if they choose. (At least that is an underlying premise of your post). And in order for that university to exist in its current form some people need to be paying full tuition. My point is not that this does or does not do as much good $ for $ as nets for malaria - rather just that paying full tuition does some social good. Thus the net sum might do more good than intentionally lowering your income for 6-8 years and not being able to donate that money either (including for several years leading up to the start of paying tuition) because you are not earning it to avoid paying the tuition.", "timestamp": "1545014861"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802&reply_comment_id=972778486992", "anchor": "fb-972730178802_972778486992", "service": "fb", "text": "→ \"you still seem to believe there is value in enabling your kids to go to a top private school if they choose\"

Just because something is positional doesn't mean I don't want my kids to have a good position :(

\"lowering your income for 6-8 years and not being able to donate that money either (including for several years leading up to the start of paying tuition) because you are not earning it to avoid paying the tuition.\"

I'm not proposing just avoiding doing anything useful for 6-8 years to avoid having the college take the money, I agree that's not a good plan. But if I think doing good things in a way that isn't mediated by money is a decent fit (though not as good a fit as earning to give) then switching into it at that point could be good.", "timestamp": "1545015057"}, {"author": "Christopher", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972730178802&reply_comment_id=972827428912", "anchor": "fb-972730178802_972827428912", "service": "fb", "text": "→ Also, parents don't have to pay for their children's college education at all. Even if students took the full sticker value out in loans and paid it off themselves, it's still worth it in many cases.", "timestamp": "1545055604"}, {"author": "Carl", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972738147832", "anchor": "fb-972738147832", "service": "fb", "text": "For personal savings you can put $55k/yr into a mega backdoor Roth if you have contractor income or an employer 401k with the necessary features., $5.5k into an IRA (traditional/Roth/backdoor Roth). In a two-income household that could be doubled. With self-employment income one could shield even more with a defined benefit pension plan on top of that. If you have traditional IRAs you can pay taxes to roll them over to a Roth to get more money away from the gaze of financial aid offices.

And future donations in a DAF or foundation won't be taxed by colleges. So the super high marginal college tax rate doesn't seem too binding for many people if they fully exploit the available means of defense, at least on the wealth side. The income side is still rough.", "timestamp": "1545012218"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972738147832&reply_comment_id=974602925802", "anchor": "fb-972738147832_974602925802", "service": "fb", "text": "→ Carl the mega backdoor Roth requires having an employer with a 401k that supports it, right?", "timestamp": "1546108919"}, {"author": "Carl", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972738147832&reply_comment_id=974606039562", "anchor": "fb-972738147832_974606039562", "service": "fb", "text": "→ David Chudzicki Or independent contractor/business income:

https://thefinancebuff.com/after-tax-contributions-in...", "timestamp": "1546110385"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972738147832&reply_comment_id=974606463712", "anchor": "fb-972738147832_974606463712", "service": "fb", "text": "→ :(", "timestamp": "1546110703"}, {"author": "Carl", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972739036052", "anchor": "fb-972739036052", "service": "fb", "text": "\"Retirement early withdrawal is a 10% penalty, and schools typically take 5% of assets per year, so it makes sense to put money into retirement accounts even if you think you might need it before you retire.\"

The tax-free growth in retirement accounts can pay for the penalty before then. And if you are putting assets into Roth accounts, there is no penalty for withdrawal of the amount of your contributions, only on the earnings.", "timestamp": "1545012771"}, {"author": "William", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972783172602", "anchor": "fb-972783172602", "service": "fb", "text": "\"colleges look at ~2 past years income when making current aid determinations\"

Is there a risk (or how significant is the risk) that in the 2030s colleges will look at more than the past ~2 years?", "timestamp": "1545018450"}, {"author": "William", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972783172602&reply_comment_id=972783182582", "anchor": "fb-972783172602_972783182582", "service": "fb", "text": "→ The more expensive college becomes, the more I'd expect people to try to avoid paying the full price, and the more steps I'd expect colleges to take to try to prevent people from hiding their ability to pay.", "timestamp": "1545018462"}, {"author": "William", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972783172602&reply_comment_id=972791974962", "anchor": "fb-972783172602_972791974962", "service": "fb", "text": "→ Just saw the next sentence: \"Closer to the time I'd want to look into aid determinations again, to make sure I didn't stick with earning to give too long.\"", "timestamp": "1545022554"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742", "anchor": "fb-972810547742", "service": "fb", "text": "My first thought in answer to your question was \"Reagan\". Some targeted search found this website to support those dim recollections:

\"Today\u2019s student aid crisis has its roots in the 1980s. In 1981, the Reagan administration, with a coalition of congressional Republicans and conservative Democrats, pushed through Congress a combination of tax- and budget-cutting measures.

