The Poverty Machine, Part 3

When last we spoke, I left off mentioning that a college education is often considered to be the answer to the great big poverty question, but I suggested that I do not agree completely.  We’ve already established that the minimum wage is woefully pathetic compared to what people need to live, and we also established that it would take FOUR full-time minimum-wage jobs to raise two kids (which is well-nigh impossible for the vast majority of human who do not have time-travel devices).

But let’s look at that “college” thing.

The average cost of one year of college for a private school is $30,000.  Some public in-state schools were as low as $8,000, and public out-of-state residents can expect to pay around $22,000.  Per year.  Not for a degree, for a year.  That means that if you want an actual degree, the least amount you’ll have to magic up is about $32,000 for in-state local college.  Wanna go to a really fancy place?  $120,000.

That’s not counting the probability of tuition increasing while you’re in the middle of it.  And it doesn’t take into account even prouder private schools.

Way back in the day (think 1960s), having a college education meant exactly one of two things:  either you were brilliant and got a scholarship to a university, or your parents were wealthy enough (or self-deprecating enough) to put you through school.  College was also much more affordable back then, and then there were the VA bill that allowed servicemen to go to college on the government’s dime.  (The amount allocated for that tuition assistance, by the way, is normally only 60% of the tuition for a full-time student, the vet has to come up with the rest.  Some states do have assistance for full rides, but they are closer to scholarships than actual veteran benefits.)

As time marched on, it was suggested that Americans were under-trained for jobs of significance, so college was stressed more and more.  Scholarships became a little harder to come by because more and more people were applying for them.  Enter in the pernicious industry of Student Loans.  Stafford Loans (the ones run by the government) have an annual interest rate of 4.66% for undergraduate and 6.21% for graduate and professional students.  Additional private loans might be more or less.

The average student loan payment for a bachelor’s degree is $300 or so if you went to a public college.  That’s roughly $2.50 per hour more, or $3600 yearly, that has to be earned assuming that all the other expenses in your life stay the same.

Oh, wait… what if your career requires a master’s degree or better?  Or if you went to a private university?

Uh-oh.

If you know it’s going to be so much more expensive, why would you go to a private university?  Usually, it would be because that school has a reputation that will put you at the top of the candidate list for a job wherein everyone else applying also has a degree.  Does it work?  Not always, but if you relied on student loans, your monthly cost could be over $700.

What if you decided not to go with student loans at all?  Wasn’t there this thing called “putting yourself through college” so that you could avoid student loans?

Let’s break out the math again:  The average scholastic endeavor requires about 40 hours a week for full-time students.  By no small coincidence, so does a full-time job.  You have to usually pay for classes up front by the semester, and we’ll assume that you are still single and in your own apartment.

In our previous example, the minimum you need to make hourly to survive reasonably well is $16.50 per hour, which is, in the end, a take-home of $2245.  We’ll take that $8000 figure for one year (two semesters) and break it down evenly over the course of the year, assuming that you are saving up before walking in and paying for your classes in cash.  That means that the roughly $35,000 you were making a year now requires $45,000.

Waaaaait a minute, $45,000 is $10,000 more than $35,000, and the yearly cost of school is $8,000 – what gives?

Taxes.  Whenever you calculate something into your expenses, you have to remember that you’ll need to factor the tax percentage on top of the actual required amount.  Otherwise, you’re going to be doing the math and expecting the full sum at the end of the year, and you’ll be about 18% short.

So, that’s $22.50 an hour, at 40 hours a week… and then once you start school, that adds another 40 hours or so per week… wait, but classes are often during the day, especially for going full time… can you work part-time?  Sure, but you’d better than the rest of your college paid for because part-time is going to pay for less than your previous lifestyle.

What if you save up all the money ahead of time and pay for your entire four years, and then roommate with someone who maybe is also going to school…

And in that case, you have to take into account inflation because tuition rates steadily increase year over year:

Inflation

 

That’s just the last twenty years.  These percentages are the averages, which means that some areas are experiencing higher levels of inflation, some colleges have increased their tuition more, housing costs in certain areas (like around colleges) has gone up more than the national average…

But in the end, the degree is totally worth it, right?  I mean, having that piece of paper gets you a better job?

Wrong.

“When everyone is special, no one will be.”

The statistical myth is that people with jobs will earn more over a lifetime.  Day-to-day evidence is putting this to the lie.  Let’s take the worst-case-scenario job – teaching high school – and factor in a master’s degree in order to move a good teacher up a pay grade.

That pay grade increase will usually almost pay for the master’s degree, which is to say, he’s not actually making any headway as far as earning more money is concerned.

And then there’s the other other problem, and that is that actual quality of education is steadily going downhill.  Degree-mill colleges (for-profits that target vets and adults, for instance) deliver degrees in the end, sure, but the quality of classes is set to the lowest common denominator – so much so that many are constantly in danger of losing their accreditation (that thing that means their degrees are recognized as real).  It’s pretty much like being in a really, really expensive high school, except the other students in general want to be there.

So, having a degree doesn’t matter as much as it used to because everyone is supposed to have one, and getting one you can afford will probably mean not getting it from a really awesome university, and in the end, you’re really only gaining a few thousand a year at least to start, assuming that you can even get a job in your chosen career field.   (Hint: GOOD LUCK.)

What’s a person to do?  How do you get into a survivable tax bracket without mortgaging the kids or selling a few organs on the black market?  There are options, of course, but they’re risky.

More on that later.

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Need to get caught up?  Check out Part 1 and Part 2.

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