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Archives for April 2014

5 Ways Public Universities Are Swindling Students And Turning Into Private Businesses

By Frugaling 9 Comments

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Public University of Iowa Institution Taxpayer Funded
Sunset over the University of Iowa campus.

From public to private: The budgetary gap in American education

Public universities are generally funded by taxpayer dollars and the federal government. Contributions ultimately lessen the cost education for an individual, and help make a college education attainable for a greater whole. Tax revenues at the state and federal levels fell in recent years, and the share of tuition owed by students significantly increased — all while student loan interest rates skyrocketed.

This recipe has decimated our youth. We afford children the right to a free, public education from kindergarten to 12th grade, but when they graduate high school, the benefits evaporate. The voting public and politicians have argued that college is no longer a right; rather, an earned privilege to a select few (who can afford it).

Public institutions were supposed to be accessible and affordable to the people in state. Heck, there are land-grant institutions that were given vast acreages to educate future educations. Unfortunately, hawkish debt reduction tactics, private-interest groups, and misinformation campaigns created a climate that hated taxes — the consequence was the disintegration of our public universities.

A subtle shift happened over the last few decades, and it’s led to a massive, business-like privatization and profit-motivated aire amidst public universities. Suddenly, administrators are aiming at your wallet, rather than their intended goal: educating the finest group of students for many generations to come. The painful revenue gaps have led to a rise in tricky tactics.

5 business tactics that public universities use to supplement revenue gaps

1. International and out-of-state students are preferred

State schools accept more out-of-state and international students for full-price tuition and limited scholarship availability. This move effectively subsidizes the education of in-state students. Although, by accepting more students outside the state, fewer in-state students are accepted.

If you’re on the cusp of going to an out-of-state school, think about the price differential. Is it really worth the added tuition burden?

2. Degrees are created that offer no career paths

For instance, my alma mater had an oft-ridiculed bachelor’s degree entitled, “Liberal Arts.” This degree is useful as a temporary placeholder for students, while they make final degree decisions, but should not be a formal track. Graduate with a degree in Liberal Arts and you might as well use it for toilet paper.

Similarly, watch out for degrees in “General Studies.” Degrees like this simply milk monies from students and send them on their way without a lifeline. Avoid these at all costs!

3. Watch out for excessive, new construction projects

While these new architectural sights provide a heightened level of excitement to prospective students, they are only afforded through higher student fees and redirected public funds. Brilliantly upholstered and designed residence halls may attract new students, but everything has a price; last time I checked, enrollment and interest in college isn’t the problem, anyway.

If you don’t want to come to a university because hotel-like residence halls are absent, you are likely going to college for the wrong reasons. Much like the cliche regarding books, don’t judge a university by its buildings.

4. Massive interest in distance education programs

At a fraction of the cost to educating students on-campus, many public institutions have a growing body of administrators pushing for online education offerings. Stigma-be-damned, plenty of people are taking up the offer to be educated online. These institutions are frequently charging handsomely for the privilege of being educated online, and offer students little support when compared to their on-campus peers.

Steer clear of most online master’s degrees that purport to give you credentials — all while you are pantsless in a bathrobe at home. While you may be able to say, “Your Name, M.S.,” you’ll be missing out on various networking opportunities and paying some of the most expensive tuition rates available. Most online programs offer little funding, and public universities use these programs to further subsidize in-state students’ educations.

5. Financial aid offices don’t warn you about student loans

This is the scary one for me. It’s quite personal and disheartening that when I requested to get student loans, nobody ever explained to me how they worked. When I met to approve the federal aid a few years ago, I never had a human sit down with me and create a budget, set expectations, and explain how interest would quickly add up. While it’s my fault for not being more critical, I didn’t know what I didn’t know — the questions were not yet clear.

Pay attention to financial aid officers at universities. They usually have no interest in curtailing or slowing your interest in finishing a degree. There goal is to get you federal or private funding and keep you coming back to school — period. If you’re looking for student loan advice, start researching the perils and pitfalls before signing on the dotted line.