No federal program suffered deeper cuts than student aid. Spending on higher education was slashed by some 25 percent between 1980 and 1985. In raw dollar figures, cuts totaled $594 million in student assistance and $338 million in Pell grants. Students eligible for grant assistance freshmen year had to take out student loans to cover their second year. For middle-class families, eligibility was changed as well. Low-cost, low-interest, subsidized federal loans were limited to families with household incomes of less than $32,000, regardless of family size.

Effectively, these changes shifted the federal government\u2019s focus from providing students higher education grants to providing loans.\"

https://www.washingtonpost.com/.../my-students-pay.../...", "timestamp": "1545030622"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972822059672", "anchor": "fb-972810547742_972822059672", "service": "fb", "text": "→ it sounds like these are cuts to grants that reduce what a student had to pay, but don't reduce the sticker price. Since I'm graphing the sticker price here I don't think this is what's going on?", "timestamp": "1545053288"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972837643442", "anchor": "fb-972810547742_972837643442", "service": "fb", "text": "→ Jeff Kaufman I see your point, and also that this is not a simple matter of history but of interpretation. Here's an article from Forbes rebutting the one I posted earlier, and more directly addressing your question, while making it clear that it's presenting an opinion rather than simple facts: https://www.forbes.com/.../if-in-doubt-blame-ronald.../...", "timestamp": "1545062500"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972838157412", "anchor": "fb-972810547742_972838157412", "service": "fb", "text": "→ I suspect that the decision-making behind setting a sticker price is highly complex and that the college's actual costs are only one of a number of factors that contribute--especially for elite private schools. (I work at a university but don't have any insight into tuition price setting.)", "timestamp": "1545062938"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972838357012", "anchor": "fb-972810547742_972838357012", "service": "fb", "text": "→ One actual data point I have is that the president of CMU called out tuition as a public relations issue --he felt that CMU suffered from being less expensive than MIT, and started hiking tuition rates in '81/'82.

He also had good use for that money -- replacing 30-40 year old analog lab equipment with expensive new digital gear that became obsolete much more rapidly, adding expensive new departments (such as robotics and chip design and fabrication), and expanding the campus. Even the humanities college moved from typewriters to computers during the late '70s. Again, shorter life spans --a typewriter that was ten to twenty years old was not a big deal, but a twenty year old computer...", "timestamp": "1545063108"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972838990742", "anchor": "fb-972810547742_972838990742", "service": "fb", "text": "→ Michael anecdotally, I've heard a fair amount of speculation that the rise of computers is a big contributor to the rising costs of college in the past several decades. Not only do you need more expensive, more quickly obsolete machines, but you also need more people with more specialized skillsets to operate them.", "timestamp": "1545063228"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972839030662", "anchor": "fb-972810547742_972839030662", "service": "fb", "text": "→ (No idea if there's actual research to back up that speculation.)", "timestamp": "1545063246"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972840597522", "anchor": "fb-972810547742_972840597522", "service": "fb", "text": "→ Michael I think there's definitely room for interpretation, but I don't think what those two op-eds are talking about is related to what I'm talking about in this post.

The op-eds are roughly arguing:

* Fergus: students have high student loans because the Reagan government switched from providing mostly grants to mostly loans.

* CCAP: the goverment still gives a lot of grants, more than we used to

They're not arguing about sticker prices at expensive schools, they're arguing about after-federal-grant prices at the much cheaper schools most students attend. I don't see anything in the articles that helps explain why Swarthmore and similar schools increased how quickly they were raising their prices when they did.", "timestamp": "1545064505"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972841430852", "anchor": "fb-972810547742_972841430852", "service": "fb", "text": "→ Sophia I have trouble seeing how computers could have such a large effect. Even if there was one administration employee per student, and each one needed a new computer every year, that would still only be ~1y worth of cost growth. Needing to pay more in order to find people who are good with computers, hire people to support computers, build custom computer systems, etc could account for costs in this range, though.

