I studied 65% of the total beginning postsecondary student population for this report. I selected students by income and dependency status.
For income, I used percentage of poverty line so I could account for family size. For a family of four, this would mean an income cut-off of $23,000. For the middle and upper-income group, it would be anyone above $45,000.
Moderately rigorous curriculum =
4 yrs of English3 yrs each of math (including Algebra II), social science, and science (including biology, chemistry, and physics)2 yrs foreign languageLow-income students save money by choosing programs of shorter duration--not lower cost.When comparing institutions of the same type, there is little difference in the price of institutions chosen by low-income and middle- and upper-income students.
After all aid, including loans.Drop out rate for all low-income = 60%Drop out rate for all middle- and low-income = 75% Low-incMid- and Upper-income Borrowed, did not work 1310 Borrowed, worked 1-14 hours58 Borrowed, worked 15+1811 Did not borrow, did not work2121 Did not borrow, worked 1-14 hours68 Did not borrow, worked 15+3742
Low-incMid- and Upper-income Borrowed, did not work 1310 Borrowed, worked 1-14 hours58 Borrowed, worked 15+1811 Did not borrow, did not work2121 Did not borrow, worked 1-14 hours68 Did not borrow, worked 15+3742
If so many students are working, and working long hours has been proven to have a negative effect on students academic performance, its important to know if this is at least a wise financial strategy.
Here are two scenarios that suggest it can be penny wise and pound foolish to work long hours, especially if one is not yet taking out student loans.
Dick works 25 hours per week every year. As a result, it takes him 5 years to graduate. If he attends a public institution, he comes out about $5,800 ahead using this strategy. If he attended a private institution, hed come out in the red using this strategy. Students seem to understand this point -- a much larger proportion of students at private colleges graduate in four years.Jane borrows a modest amount, and uses the money she borrows to reduce her number of hours at work to 15. As a result, she graduates in four years. Even if we assign all of the costs of her $10,000 loan to her first year out of college, Jane comes out $10,000 ahead.
I havent tried to make any assumptions about how Janes living expenses might differ from Dicks, but I think assigning all the loan costs to the first year out of college probably makes up for not inflating Janes living expenses.