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I was in college from 2006-2010. Top 20 school (think Rice/Vandy/ND/Emory). It was $45k a year all in. You can't get a job at 14 anymore, so let's say you're like me and got a job at 16 at McD's making $5.15 an hour (as I did). https://twitter.com/nel_corr/status/1355573771764031488
Let's assume also that it is possible to work 40 hours a week in HS while being able to participate in all the extracurriculars/coursework needed to get into a top 20 school. From 16-18, working 40 hrs / 50 weeks at $5.50/hr (assume I get a raise) that's $30k (10% taxrate).
Now in college, assume you get a job paying $7.50 (as I did) and also manage to work 40 hours a week while being able to keep a GPA and extracuriccs so employers will want to hire you. Over 4 years that's $53k assume 12% tax rate).
Assuming zero cost of living expenses, that puts me at $83k toward my $180k of tuition ($45k*4), leaving me w $100k of student debt. Now assume that somehow you managed to get someone to hire you despite graduating into job market reeling from GFC (and working 40hrs/week).
Let's say you make $55k/year to work in NYC (as I did). Rent is $1500/mo, 20yr pmt on loans is $700/mo, assume $600/mo of living expenses (good luck). Assuming 35% tax rate, I keep $180/mo ($2k).
Ran this out assuming 10% raise annually (aggressive), rent 5% (aggressive), living expenses 3% (aggressive - implies I only paid $800/mo in living expenses in 2020), this leaves me ~$160k of net worth (~$220k less $57k of SLs). Assuming I dump every cent to my name into RE...
...at 20% down payment + 3% fees I can afford ~$700k of real estate, which might get me into Bed Stuy. So 100% of my net worth at 30 is tied up in RE and now I have property taxes and a mortgage to think about.
Not to mention now I have $600k of debt (mortgage + SLs). All that to say - I basically had to spend 10 years doing nothing but working and buying food (no emergency expenses) to put myself into a house w an irresponsible asset allocation.
I got lucky as my wage growth was much higher than 10% and I left NYC, allowing me to spend more than $600 on living expenses. But most are not lucky like me. I won the lottery in terms of being born smart and into a stable family.
I got lots of financial aid bc I got into a great school that met 100% of demonstrated need (my parents did not have much money), I got into a mildly lucrative career, and did not have any significant medical emergencies.
Most are not so lucky. They graduate w significant debt and cannot find work paying even $50k a year. They have medical problems, they have kids to feed, they get laid off.
My point is - right now the median case is bleak. You need very few things to go wrong to have financial stability. And the coming generations have it even worse! My school's tuition eclipsed $70k this year. And for poor kids from rural OH they do not have the option...
...to live at home - the connections you make at a top school are critical to getting out of the cornfield. So we are demanding huge fees just to play the game, and then you better hope you win.
