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Financial Strength Through Unity

By Frugaling 9 Comments

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Union Strikers
Photo: Kheel Center/Flickr

We get paid to go to school?!

I had this misconception about graduate school. See, I thought that when I worked for the university, added to the research landscape, and taught undergraduate courses, my own tuition and student fees would be paid. Even when I entered the University of Iowa for graduate school, I didn’t completely understand the financial obligations that are placed on students.

My first year as an instructor and employee of the university, I was quarter-time. That meant I would get 25% of a salaried employee (just over $10,000 per year). Additionally, because of my graduate student status, I’d receive a “tuition waiver.” This benefit sealed the deal and made graduate school sort of “affordable.”

Across the graduate colleges at the university, the majority of students received a 100% tuition waiver. Inexplicably, my college didn’t receive that benefit. That meant that around $2,000 per year of my tuition would come from the “paychecks.” To make matters worse, student fees cost about $2,400 per year.

If you’re doing the math with me, that means that I was getting paid in my first year of being a graduate student: about $10,000 minus $2,000 for tuition and $2,400 for student fees. It equaled roughly $5,600. Now, that quarter-time salary was decimated. Money for rent, food, and regular budgetary expenses disappeared. I had to take out loans to live.

Aren’t we trying to “better” ourselves?

As the years passed, I was afforded more opportunities and a semi-living wage. I was able to pay off my debt with my side income and stay away from student loans through a better “paycheck.” But the tuition waiver gap and student fees meant that I still paid much of it back to the school.

Those pursuing higher educations and degrees for more competitive employment should be commended. Unfortunately, our society and system doesn’t necessarily allow for all those to succeed.

Considering the cost of a graduate degree and the years of minimized/lost wages, it is an expensive proposition. Inherently, that means that only a select class of privileged individuals are more able to pursue this education. The consequences of pursuing a graduate degree without funding and few assets can be horrific, and lead to massive student loans.

That’s why students sometimes need to collectively bargain, unionize, and ask for better treatment.

Hope for a more respectful future

Last week, the union for graduate students at the University of Iowa accomplished something amazing. After months of consternation, threats to the tuition waivers, and proposed student fee increases from higher ups, the union demanded respect. They wouldn’t budge.

They asked for a 100% student fee waiver. While they didn’t receive that, the bargain was a 25% student fee cut for those on assistantships (working for the university).

They asked for a real 100% tuition waiver for all graduate students across the colleges. And they received that! Now, certain colleges within the university system that charged more tuition will be equalized.

Additionally, the union lobbied to provide better health coverage for transgender individuals, single-parent households, and much more. It was a moment of hope — of acceptance for diverse populations and classes.

And just like that, I received a nearly $3,000 raise! Without the union, I would still be bitterly explaining — to everyone who’ll listen — that my $22,000 ($18,000 after taxes) salary doesn’t actually equal what I take home.

The importance of collective goals

Unions have been villainized recently. Take Governor Tim Pawlenty of Minnesota, who said, “In many cases, [unions] exploit and abuse the taxpayers.” These disparaging remarks undercut the importance of unions for actors, on-air talent, auto-workers, politicians, teachers, students, professors, and countless others.

Historically, collective bargaining and unionization helped employee wages, voting rights, and improved safety in some of the most dangerous industries. Businesses weren’t interested in helping workers, and they didn’t have incentives to change.

When workers came together, worked towards similar goals, and collectivized, employers listened. If history repeats itself, then we ought to reflect on this lesson. Change and respect for students and others across the world will come from the bottom-up — not the top-down.

Filed Under: Make Money Tagged With: college, employees, graduate school, higher education, Salary, Students, taxes, unions, university

Frugal Articles of the Week

By Frugaling 5 Comments

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Reading Nook Photo

Today I wanted to feature a few frugal articles that caught my eye this week. Curl up in your favorite reading nook and enjoy. Hopefully these encourage you to live frugal lives!

