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How Leases Trap College Students

By Frugaling 5 Comments

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How Leases Trap Students

I live in a nice apartment. The bathroom is large, kitchen is brand new, ceilings are high, and my roommate and I have held many parties. When something goes wrong, the maintenance promptly fixes things – often the same day. It’s been a refreshing experience, but it’s come with a price and harbinger for higher education in general.

When I first entered graduate school, rent was about $400 with Internet and cable (not including utilities). I lived in Soviet-themed (unintentionally) barracks the university built in a flood zone. The entire area had flooded repeatedly (including many of the buildings). They weren’t necessarily up to “code,” but they were utilitarian and met my needs.

After two years of living, they decided it was time to tear them down and build up new buildings. I couldn’t blame the university. Unfortunately, there was a catch: private construction and land management companies would now control the buildings. Flirting with private and public lands (as I go to a public university), the university sold the building rights to the company. Now, my apartments are owned by a private company and the public land is leased to them.

While the apartments were brand-spanking new, it came with a flashy price: $550 per month with a roommate. I found a great one, and we’ve been living here ever since. From around $400 to $550 was a tremendous leap. But I justified it because it would keep me “on campus,” on the free bus route, and rentals are regularly expensive in the city. The old price didn’t really exist in the city, as it was university subsidized. Additionally, it would limit my moving expenses, as I would carry my stuff across the block.

Then something strange happened last year. Half way into my lease, a brochure was placed in my door frame. It said, “Take advantage of a great opportunity to renew your lease…at a discounted rate!” That first sentence sent off alarm bells in my head; I thought, “here comes a sales pitch.”

If my roommate and I renewed early, we’d receive this so-called discounted rate, but it was made worse by a bold-faced exclamation, “The first 100 residents that renew will get a discounted renewal rate!”

Both of us eyed the brochure and looked at the rate. At first I thought we’d actually be saving money because the table outlined “annual savings.” More closely, we realized they would be charging us $10 more. Despite all the rhetoric about savings, we’d be paying $120 more a year, each. Then, the company had combined it with a time-sensitive offer. They had clearly read some awful business books that encourage these tactics at the expense of consumer hatred.

The kicker was a third element: information about how expensive and difficult it is to move. As a skeptical reader I wondered why they were including information about “truck rental,” “utility transfers and deposits,” and “application fees.” Simply put, they wanted to psychologically implant loss potentials by using classic business techniques. The company wanted to reduce the likelihood of a move.

Despite my hate for the technique, it was true. Because we were graduate students, on tight schedules, and fearful of awful landlords (the city is full of them), we accepted the $240 total increase.

A year passed without much concern. Yesterday, I came home to an updated brochure. It was entirely the same except for the amount owed and leasing year. All the same rhetoric was used: “annual savings,” “the first 100 residents,” and information about moving expenses.

Another increase stared back at me: $480 per year per person. I was stunned. Over two years, the private land management company hiked the price $600 for leases annually. And horrifically, it’s even worse for new leases. Now, my roommate and I have a major decision to make.

This story is about more than one rental company’s tactics. Rather, this article is about the wicked decline of public institutions. What used to be highly subsidized, affordable housing for graduate students, quickly declined to a gentrified area (all the families and international students left). The university no longer needs to manage the land and they receive leasing payments, but they have little control of the land management’s prices and sales tactics.

By understanding these tactics and the privatization of public university property among rising student loan debt is a recipe for resentment. Raising prices $600 per year for each person becomes a formidable sum. Think about how $600 each year over the course of a five-year graduate school career equates to $3000 in extra housing costs, which are often at 6.8% interest with federal aid. That adds up, as do the future payments.

While people could move out, year round schedules and limited savings become a trap for many students. With strict budgets that limit freedom to afford truck rentals, rent cleaning products, and pay for utility transfers, we are a vulnerable population. Many are restricted by these methods.

The privatization of public property might be an omen for continued demises in higher education. By pushing towards a business model, students will bear the brunt of these horrid policies.

We’re at a tremendous precipice in academia. As we play limbo with students lives, I cannot help but wonder when we’ll find the bottom because we’re walking straight towards it.

Filed Under: Save Money, Social Justice Tagged With: academia, apartments, campus, college, housing, leases, Students, university

Frugal Articles of the Week

By Frugaling 1 Comment

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Reading Nook Photo

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

Household Finances Still Fragile Six Years After the Recession by Gillian White
The Great Recession still lingers on. Many households are resisting purchases because of inconsistent and variable incomes. Paychecks that vary each time make it difficult to predict safe spending. It’s leading the most affected to hold back more than ever.

This Is What Sweden’s Most Statistically Sought-After Home Looks Like by Kristin Hohenadel
This brilliant design firm has constructed the “perfect” house. Based on surveys and data from Swedish residents, this minimal, utilitarian home is what most would like. The floorplans are open, with lots of natural light. But the best part is the effective use of space.

How to live a middle-class life in New York City on less than $5,000 a year by Pauline Marie Bock
This semi-anonymous, French freegan is living in New York City on an insane, impressively frugal budget: $5,000 a year. She hustles to find the shops and spots where good food is being wasted — thrown away unnecessarily. From bagels to beans to fruits, “Marie” has found countless free meals.

This Season’s Must-Haves by Brooke McAlary
From beautiful new colors to shapes, clothing changes every season. For many, it’s a clarion call to action: shop to you drop. Brooke has an amazing twist on this season’s must-haves. You must read this one!

