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Personal side of Federal Student Aid

October 23, 2007

I’ve been cluttering up someone else’s comments area on a post about Federal Aid for college students. Honestly, I’ve never heard anyone take the position that federal aid is a large factor in why college is so expensive. Then again, it isn’t something I’ve discussed with many people, so it is may be a more common idea than I thought.

Rather than continuing to disagree with the overall point, I want to approach it from an entirely personal angle. One examples doesn’t prove a darn thing, but I’m not out to prove anything, just to think and discuss.

I graduated high school without a penny saved for my college education. Yes, I could have saved something myself (I worked part time through high school), but I didn’t. No one suggested it to me, and I didn’t think of it myself. My friends were quite well off and their parents were planning on paying for college for them, so it wasn’t “normal” to be saving for college.

Even though there wasn’t any money set aside, the question of whether or not I would go to college wasn’t raised. It was obvious that I would–I was a bright student who loved school and excelled in math. I couldn’t imagine doing anything else. I went to the state school because it was relatively inexpensive. Even today, after yearly tuition increases (one year it was a 20% increase!) it is “only” $5000 for tuition, another $1000 for fees, and $6000 for room and board.

The exact dollar figure in grants that I got is unknown, because I’m not a good record keeper. I estimate that it would be about $10,000. I got about $22,000 in subsidized government loans, which means the government paid my interest throughout school. I’m sure there is fancy math to figure out that cost to them, but I’m just going to round it to a cost of $1000/yr for four years. I’ll also throw in the $5000 merit based scholarship I got to study abroad, because it was a government program and one qualifying factor was finiancial need. That puts the governments total investment in me at a whopping $19,000, a humbling number.

But, what will they get back on it? It is hard to quantify, because if I didn’t go to college, I have no idea what I would have done. I would have stayed in my home state, and with hard work I might have been able to earn, say, 35k a year. This would make my tax bill (at 25%) be 8.7k a year, for 47 (65-18) years. I’m simplifying the math, but I’ll do both calculations the same, so it should be a wash. Total lifetime taxes: $408,900

My first year out of school, I’m earning $56k. My oportunity for salary growth is much greater than if I had no degree. For simplicity, let’s just say I make $67k (my salary offer for my new job) for my entire life. This is ridiculously unlikely, but so be it. My tax bill for this salary (at straight 25%) is $16.75k, for 42 years 65-23) that ammounts to an impressive $703,500.

The difference? $294,6000. It would take some more accounting to flat out demostrate that they made a good investment in me and I don’t know finance. Yet it seems apparent to me that over my life I’ll pay substansially more in taxes than that 19k investment in my education. Strictly based on taxes, I was a good investment. This isn’t to mention the decrease in US students graduating in science and engineering, the need for us to stay up to date in technology, and the value I provide to my company and our economy.

The playing feild between the haves and the have nots will never be level, but government aid helps those of us who’s parents don’t have a pile of money saved up at least get ON the field and try to better our lives. When I have kids, they probably won’t qualify for any sort of aid, but I’ll be able to provide for them with money I’m able to save due to my education. Government aid can help one generation so that the next can do it without that help. It is sort of like the saying, “Light a man a fire, he’ll be warm for the night. Light a man ON fire, and he’ll be warm for the rest of his life.” Or wait, maybe the saying was about fish…. 🙂

It is difficult for me to look at government aid as anything but good because my experience with it was good. It not only helped me, but it didn’t go to waste on some student who frittered away they governments money while skipping class and getting wasted. I understand there is another side of it, but it is a side that I just will never be on.

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5 Comments leave one →
  1. Ladsk permalink
    October 23, 2007 6:44 pm

    Most countries don’t have this kind of aid, and many students never go to college and end up working jobs, somtimes two jobs just to make 35k/year. So, I agree with you that financial aid in this country is a blessing. Probably one of the few things in this country that is. The government really is investing in you.

    In the end, it’s not what Ivy League school you go to. It’s the kind of great job you can find when you get out. Isn’t it better to go to a state school and have a crap job than going to an ivy league school and having a crap job?

    Food for thought.

    (chomp)

  2. SJean permalink
    October 23, 2007 10:18 pm

    “most countries don’t have this kind of aid”

    Probably true, but in a few countries (sweeden? Not sure which ones) university is free of charge.

    Not that I think we should go that route anyway.

  3. Anonymous permalink
    November 6, 2007 3:06 am

    I’m glad that you were defending student aid. I, too, would have not been able to go to a good University if not for federal grants. I had excellent grades and was motivated but my parents just did not have the money. Sure, there are slackers who take aid but I know that there are an equal number of slackers who take their parent’s money and partied all through college. The goal of aid is to help needy students so that college is not simply an elite institution. Plus, I highly doubt that government aid causes tuition increase. I think universities are just not held accountable for their spending and they should be. Are they overpaying administrative staff? Can they reduce their landscaping costs? DO they really need a state-of-the-art gym? Only then can you control the spiraling tuition costs.

Trackbacks

  1. deciding on student loans « Brown-Eyed Girl on a Budget
  2. On Student Loans (again) « Stacking Pennies

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