Filed Under: Social Justice Tagged With: bachelors, Budget, college, cuts, distance education, education, funding, masters degree, private, public, Student Loans, taxes, taxpayer, university

Stick To Your Budget And Go Gluten-Free

By Frugaling 4 Comments

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Bread Wheat Gluten-free Frugal Budget
I definitely miss fresh loaves of bread! Photo: flickr/surlygirl

Switching to gluten-free foods was surprisingly easy!

One of the best things I did for my delicate, dyspeptic stomach was to go gluten-free. While I still have some indigestion and problems every now and then, I’m a couple weeks into a [mostly] gluten-free diet. I do not exhibit symptoms of celiac disease, but I fear I’ve long had a sensitivity to gluten products.

I make mistakes and/or cheat a little bit here and there (why is it that every office on campus offered free donuts when I started going gluten-free!), but I’ve been trying to eliminate it all. Surprisingly, transitioning to this diet was easy — all I needed to do was buy some food at the supermarket.

What do others ask about going gluten-free?

Every now and then I mention my new dietary regimen and people provide entertaining commentary. The biggest question is: “Why go gluten-free?” If I’m honest — and I try to be — I tell them that I had pretty awful stomach problems (and occasionally still do), but after reducing/removing gluten from my diet, I feel better. My energy levels are bit more normal and I’m not endlessly sitting on a toilet.

But the financial questions are the funniest and most intriguing: “Sam, how do you afford that diet? Isn’t that expensive? Aren’t you trying to be frugal?” Somehow, someway, there’s a scary myth that’s propagated society, which says that going gluten-free is for wealthy, privileged individuals. In fact, merely mentioning the diet can get sarcastic scoff out of some. Comically, the diet and those following it seem to be highly miscategorized.

The reality is far more basic and frugal! When you remove most all bread products, wheat-based pastas, etc., the store shelves appear less busy. Snacks and carbs no longer beckon your attention with a gluten-free diet. You may still yearn for some nostalgic food like mac & cheese in its original, wheat form. But largely, the grocery store is simpler — that’s where the savings begin.

Financial consequences of going gluten-free

Nowadays, I pack more lunches than ever and tend to cook at home. This way I know the exact ingredients of the meals I’m making and preparing for a long day out of the apartment. I’m on the go most of the day — 10-13 hour days are sort of normal. Going gluten-free resulted in terrific benefits — both directly and indirectly. Here are some of my favorite reasons:

  1. Packed more lunches than ever ($7-10 savings per day)
  2. Made healthier food choices — solid, unprocessed foods (i.e., apples, veggies, nuts, etc.; removed pizzas; $—– Unknown future medical bills)
  3. Removed gluten-based snack foods when out and about ($1-3 per snack)
  4. Learned to cook more dishes and vary seasonings (my happiness = priceless)
  5. Lastly, friends supported and egged me on, which is fun and entertaining (a nice social surprise and bonus to being open and talking about it)

Switching to a gluten-free diet is not synonymous with wealth. Instead, its one of the cheapest diets I know. Think about it: Most of the world eats rice. The most disenfranchised and displaced and burdened still eat rice. It’s a gluten-free food source and it has nothing to do with privilege. Rice is a staple food for the world and it’s just become one of the highlights of my diet — yum!

Filed Under: Save Money Tagged With: diet, Food, Frugal, gluten, gluten-free, healthy, lactose, Work

I Just Paid Off A $25,000 Student Loan!

By Frugaling 30 Comments

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Graduation Debt Student Loans

Remarkably, over the course of this year, I’ve completely changed my budget — both in spending and income. The aim is simple: I want to destroy my student loan debt as rapidly as possible while in graduate school. Over the last few months, I’ve deposited more than ever into the federal government’s coffers by paying everything off early.

In August, one of my student loans — the unsubsidized at 6.8% — was actively gaining interest and sat around $25,000. My debt had metastasized and was snowballing into a serious concern. I thought I was doomed to this reality until I started Frugaling, found more ways to make money, and prioritized debt reduction. Then, it all clicked, and debt started disappearing.