Maybe the schools thought switching to computers would save money, but has actually substantially increased costs, and they should have just stuck with their paper-only practices?", "timestamp": "1545065011"}, {"author": "Sophia", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972842194322", "anchor": "fb-972810547742_972842194322", "service": "fb", "text": "→ Right--I think it's not so much the expense of the machines themselves (though that's an element of it) but that introducing computers and computerized systems creates whole new areas of support for the school. Student information systems, academic technology, lab support, etc.

I think switching to computerized systems is probably a necessity in today's world--hard to imagine running things like admissions, class registration, student ID management, etc. on a totally paper-based system these days. It's probably a better *experience* overall but also costs more. Plus there are things like course management systems (e.g. Blackboard) and research computing which (theoretically at least) allow you to teach better and do better research, and thereby be a better college/university, but also cost more.", "timestamp": "1545065498"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972845283132", "anchor": "fb-972810547742_972845283132", "service": "fb", "text": "→ Jeff Kaufman in the case of CMU, it was at least one computer per student per class, a number which would be hard for us to estimate. In the case of the electrical engineering department, I think we got at least a dozen digital scopes, plus digitally controlled regulated voltage supplies, plus several laser printers, just for the beginners lab. Also, in the late '70s, computers cost around $10,000 each. When the Macintosh came out in '84, it cost around $2000. Departmental computers were more likely mini computers, not micros, and more expensive. Then, as now, an entry level computer person got as much as an academic department head.

I agree that this isn't enough on its own, but I think it may have been a more significant fraction of the issue.

Cost of advertising is probably another factor. The movement to run colleges like businesses.", "timestamp": "1545066985"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972853611442", "anchor": "fb-972810547742_972853611442", "service": "fb", "text": "→ Michael all of these things have become dramatically cheaper over time, so I don't see how they would be large drivers of cost growth", "timestamp": "1545070305"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972860278082", "anchor": "fb-972810547742_972860278082", "service": "fb", "text": "→ Jeff Kaufman Good point. They can be part of the story, but absolutely can't be the entire story.

While they've become cheaper over time, it's generally the nature of bureaucratic institutions to preserve and increase budgets over time, not services. So, part of the story is probably that the number of computers owned by universities has increased as the cost per computer has dropped.

I'm under the impression that there's a been a large incentive to provide students with cutting edge tools for learning.

I don't know if the large increase in campus foot print at CMU is typical or unusual. When I was there, the vast majority of buildings were 75 years old and largely in their original condition. Now, I would guess that only half are that old, and furthermore that a great deal of renovation has gone into the older buildings as well (some of which I saw and was impressed by on my last visit). In addition, the newer buildings from when I was there have mostly been rebuilt or replaced, partly because they were constructed more poorly than the older ones in the first place. The buildings that are currently new appear to have been built solidly to last.

