College grads make a million dollars more in their lifetime? Statistics and false correlation.

Post hoc ergo propter hoc - "false cause" fallacy.

This topic has been written about fairly recently:  (See Forbes:  The College Hoax).  However, it has really started to irk me because of the 268collegenow.bs commercials on cable TV quoting this erroneous statistic.

Some cause for concern:

  1. The number is not a comparison of lifetime earnings of 62-year-olds who graduated from college versus those who only graduated from high school, it is an extrapolation of a one-year sample from working age people 21-64 tears of age.
  2. Secondly, the extrapolation is done using a median of $20,000 and multiplying it by 40.  Each median is taken over the entire age group, from 21-64, by degree level.  Why is this a problem?
    1. Many professions which specifically require a bachelor's degree have a relatively flat income growth rate:  nursing, teaching, social work, accounting.  These professions have opportunities to significantly boost income, but many require the addition of a master's degree, which would take them out of the "bachelor's degree" category and place them into the "advanced degree" category.
    2. For someone with no "college", their career path might involve a trade school and/or a lifetime of real world experience.  If that real world experience typically results in a breakthrough understanding or opportunity after 23 years in a job, the resulting income has been completely ignored because it is past the midpoint from which the median was taken.
    3. Never mind the fact that a single value was plucked out of the population, yet it was multiplied through as if it was representative of that population.
  3. $80,000 in student loans takes an 8% cut out of that extrapolated earning potential.

While the rigors of getting a college degree can be valuable experience in teaching perseverance, it does not mean that getting your "degree" will entitle you to an automatic $20,000 per year more than your high school graduate cousin.  All these quick degree programs and, to some degree, some colleges would have you believe otherwise.

The reality is, while licensing boards may require that degree before you can seek employment in your chosen profession, the learning really doesn't start until you take off your cap and gown and get to work.  College sets you up with a really nice set of tools, including a few that you may not get anywhere else.  You can still be a lousy handyman with even the best set of tools.

Fifth Third Bank "Early Access" Check Advances

Fifth Third Bank has been pushing this "service" pretty hard at their branches.  It's basically a pre-authorized payday loan account that you can access through your online account access (for a small 10% advance fee).   I guess they need a replacement for bad home loans.  Their stock price, as of this writing, is in the $1 range.

Early Access Terms:

  • "As a Fifth Third consumer checking customer, you may qualify for a line of credit that can be deposited immediately into your checking account for a cash advance."
  • "Please Note: This is an expensive form of credit. This feature is designed to help our customers meet their short-term borrowing needs and is not intended to provide a solution for longer-term financial needs."
  • "Advances are automatically repaid from your next direct deposit of $100 or more."
  • "Your maximum credit limit will be $500 or 50% of total monthly deposits (based upon a 3 month average) rounded up to the next $20 increment, whichever is lower."
  • "The finance charge is $1 for every $10 borrowed. This equates to an Annual Percentage Rate (APR) of 120%."

Fees:

  • "A 10% Finance Charge will be assessed for each dollar that you advance through your Fifth Third EARLY ACCESS account feature. For example, for every $10 that you advance, the Finance Charge will be $1, without regard to how long the advance remains outstanding."
  • Bad math: "For example, $100 Advance with a $10 fee = $10/$100 = 0.1% X 12 cycles = 120% APR.
    REPAYMENT"  (remember the Verizon dollars versus cents debacle?