A Counterculture Spirit Flourishes, Preserved Under Fiberglass Domes by Patricia Leigh Brown
When I was in college, I lived in an old residence hall with a drab blue carpet. I didn’t get much of a choice about where I lived or roommate. Thus, I was socked away in a hall that was perpetually too hot and overcrowded. But there’s another, cooler way. Over at UC Davis, there’s an incredible cooperative community residence hall. They grow plants, vote democratically, and are all around awesome!

Oxfam Study Finds Richest 1% Is Likely to Control Half of Global Wealth by 2016 by Patricia Cohen
The New York Times’ Patricia Cohen found that major economic studies suggest that about 80 people have the wealth of 3.5 billion people. Oxfam and other charities/NGOs are working to educate everyone about this vast income and wealth inequality that affects us all.

The Possibility in Blank Spaces by Cheryl Moreau
The consumption culture tends to find empty spaces… for lack of a better term, empty. Finding something blank or empty feels like a void — as if something is missing that should be present. Cheryl writes about this problem, and how she looked past emptiness and saw freedom. Brilliant thought piece!

Why Is No One Talking Medium-Term Financial Goals? by Stefanie O’Connell
Stefanie asks one of the most important questions about creating medium-term financial goals. Unfortunately, most people don’t plan or budget for the middle years particularly well. Retirement accounts may grow, and emergency funds might protect, but there’s often this palpable absence of the medium-term. Stefanie takes a crack at fixing that for us.

Filed Under: Save Money Tagged With: college, Financial, Frugal, goals, Income, Income Inequality, Minimalism, Wealth

American College Students: In Debt, Distracted, And Doomed

By Frugaling 9 Comments

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College Classroom Distracted With Macs

Being a teacher and instructor in college is more challenging than ever. Nervous eyes take glances at iPhones, quickly minimize Facebook apps, and craft rapid text messages. Students are unbridled in their distraction. They look uncomfortable sitting still.

As a college instructor for about 4 years, I’ve become increasingly aware of fellow educators expressing frustration over “lazy” students that multitask. Some educators ban smartphones and iPads during classes. Others call out students that text in class, and ridicule them in front of peers — aiming towards social conformity.

Unfortunately, technology is serving as a scapegoat for something worse. Teachers want to limit these technological forms of distraction to heighten learning for everyone, but this classroom management strategy misses a fundamental problem. Today’s students aredistracted, but their attention problem results from atmospheric student loan debt and poverty.

The American Dream and business of higher education

Built in to our ailing economy and concrete erections is a fundamental dream: hope for a better life. It’s why many emigrate here.

While achieving that success is attained through various methods, college still serves as the number one predictor of middle class life. High school graduates make a median salary of $651. By attaining a bachelor’s degree or higher, individuals make a median salary of $1,108.

BLS Educational Attainment Statistics

For decades, the message has universally been towards greater higher educational attainment. Generations of students, employees, employers have followed this rule — requiring college educations and encouraging people to get at least a bachelor’s degree. Now, about 32% of Americans have college degrees.

Guidance counselors ask high school and college-aged students to envision anything they want to accomplish. Fundamentally, they ask, “What do you desire?” and “What would you like to do if money were no object?”

But money is an object, and we are controlled by its properties — through empowerment or restriction. These questions of freedom tease students with a reality that doesn’t exist.

Student loans restrict, constrict, and destroy choice

Many will graduate with nauseating student loan debt. Heck, there’s $1.2 trillion right now! For class of 2013 college graduates, the average student loan debt was nearly $30,000. With that amount of debt and interest rates that vary from 3.86% to 7.21%, today’s graduates don’t have the freedom that’s espoused and propagated by higher education and mainstream media.

The problem gets compounded as “student tuition now outweighs state funding at public colleges.” Now, state taxes and revenue sources are contributing to even less of the total cost for students. This all flies in the face of socialistic policies in many European countries that have highly progressive, free (tax-supported) higher education.

Americans place the burden on students as young as 17 to make educated decisions that could affect the rest of their lives. Faltering in payments and failing to swiftly pay off the debt can lead to forbearance, default, skyrocketing interest rates on credit cards, and more. Credit scores and future livelihood are at risk.

