Top Of My Head

Thoughts on everything from Politics to Video Games

Tag: College Education

Starbucks, College, and Interest

I’ve seen the various articles regarding Starbucks announcement that they are going to fund their employees’ college tuition at Arizona State University.  I’ve seen the articles that are pro and con (more con than pro, I should mention).  I’m not sure how I feel, because I need to understand it better and to see what’s going on.  I was researching the subject when I came across an article on Market Watch called “Why Starbucks is right, and Obama is wrong, on Tuition“.   The article is interesting and we do need to figure out how to lower tuition costs, but the article, also, makes a wrong point about college loans and interest rates.

According to the article, the average college student leaves college with $29,400 of debt.  The argument is that a payment of $375.14 a month isn’t that much of an economic problem.  It’s merely a car payment.  See the quote below.

Numbers don’t lie. That $29,400 borrower would pay $375.14 a month for 10 years at Sallie Mae’s highest current rate of 9.17%. But if that loan commanded 0.01% interest, the payment would still be $245.12. The real average is somewhere in between and covered by the spread between a college grad’s income and a high-school grad’s. It’s a car payment, and not really the economic problem many posit.

Except the author is missing a bigger point, that $130.02 a month savings adds up to a difference of $1,560.24 over a 12 month period or $15,602.40 over a ten year life of the loan.  Perhaps, that’s not a lot of money for the author, but it is for most people.

Realistically, the average student isn’t going to pay an interest rate of less than 1% and President Obama and Senator Warren haven’t suggested one that low.  Their plan calls for an interest rate on a refinanced loan of 3.8%.  Even at that amount, the total cost of the loan works out to $35,384.90 – $9,631.54 less than $45,016.45. That’s half a car.

One more item I’d like to point out.  He mentions spending $150,000 on an education for a $42,000 position.  In his opinion, this is way too much money.  He doesn’t really say if this was tuition or the cost of a loan, but I’m assuming he means tuition.  Here’s where the 3.8% interest rate comes in handy.  At this interest rate, the total cost of the education works out to  $180,535.21 .  It makes his argument look even stronger, doesn’t it?

Except, the $42,000 isn’t going to hold as the yearly salary for the rest of the student’s working life.  They, if they’re any good, should get some raises over the next forty years (assuming they start at age 25 and work until age 65).  But, let’s say they don’t receive any raises over the next forty years.  The student will have earned $1,680,000.00 minus the education cost, that’s a profit of $1,499,464.79. That’s not such a bad return on investment.

(The author, also, set me off by knocking people who scored a 20 on their ACT. I scored a 19 – not only have I graduated from college, but I’m at the top of my field, proving that test scores mean diddly squat. But, I digress, as that is off my subject.)

My whole point is this:  tuition needs to be controlled in some manner.  However; distorting facts and not telling the whole story isn’t going to help the overall debate.

Rick Santorum is a Horse’s Ass

Here is his quote:

President Obama once said he wants everybody in America to go to college. What a snob. There are good, decent men and women who go out and work hard everyday and put their skills to test that aren’t taught by some liberal college professor that (tries) to indoctrinate them.

Don’t we all want our children to go to college? Haven’t we learned that the majority of people who are unemployed are those with less than a college education? Our manufacturing jobs have gone overseas and they’re not coming back.

And, there’s a quote I want you to read:

“The unemployment rate among (the) non-college-educated is well into the double digits in America. It’s 4 percent or 5 percent for people who have college degrees.”

Who said that? Rick Santorum – the horse’s ass of the Republican Party. Surprised? I’m not. He can’t even keep his own quotes straight. In case you’re wondering, here are the breakdowns of the unemployment rates for January, 2012 by education:

Education Level Unemployment Rate
Less than High School 13.1%
High School/No College 8.4%
Some College / Associate Degree 7.2%
Bachelor’s and Higher 7.2%

How can you think anyone that wanting all of America to be college educated is a bad thing?

Gainful Employment

If you have read the proposal from the Department of Education that will make it harder for students to obtain financial aid at for profit colleges and universities, you need to click the below link.  You need to tell the Department of Education that this is bad for those students who find it harder to obtain a college education through normal channels.  Not all of us were blessed to be able to attend college right out of high school.  Some of us had to work our way through school and if you’re thinking that I am one of those people, you’re right.  I was told by my mother that I was on my own when it came to college.  It took me 22 years, $23,000 in student loans, a lot of blood, sweat and tears; but, finally, I graduated with a degree in Business Administration with a minor in Computer Science.  My salary in just the last 14 years has risen 361% (if my math is correct).  I’ve gone from paying next to nothing in federal income taxes to, this year, paying $9,000.  I no longer live in a one bedroom apartment.  I own a two bedroom home.  And, I’ve paid off that $23,000 student loan.

And, it is all because of my college education and the hard work I’ve put in.  Please don’t let others like me fall by the wayside and not be able to obtain their dream of graduating college.  Click on the link below and tell the Department of Education to cease and desist.

There’s a million potential college graduates depending on you.

http://www.bipac.net/page.asp?g=cca&content=alerts

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