Ivy League Myths Uprooted

John had a stern, almost angry look on his face when he put up his hand.

The Stanford bound high school senior is a student in my Personal Finance class. He had just finished a series of calculations determining whether college graduates are better financially served earning a Bachelor’s degree at a state college versus an Ivy League institution. I posed the question as a lesson on “opportunity cost” and to be honest, I didn’t know the answer. I just wanted the kids to understand the “time value of money.”

For example, if one student spends $220,000 on a Stanford degree and a second spends $86,980 for four years at Texas A&M University, what is the true cost of going to Stanford after loan interest payments?

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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6 Responses

  1. Barry says:

    Who comes out ahead if you take on a trade apprenticeship and they then invested the whole $220,000 by age 65 rather than spending it on either Stanford or Texas A&M University?

  2. M says:

    i saw your interview on yahoo


    and when i found that you teach at a Singaporean international school bought your kindle book on amazon! we actually started living in China and my child goes to a local school for affluent Chinese people who want their kids to attend foreign universities.

    they are on both the Chinese and American programs up till high school graduation. classes are half Chinese, half English for lower grades and mostly English for upper grades, so it is tougher for kids, i think my child is going to be at a disadvantage in both languages for the elementary years, although i am told that bilingual kids usually start catching up by the time they are young adults.

    the standard for local American and British International schools here are about $15,000/yr w/o boarding, which is cheaper than many major Asian cities like Singapore, but our school is a little cheaper, or around $9,000 because it is primarily for the local residents w/o the international passports.

    it works for us because i want my child to be fluent in chinese, not just speaking but writing. but a local school is too much, so this is a good solution for us.

    i havent gone through most of your material yet, but i would be interested in learning about your thoughts on mutlicultural, multilingual education for expat parents.

    we actually relocated to learn Chinese, and to save costs, while our income is not contingent on our location.

    this is a good way to save costs and broaden your mind, it's not just penny pinching but we are ending up with a substantial uplift in our quality of life as opposed to lowered living costs.

    cheers, m

    • Hi M,

      I think you're doing a GREAT thing for your kids. Exposure to other languages and cultures is probably one of the best educations you could give them. I think they'll have double the opportunities, based also on a level of confidence that many other monolingual, monocultural kids won't have.

  3. L says:

    Hi Andrew, I'm a teen serving the army in Singapore now, I have a army 'salary' of lets say 900, how would i be able to invest? I have very low starting capital, the best I can do is putting in afew hundred $ into some account. But I do not know if this can be done. And whether if its a good idea. Pls enlighten!

  4. Brian White says:

    Hi Andrew,
    It’s me again! I searched your site for any information you might have on college savings plans. I didn’t see anything so I thought I would write.

    I’m looking at the Vanguard 529 for our son. I’m assuming, but wanted to check, the advice you present in your book (total stock, total international stock, and total bond index funds) would apply to a 529 plan? We sold some property and are ready to plunk about 85,000USD into a 529. They sell an age based plan that adjusts the percentage of stocks to bonds automatically as the beneficiary gets older.


    Thanks as always!

    Below is the list that Vanguard lets you choose from.

    Stock Portfolios:
    Vanguard 500 Index Portfolio %
    Vanguard Aggressive Growth Portfolio %
    Vanguard Growth Index Portfolio %
    Vanguard Mid-Cap Index Portfolio %
    Vanguard Morgan™ Growth Portfolio %
    Vanguard Small-Cap Index Portfolio %
    Vanguard Total International Stock Index Portfolio %
    Vanguard Total Stock Market Index Portfolio %
    Vanguard Value Index Portfolio %
    Vanguard Windsor™ Portfolio %
    Balanced Portfolios:
    Vanguard Conservative Growth Portfolio %
    Vanguard Growth Portfolio %
    Vanguard Moderate Growth Portfolio %
    Vanguard STAR® Portfolio %
    Bond Portfolios:
    Vanguard High-Yield Bond Portfolio %
    Vanguard Income Portfolio %
    Vanguard Inflation-Protected Securities Portfolio %
    Vanguard Total Bond Market Index Portfolio %
    Short-Term Investments Portfolio:
    Vanguard Interest Accumulation Portfolio

    • Hi Brian!

      If you can buy a plan via Vanguard that adjusts itself more conservatively as August gets older that would be great. Otherwise, the idea is this: in about 14 years, August is going to need this money. Therefore, by the time he is about 16 years old, it should be invested as if he’s an old man. Old people can’t afford huge fluctuations in their accounts because they are selling off pieces of it to live, and need relative stability. But a 529 should be even more conservative when the child is 16 because. between 18-22 years of age, you’ll be selling 100% of the portfolio to pay for school. If the stock markets fall 30% or more when August is 18, and they don’t recover for the next five years (it has happened before) then you lose a third of his college fund, and of course, you would have to sell (at a low) to pay for his schooling.

      A 529 through Vanguard that’s self-adjusting would consider this. But again, if you have to build it yourself, here’s the idea:

      His school will likely be in the U.S., so you would want a U.S. dollar bias, considering that you would be paying bills in greenbacks.

      Vanguard’s inflation protected securities is a bond index (you listed it above) that will always beat inflation. That’s how it’s designed. It’s a package of bonds issued by the U.S. government for that purpose. Put roughly 30% of the money in that.

      Put 50% of the money in Vanguard’s total stock market index and 20% in Vanguard’s total international stock index.

      When you add fresh money, watch the allocation between stocks and bonds. By the time August is 10 years old, shoot for about 40% in bonds. By the time he’s 13, shoot for about 50% in bonds; at 15, have him 60% in bonds, and by the time he’s 18, have the money 80% in bonds. Keep it at 80/20 as you deplete it.

      Hope you’re having a great time! Say hi to August and your lovely wife.


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