The Economics of

College

Araceli SeguraPeriod 10/12

1/28/15

The Importance of a Degree

• Ages 25-40 4 year college degree: --$40,000 High school graduates: $25,000

• Low income: 30% High income: 29%

• Since 1970 Median: 11 to 15 percent Poorest: 6 to 10 percent

The Importance of a Degree

• High school graduates: Bachelors Degree: 56% Associates Degree: 21%

• End of 2013, student debt was more than 1 trillion.

• Annual Returns -Workers with a bachelors degree in engineering: 21% -Workers with a bachelors degree in education: 9%

College Costs

• Luxurious campuses

• Tuition and fees: 2001-2011 State schools: 72% Nonprofit Private Institutions: 29%

• Colleges devoting Financial Aid to students who aren’t in need

• Tuition increases due to state budget cuts

College Costs

Advice• Job on campus

• FASFA

• Maintain grades and DON’T skip classes

• Don’t take out loans if it is not necessary

• Apply for scholarships and grants

Mistakes• Not studying, skipping classes

• Taking on too many classes

• Misusing loans and/or financial aid.

• Not focusing on deadlines

Graduation and Retention Rates

Retention Rates

4 Yr Grad Rates

5 Yr Grad Rates

6 Yr Grad Rates

0% 20% 40% 60% 80% 100%

80.00%

4.20%

16.40%

27.60%

75.00%

13.60%

36.50%

48.00%

85.00%

13.40%

39.60%

51.20%

Cal State FullertonCal State University of NorthridgeCal State Dominguez Hills

My 3 schools & my loans

Year 1st choiceSanta Monica and transfer to Dominguez Hills while living at home for both

2nd choiceSanta Monica and transfer to Northridge while living at home

3rd choiceSanta Monica and transfer to Northridge while living on campus

1st 0 0 0

2nd 0 0 0

3rd 0 0 0

4th 5,098 5,756 16,632

5th 5,098 5,756 16,632

6th 5,098 5,756 16,632

TOTAL LOANS 15,294 17,268 49,896

Total amount loaned vs. Total payments

SM to DH (home) SM to CSUN (home) SM to CSUN (campus)$0.00

$10,000.00

$20,000.00

$30,000.00

$40,000.00

$50,000.00

$60,000.00

$70,000.00

Monthly Payments

SM to DH (home) SM to CSUN (home) SM to CSUN (campus)$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

Series 1

Different repayment plans

Loan Payment Chart

Amount Borrowe

d

Loan term

Interest Rate

4.66

Monthly Payments

Total Payments

Total Interest

$15,294

10 $159.69 $19,162 $3,868

15 $118.25 $21,285 $5,991

20 $98.08 $23,540 $8,248

My Career

• Starting Salary (10th

%):

34,750$

• Average Salary (50th

%)”

65,930$

My Career

• I want to major in Mathematics and become a math teacher. I look forward to teaching kids in high school. The reason I want to do this is because I love the concept of math and I love solving the problems. Additionally, I love that I will be helping kids grow and learn. I feel that watching students exceed in something you are teaching them is such a wonderful feeling.

• The demand for this job is expected to grow due to how many opening there are for teaching positions.

Can I afford it?Gross Income: $65,930.00    

Tax $14,504.60     

         

Category Range Suggested Percentage Annual Amount Monthly Amount

Net Spendable:1     $51,425.40 $4,285.45

Housing: 2 25-40% 3%$1,542.76 

$128.56 

Food: 2 6-11% 12%$6,171.05 

$514.25 

Auto: 2 12-18% 8%$4,114.03 

$250.00 

Insurance: 5-12% 5%$2,571.27 

$214.27 

Ent/ Rec: 2-11% 7%$3,599.78 

$299.98 

Clothing: 3-7% 3%$1,542.76 

$128.56 

Savings: 3-10% 5%$2,571.27 

$214.27 

Med/Dental: 4-8% 6%$3,085.52 

$257.13 

Misc: 1-6% 2%$1,028.51 

$85.71 

Investments: 3-10% 9%$4,628.29 

$385.69 

Loans 0-30% 10%$5,142.54 

$428.54 

Totals 35,997.78 2,906.96

Is it worth it?

My Career Salary as a Teacher x 42 (Years working)

• 65,930 x 42 = 2,769,060

Loan Payments paid over 10 years

• $19,162

Return on investment

• 2,769,060 – 19,162 – 1,363,000 = $1,386,898

Lifetime Earnings

No college degree College Degree$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$1,363,000

$2,769,060

ROI Chart

SM to DH (at home)

SM to CSUN (at home)

SM to CSUN (campus)

$1,320,000

$1,330,000

$1,340,000

$1,350,000

$1,360,000

$1,370,000

$1,380,000

$1,390,000

$1,400,000

$1,386,898 $1,384,424

$1,344,045

Cost Benefit AnalysisPros

Santa Monica College to CSUDH while at home

Santa Monica College to CSUN while at home

Santa Monica College to CSUN while on campus

-Cheapest option. Only $15,294 annually.

-Will be saving money!

- Wouldn’t have to drive everyday

-I will gain responsibility such as cooking for myself, cleaning the house, etc.

-Less distractions. While in dorms you have friends and parties, at home you don’t.

- Won’t have to worry about monthly rent payments

- Location is only about 20/25 min. away from my home.

- Will increase my social life. I will meet more people and create more friendships

Cost Benefit AnalysisCons

Santa Monica College to CSUDH while at home

Santa Monica College to CSUN while at home

Santa Monica College to CSUN while on campus

-Lack independency due to living by parents rules

-Driving to school everyday/paying for gas. (about an hour from my house)

-Less privacy. It is more likely that I will have a roommate so therefore, I will not have much personal space

- -Harder to be involved in school activities due because not all time will be spend on campus

-More likely to slack off on school assignments due to parties, etc.

-Most expensive. Costs $49,896 annually

So…•Cheapest option (SM to CSUDH)

•Lifetime earnings is higher

•Monthly payments?

•Go to school to become a teacher

Works Cited

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Works Cited

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<http://www.bls.gov/oes/current/oes_nat.htm>.

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<http://www.nytimes.com/video/business/100000001500508/graduating-into-debt.html>.

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Thank You