Filed Under: Save Money Tagged With: articles, Class, Clothing, Frugal, housing, Minimalism, Recession, Sweden, week

Frugal Articles of the Week

By Frugaling 2 Comments

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Reading Nook Photo

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

The Stock Market Is No Place for Millennials by Eric Roberge
This article has one of the most controversial headlines, but a more subtle message. Time Magazine and its author, Eric Roberge, highlight a few reasons why the stock market can be unkind to Millennials. But the rules and lessons apply across generations: wait to invest until you have more money. Interesting argument, as media has repeatedly noted that the Millennials are not making much money.

Would You Be Content With Just Enough? by Michelle
Michelle blogs over at Fit is the New Poor, and I must say I’m a big fan of her work. Recently, she wrote about contentedness on her site. It’s a must read for anyone who’s struggling to feel like “enough.”

How Much Of My Income Should I Spend On Housing? by Stefanie O’Connell
Stefanie introduces to one of the oldest personal finance rules: keep housing costs to around 1/4 to 1/3 of your monthly budget. That means that if you make $1500, you shouldn’t spend more than $500 per month on rent. But something different happens in big cities. You can begin to save in other areas, as the rent escalates. Stefanie does a fantastic job outlining why you need to look beyond basic rent costs.

How Big Food Brands Are Boosting Profits By Targeting The Poor by Roberto Ferdman
This week’s roundup of articles includes a nasty one. Turns out big-name brands are packaging their materials in smaller containers and selling them at dollar stores nationwide. Unfortunately, there’s a big catch: dollar per ounce, it’s a fortune. This tactic is pretty nasty, and the poorest members of society are hurt worst.

Have a wonderful Valentine’s Day!

Filed Under: Save Money Tagged With: articles, Food, Frugal, housing, Income, Millennials, poverty, Stock Market, week

Find A Roommate And Financial Freedom

By Frugaling 4 Comments

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IMG_4288

As a student, I feel like a pinball getting smacked around from location to location. I’ve moved about 9 times in my adult life. I’ve lived with significant others, friends, acquaintances, and even by myself. I trekked across campuses, cities, and the country. After two years living alone, I found a roommate and will make my tenth move this summer. Today, I wanted to spend some time reviewing my current and future living situations, a hesitancy regarding roommates, and the effect on my budget.

My Man Cave

Two years ago, when I received my admission to graduate school and decided to move to the Midwest, I was ecstatic, but clueless about housing. I didn’t need much – just a roof over my head and basic utilities. I jumped at an opportunity to live in the university apartments. I hadn’t seen the outside or inside of them, but the price ($435 a month for a one bedroom) was unbeatable.

Look at these digs!
Look at these digs! Perfect for a window air conditioner.

What I found was both decrepit and lovable. The apartments bubble with rust. A perma-dirty linoleum floor greets my toes when I slide out of bed each morning – you never get used to the cold. The faucets run a yellow/red when they’re not run regularly. My circular thermostat doesn’t account for certain parts of the apartment, which seem to be unprotected from the harsh, Midwestern cold. Cinder blocks are stacked high on the walls, painted over in what can only be assumed to be lead paint. A thick coating of asbestos lines the ceilings.

Despite misgivings, it’s my home, and I love it. Actually, I find it comical how much I don’t want to leave my current apartment, and I’m only leaving because the university is demolishing them.

Forced to move again, while balling on a serious budget with severe time constraints, seemed impossibly difficult. Then, the university notified everyone that new apartments were being built in time for my departure from the old ones. I could just move right into them!

Luxury Living At A Price

Over the last decade or so, the university considered a construction project to repair and rebuild the flood-damaged, aged, asbestos-filled apartments. Year after year seemed to pass without resolution. When I moved in summer 2012, I heard the whisper of change – a private bidder on public lands.

Then, a resolution quickly swept over the university apartment system. New buildings, contractors, and contracts would be drawn. The private company would revitalize this community with opportunity, design, and (supposedly) affordability. Tenants would see a brightened exterior and feature-filled interior. The costs would unfortunately need to increase, but we were assured they’d be manageable.

Something seemed askew about allowing private bidders onto public, university property, but the messages seemed positive. A few months later I found out the price: $875 per month for a one bedroom. In other words, more than 100% what I paid when I first moved!

Despite balling on a budget, I resigned to the fact that my 60-70 hour workweek wouldn’t enable me to tour many places. I would accept whatever they required. I signed a lease last year, much to my dismay and confusion. How could the university charge $875 per month for student housing?

Wake Up And Smell The Budget

Even though the price of rent was steep, I relished my independence, at the expense of my budget. I wanted to be frugal, but not that frugal. This new rent would decimate everything I worked towards over the last 10 months. I balanced my budget and created a tiny surplus for each month. But paying $875 a month would mean losing about $3000-4000 per year, plus student loans with at least 6.8% interest APR. I can’t even calculate the true cost of this decision.

Over the course of this semester, I’ve been working hard at not working. Essentially, I reached burnout, and to counteract these notoriously awful feelings, I decided to spend more time going out with people. Being able to socialize and meet new people has been one of the best experiences of my life. It’s kept me sane amidst my crazy-busy life.

Thankfully, meeting people also meant finding those in similar situations: looking for roommates. Over time I found someone that was excited about living together and could afford to split a two-bedroom apartment. The mental math was easy: rent would be $550 per month.

The challenge for me was realizing my prejudices towards having roommates. In the end, I realized that opting for the expensive rent was a cop-out to finding a roommate and managing my delicate budget. The reality was that I didn’t have independence until I was free from debt. I’m looking forward to having a new roommate, paying off even more student loan debt, and freeing myself from the burden of an unbalanced budget.

What have you done to save on rent, housing, etc.? What do you think about living with roommates? Any recommendations for me?

Filed Under: Save Money Tagged With: apartment, Budget, Burnout, Finances, freedom, Frugal, graduate school, housing, moving, rent, roommate, Student Loans, university

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