There's a custom of naming buildings after major donors, and I don't know what portion of the costs of this build-out comes from tuition and what portion from earmarked donations. So the buildings may also be irrelevant to your question.", "timestamp": "1545072410"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=972810547742&reply_comment_id=972861046542", "anchor": "fb-972810547742_972861046542", "service": "fb", "text": "→ Is the increase more than simple supply and demand can explain, with the vastly increased emphasis on a college-educated workforce?", "timestamp": "1545072724"}, {"author": null, "source_link": "https://forum.effectivealtruism.org/posts/63ajYkEWR9TbWfxC2#MvG22gZ6JoeHbxxqP", "anchor": "ea-MvG22gZ6JoeHbxxqP", "service": "ea", "text": "I agree it is good to think about it early! The 529 still can be better than general taxable savings because of a tax deduction and then tax-free growth. The problem is limited investment options. However, the Coverdell has more freedom of investment, so I'm doing that. Depending on the college, faculty or even staff have their kids go at reduced or free tuition, which could be an option for some people. That is a creative idea to do direct work while kids are in college. If one does have significant savings by then (including retirement savings, because as you point out the penalty for withdrawal is not that large), one could even take off time from paid work. This is facilitated by being able to take out an interest free loan on the part one does not have to pay right away while the kids are in college. Or if one is doing direct work while kids are in college, one could just continue the direct work afterwards. Since parents are expected to pay 5% of taxable assets per year when in college, I believe that means one would need to pay about 30% over six years. As you point out, there is also uncertainty that it would even be required (like if MOOCs take over). But you can still think of this (and the interest free loan) as an additional reason other than avoiding taxes to donate more money now instead of accumulating it in a taxable account. (Disclaimer: I am not a financial advisor nor a tax professional.)", "timestamp": 1545156638}, {"author": null, "source_link": "https://forum.effectivealtruism.org/posts/63ajYkEWR9TbWfxC2#aDRbnQca4mjDLeasJ", "anchor": "ea-aDRbnQca4mjDLeasJ", "service": "ea", "text": "Or let them pay for their own college. The rates they'll get charged will take your income into account, so they'll have to get a lot of loans. But the loans are pretty manageable and essentially risk-free as long as income-based repayment remains an option. Now, if they are committed EAs and will be earning to give, this doesn't accomplish as much since this comes out of their future earnings. But even if there's a 95% probability that they turn out to be earning to give as EAs, that's still better than the ~100% odds with respect to you. And the interest rates on those loans are lower than average stock market returns, so the smart financial move is always to get the loans and pay them off as slowly as possible rather than pay higher up front costs (assuming they're reasonably risk tolerant, as young people should be but especially when the goal is to maximize good done rather than maximize their own comfort) (this is a little more complicated to see when we're talking about earning to give. but you must be assuming a larger discount rate for the value of donations than what you could earn by investing and giving later; otherwise you'd be doing that instead of giving now. So if giving the money away now is worth sacrificing the ~10% annual gains you could make on it, then it's even more worth sacrificing ~7%/year in interest payments). ", "timestamp": 1545162344}, {"author": null, "source_link": "https://forum.effectivealtruism.org/posts/63ajYkEWR9TbWfxC2#qav928rzgfHGKqhqX", "anchor": "ea-qav928rzgfHGKqhqX", "service": "ea", "text": "I enjoyed this very much.Look for an update some time around 2028.

", "timestamp": 1545252768}, {"author": null, "source_link": "https://forum.effectivealtruism.org/posts/63ajYkEWR9TbWfxC2#FkGKbFar4Xic4AyCp", "anchor": "ea-FkGKbFar4Xic4AyCp", "service": "ea", "text": "I would love to see a paper actually breaking out how all the reasons why college has gotten so much more expensive actually contribute quantitatively, but I have not seen it yet. In general, we expect something that is labor dominated to increase faster than inflation, because salaries increase faster than inflation (this is roughly per capita economic growth). But college has increased faster than per capita income. You mention more administrators. Also, there are more services, like career services. You point out that tuition has increased faster than the amount actually paid, because there is more price discrimination. There is also reduced state funding for state colleges (I believe absolute and definitely as a percentage). There may be reduction in mean class sizes-there has been for primary and secondary. There is more technology use inside and outside the classroom - overall I think this has increased efficiency, but it would still probably show up as an increase in tuition. On the side for controlling costs, a much greater proportion of classes are taught by low-paid adjuncts. Also, terms have gotten shorter. Another factor that can control costs is endowments. Princeton has actually reduced its tuition recently because its endowment is so big.", "timestamp": 1545283016}, {"author": "Jemma", "source_link": "https://forum.effectivealtruism.org/posts/63ajYkEWR9TbWfxC2#pe7Q2neJeae8odEjs", "anchor": "ea-pe7Q2neJeae8odEjs", "service": "ea", "text": "This is a great article! Given the extremely high cost and demanding debt structure of college in the US, do you think that those of us who are lucky enough to live in countries with free, cheap(er) or more easily paid-off college tuition, should remain in those countries at least for undergrad (while aiming for top world colleges if/when we do a PhD)?\n", "timestamp": 1546395677}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=10100104132709052", "anchor": "fb-10100104132709052", "service": "fb", "text": "Here's a loophole, though it doesn't look likely to last: https://www.wsj.com/.../college-financial-aid-loophole...", "timestamp": "1564453737"}, {"author": "Todd", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=10100104141501432", "anchor": "fb-10100104141501432", "service": "fb", "text": "You mentioned that attending a cheaper school doesn't seem like a good trade-off, but what about not attending college at all?", "timestamp": "1564458170"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/972696770752?comment_id=10100104141501432&reply_comment_id=10100104156765842", "anchor": "fb-10100104141501432_10100104156765842", "service": "fb", "text": "→ Todd depends what my kids end up being good at, and what the world looks like then?", "timestamp": "1564483887"}]}