Educating the desperate, sleep-deprived, and in debt

The interest is already ticking for many before graduation. Students can feel eager to get a job, get paid, and pay off debt. But even before they graduate, they must ask themselves some serious questions:

  • Should I work during college?
  • Should I take more than a normal credit load each semester to finish faster?
  • Should I skip study abroad opportunities that cost more and may extend my time?

Previous generations had the incredible luxury of minuscule tuition rates. Between 1978 and 2013, college tuition and fees grew by an overwhelming 1,225%. Simply put, college cannot be paid for with summer jobs and temporary work.

To the financially disenfranchised, student loans fill the gap for access. But there are still students that work during college. I had two jobs while also a full-time student, and there are many like me.

Then, there are students with disabilities, children, and veterans of foreign wars (to name a few). They are challenged to keep paying utilities, attain an education, and somehow keep a roof over their children’s heads. Again, student loans often serve as a mediator to accessing education — a temporary source of funding to attain a better income and vocational future. But real dreams can subtly disappear from view as financial aid bills take precedent.

Student loans magically appear, as do depressed dreams

Like many of my readers, I’ve worked hard to turn around my financial future. When I was in debt, I felt horrible. I spent money without concern and bought things I couldn’t afford. My debt was the illusion of success.

When I finally stopped to breathe in May 2013, I realized I had dug a hole nearly $40,000 deep. I was embarrassed with what I had done, and who I’d become. I wondered what I could do to reverse this dangerous course. Trust me when I say this is a common problem for many students.

Financial aid usually was deposited into negative balances at universities and then extra amounts were distributed to the individual student’s bank account. Suddenly, bank accounts were flush with thousands of dollars — budgets seemed irrelevant.

Everyone from the in debt to the creditors to general public confuses these loan instruments for real cash. Yes, you can spend student loans however you see fit, but the consequences are punishing. Every dollar is taxed by the current loan interest rate, and is a dollar in the wrong direction: towards poverty.

The problem of poverty in college-age students

Unlike the clarion calls that suggest America is number one, we seem to have created a master plan for educational failure. Research suggests that “poverty, itself, hurts our ability to make decisions about school, finances, and life, imposing a mental burden similar to losing 13 IQ points.”

By saddling our future graduates with nearly $30,000 in average student loan debt and a future of near poverty for many, we are hurting their ability to learn in the process. Lower-income and impoverished populations constantly report lower amounts of sleep, vocational uncertainty, higher stress, and show evidence of hindered decision-making capabilities.

These are the students of today. They are trying to succeed in a cultural landscape that begged them to get educated, punished them for getting that college degree with years of debt payments, and then limited their employment options.

As the dreams fade due to financial concerns, anxiety and distractedness likely increase. The dream of “What’s your purpose?” can quickly be replaced with “Who will hire me?”

We want bright, capable graduates, but we “victim blame” them instead

America is eager to have the best workforce in the world. We are a nation that aims to be a beacon of hope and role model to developing states. And yet, we are breeding and cultivating some of the most in debt, distracted, and impoverished students.

It’s not in the interest of this country, the world, and future progeny to continue this wicked cycle of educational attainment and poverty. It’s not in the interest of creating a bright, educated populace to have them cowering in poverty for doing so. It’s not in the interest of America to impair decision making in finances and education in the process.

As teachers express frustration for their distracted students, they need to fundamentally understand the complex, systemic interplay of student loan debt. This financial instrument is inherently complex and can psychologically impair the most capable students. They might not be able to pay attention because they’re burdened by a future of poverty, student loan debt, and restricted opportunities.

Something needs to change. This system isn’t sustainable. Fortunately, a small light of hope might be on the horizon.

Post by The White House.

President Barack Obama recently announced a massive initiative to empower those from diverse financial backgrounds to receive a “free” education. His plan includes funding community college educations for those working part-time and maintaining certain educational requirements. Over the coming months this will be hotly contested and debated. But this is the first step, in what needs to be many, for those in need of an education that’s truly accessible and affordable.