Today, I’m shocked and proud to announce that I’ve paid off the biggest hurdle. The $25,000 loan in August now sits at $0 — completely paid off. Instead of losing thousands of dollars over the years and struggling to pay it all back, I have shortened everything. Now, it’s gone!

Unsubsidized Student Loan Chart Debt Question
My unsubsidized student loans were going crazy. In August 2013, they reached $25,000. Now, they’re completely paid off!

I know this is shorter than normal, but I just wanted to share this little achievement with all of you. Trying to keep personal finance… Well, personal!

Thank you everyone for your support and help thus far. I have a ways to go, but this is the biggest mountain to climb.

Filed Under: Loans Tagged With: debt, debt reduction, federal, Frugal, loans, make, more money, Save, Student Loans, subsidized, unsubsidized

220 Million Gallons Of Gas Per Year: The Case For A Carbon Tax

By Frugaling 1 Comment

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The price we pay at the pump is inaccurate

A couple weeks ago, I wrote about what might happen if gas were to spike to $10 per gallon. The comments and tweets were enlightening. Nobody wants this to happen, and the consequences could be drastic to our still-fragile economy. Today, I wanted to focus on a different angle: the hidden price we pay for burning fossil fuels (aka, oil).

The national average gas price sits at $3.67 per gallon. Most of that consumer cost goes to a massive supply chains of drillers, explorers, refiners, transporters, commodities exchanges, and storefronts. It supports their bottom line. This process of getting oil from the ground into a refined fuel source is an elegant dance. Without every component working in harmony, we wouldn’t be able to fill up our cars.

Where our current fuel taxes go

In America, our price per gallon includes about 50 cents for state and federal taxes. Of that 50 cents, about 18-20 cents per gallon is directly funneled to the federal government as an excise tax. Essentially, an excise tax is an adjustment and penalty for greater contribution of damage. For instance, if you drive more, shouldn’t you have to pay more to maintain the roads? Most people understand the need for this tax; without it, we wouldn’t have this infrastructure.

Smokestack Industry Fuel Gas Taxes
Photo: flickr/senorcodo

Like all things political, the funds get redirected to all sorts of “special” programs. About 60% of federal funds go directly to road and bridge building. The other 40% seems to be sent to local municipalities for the purposes of pet projects, which may include (but is not limited to) roads.

There are museums that are being built with that money, bike paths, trails, repairing lighthouses. Those are some of the kind of things that that money is being spent on, as opposed to our infrastructure.
–Former Transportation Secretary, Mary Peters (Link)

What’s happening here is that federal funds are being redirected back to districts after Congress gets their hold on the excise tax. Instead of spending on the federal level with federal funds, earmarks eat away at the excise tax. Ironically, senators and congressman already see a benefit via state gas taxes. The federal redirection of funds is just an added bonus. An estimated 30 cents per gallon is fed back to the state (e.g., Iowa) for the purposes of:

State highways maintained by the Iowa DOT are financed with funds that are principally derived from vehicle fuel taxes and registration fees collected and allocated by the state and federal governments.
–Iowa DOT (Link)

Both state and federal taxes for fuel directly charge corporations and individuals for their use. I bet you and I could both use the extra 50 cents per gallon that we’re paying in taxes, but it would not properly contribute to the maintenance and security of our infrastructure. Albeit, we could probably do without the earmarks for special interest projects in local municipalities.

Our tax code is missing an essential element: Carbon

Unfortunately, the current tax regime doesn’t account for other, indirect negative externalities that are involved with burning fossil fuels. Many developed nations attempt to account for these indirect damages.