Students cannot continue to shoulder most of the burden. There are powerful inequalities in income and wealth — educational opportunities shouldn’t be one of them. If we can muster the courage and wherewithal to increase taxes towards education, we may see what America is truly made of.

Filed Under: Loans, Social Justice Tagged With: America, American, college, debt, Financial, financial aid, freecommunitycollege, Income Inequality, loans, lower income, poor, poverty, Student Loans, Students, university

5 Financial Lessons I Learned In College

By Frugaling 5 Comments

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Fort Collins, Colorado State University Oval

This past weekend I traveled to my alma mater, Colorado State University. My old stomping grounds changed, as new buildings and flashy designs populated the sprawling campus. But despite the changing landscape, it felt familiar.

There are countless memories — exceptional and horrific — that span my 5 years of life in Fort Collins, Colorado. One of the most poignant and relevant were the many financial mistakes made during my tenure. It was here that I started a crazy financial roller coaster that led me to nearly $40,000 in student loans and debt. It was here that I first noticed a panicky daydream where I would be sucked into the ground and have no way out of this horrific financial hell.

After reflecting on my visit and time in Fort Collins, I realized that I’ve changed — like the campus landscape. I’ve learned a lot about myself and some financial lessons along the way. Today, I wanted to focus on 5 key aspects that college helped me understand about personal finance. What I would’ve given back then to know this information now!

1. Friends influence frugality
Unsurprisingly, the people you surround yourself with greatly influence how you spend your money. If you’re trying to be a more frugal person, it’ll be vital to find friends that support and approve your way of life. It can be radically different from the party, work-hard-play-hard mentality at some campuses. Additionally, if you attend a private college/university, you may be around people with larger bank accounts. It’s important to reflect on who you are and what your inner compass is telling you about finances.

2. College is expensive, put extra funds in a savings account
While I was fortunate to have parents that paid for college, I didn’t budget well — if at all. My parents gave me a little spending money and I did exactly that, spent it! It wasn’t “saving money.” I burned through the money. From expensive dinners to luxury road bikes, I was a faux-millionaire with an unquenchable need to spend. Much of this could’ve been solved or stifled with a good budget. And it’s never too early to make a budget! College is the ideal time to figure out these important “adult” issues, as you should have money coming in and out. If you ever have extra funds — whether you’re the campus pot dealer or have generous parents — stock your funds away for rainy days.

3. Question your student loan “award” unmercilessly
Student loans are often called “awards” after you apply for and fill out the FAFSA. Unfortunately, these are not anything of the sort. Student loans are powerful debt instruments that are issued by the federal government, with changing terms and interest obligations. These are complex, dangerous, and can spiral out of control rapidly. With any decision to take out student loans you need to be unmercilessly skeptical and defensive.

4. Avoid car-friendly/needed campuses
I sold my car over the summer. It’s been a difficult adjustment, as the current university — Iowa — isn’t particularly bike-friendly. Wherever you intend to go to school, consider public transportation and (wide) bike lanes. You should be able to receive free transportation on buses with a student ID. Look out for bike racks, too! Ideally, you’d be able to sell or avoid buying a car altogether.

5. Find “easy” jobs and double-up on work
College campuses have tons of jobs for students. If you’re an exceptionally busy, motivated student — and I hope you are with what college costs — it’s important to find a job that allows you to double-up on work. For instance, you could get a job as a server that pays very well, but that could make it difficult to take full semester course loads. Thus, you sacrifice one part of your life for another. An alternate option — especially if under a time crunch to graduate — is to find a desk job at a residence hall or an office assistant position. Oftentimes, these jobs have downtime and allow you to sneak in some study time. Now, you can be efficient and make some money in the process. What could be better?!

Filed Under: Save Money Tagged With: Awards, college, Colorado, Colorado State University, debt, Friends, Frugal, frugality, jobs, Personal Finance, Student Loans, university

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