Norway is a major oil producing country, but the average Norwegian has to shell out $9.97 for a gallon of gas, more than twice the U.S. average. Norway doesn’t subsidize fuel at the pump; instead, it uses oil profits to fund free college education and infrastructure development. (Link)

Photo: flickr/Andrew Hitchcock
Los Angeles in a smog, pollutant cloud. Photo: flickr/Andrew Hitchcock

In Norway, steep gas prices are primarily due to two taxes: road and CO2 taxes. After that, the revenue generated goes to support free education in Norway — creating a highly-educated populace that can intelligently vote and participate in democracy. These are some of the positive parts in expensive taxes.

But there also more nefarious company practices that could be accounted for by taxes. For instance, while BP’s Deepwater Horizon spill in the Gulf of Mexico has cost the company around $13 billion, the environmental devastation and future wildlife concerns are still unknown. A carbon tax could account for this damage, too. The threat of terrorism and instability in global markets forces companies to explore and drill in safer zones that are further from developed areas. But safety has a cost, as transporting, leaks, spills, and CO2 emissions in the pumping process is already tremendously expensive.

America subsidizes heavy oil use, at the detriment of long-term stability considering major environmental impacts (i.e., climate change). This policy stands in direct contrast to many European countries that prioritize the environment and recognize the painful consequences that are soon to occur if we don’t change course. Further gas taxes alone would likely reduce consumption and begin to correct our course towards a more environmentally friendly economy.

What should we do now

The leading argument against additional taxation (primarily carbon taxes) is because the economy could suffer. By placing a uniform tax on the fossil fuel use that’s contributing to climate change, a difficult consequence may occur: business may slow. Critics point out that the economic ramifications for increasing the excise tax and introducing a CO2 emissions tax are dangerous – they affect average Americans and vulnerable small businesses.

…higher prices would consume a greater share of income for low-income households than for higher-income households, because low-income households generally spend a larger percentage of their income on emission-intensive goods. Similarly, workers and investors in emission-intensive industries, who would see the largest decrease in demand for their products, would be likely to bear relatively large burdens as the economy adjusted to the tax. (Link)

Most of the evidence suggests that if we ignore the signs and continue our current fossil-fuel driven life, we’re in trouble, but the solution is murky. Our current paradigm is to burn and travel as fast and frequent as possible to deliver goods with efficiency and at a low-cost to consumers. Tweaking this simple equation may provide long-term benefit to our environment and future as humans, while hurting individuals in the short-term. More importantly, lower-income populations would be at particular risk to these changes.

We’re at a fork in the road as a country and world:

  • Should we do anything about climate change?
  • Should we admit that our consumerism contributes to spiking CO2 rates?
  • What happens if we don’t act now?

Unlike apocalyptic predictions from moneyed interests, a carbon tax likely wouldn’t decimate the US economy. In fact, the Congressional Budget Office (CBO), which acts as a non-partisan group for Congresses budgets, says this:

For example, in 2011, CBO estimated that a cap-and-trade program that would have set a price of $20 in 2012 to emit a ton of CO2 (and increased that price by 5.6 percent each year thereafter) would raise a total of nearly $1.2 trillion during its first decade. In addition, total U.S. emissions of CO2 would be about 8 percent lower over that period than they would be without the policy, CBO estimated. (Link)

Production costs would increase and possibly affect the total output; moreover, the prices paid at the supermarket would likely increase. All forms of consumption would decrease, and as the CBO statistics suggest, an 8 percent decrease in emissions would be witnessed.

Like much of Europe, where you are likely paying double what you pay in America for gas, fossil fuel use is reduced. The cost is burdensome — in a good way. We need to begin exploring alternative energies and production paradigms that don’t tax our environment as much. In the mean time, we need to start taxing fuel at higher rates and redirect some funds to lower-income families as a fuel credit (essentially, becoming an upper-middle, high income, business tax).

Below is a video from Apple. They’ve recently been featured by Greenpeace for their all alternative energy power sources for data centers. While companies can and will adjust — innovating for the future — we should make this shift economically advantageous, while punishing the polluters.

The future is just too fragile without significant changes.

Filed Under: Social Justice Tagged With: Apple, carbon, climate change, CO2, emissions, environment, fossil fuels, gas, gasoline, greenpeace, prices, taxes

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