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Living In A Van To Becoming A Pornstar: Crazy Ways Students Pay Tuition

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Photo: MIT is a land-grant university.
Photo: An iconic building in the heart of MIT

Part of the fortunate few

That first day of college is burned into my memory. Mom dropped me off, and I can still feel that vague discomfort in realizing I was independent. Perhaps more accurately, I felt alone. Instead of seeing my brother every day, it was my new college roommate — a heavy metal aficionado. Despite his taste for incomprehensible music, we actually got along (I think).

Both of us had the privilege of parents who saved and paid for our college educations. My undergraduate years were financed through various investments in stocks, bonds, and mutual funds. Another way many parents save is through 529 College Savings Plans, which provide tax benefits for a child’s college education. Unfortunately, future college students don’t always have it this easy.

Suffering from rising tuition, fees, and state tax cuts

Americans are in trouble. There’s a confluence of events that’s acting as a perfect storm for adolescents: people save less than ever, tuition costs are on the rise, and state tax revenues for public education are severely constrained.

About 75% of households only have enough in savings to pay their bills for 6 months. A Huffington Post reporter interviewed one person who said,

A single mother of four living in Bangalore, Maine, Norton says she often writes checks for bills without enough money in her bank account to pay them, hoping the check won’t clear until her next paycheck arrives. Between rent, child care and other necessities, Norton says her expenses cost more than she earns, leaving her without a cushion to fall back on in case of emergencies.

Tuition fees are increasing at far greater rates than inflation. Effectively, this is stunting parents’ and future college students’ purchasing power, and leading to nauseating levels of student loan debt. The New York Times found that,

At public four-year colleges, the inflation-adjusted average annual increase has been somewhat higher, thanks mostly to state budget cuts: 2.3 percent (which translates into almost 5 percent a year in nominal terms). At public two-year colleges, also known as community colleges, costs have fallen relative to inflation, at an annual rate of 0.3 percent over the last 20 years.

A caution: these increased tuition rates do not account for greater student loan debt and the possibility of being charged upward of 6.8% active interest to be paid off after graduation. If you account for this, real tuition costs are skyrocketing. This is the burden of students, parents, and our greater society.

cost of attendance
The estimated total cost of attendance at Duke University.

The tuition is too high

At a private institution such as Duke University, you’ll be staring at a whopping bill for about $61,404 a year. Just for some perspective, the World Bank suggests that the average per capita income in the United States is $51,749. For four years at Duke, you’ll be staring at about five years of income — in debt.

Maybe you’re wondering why I chose one of the most expensive schools in the country as an example. My simple answer is twofold: 1) Duke University is highly prestigious and well-regarded by both employers and future students; 2) Two of the craziest stories come from this institution.

You won’t believe what college students are doing to make ends meet. For some, desperate times call for desperate measures. The following are 3 real-life examples of students saving and paying for atmospheric tuition costs.

Ken Ilgunas
Photo courtesy: Ken Ilgunas, writer of Walden on Wheels

Ken Ilgunas: Walden on Wheels

Ken Ilgunas had finished paying off undergrad loans when he decided to return to Duke for a graduate degree. Before starting the program, he was determined to avoid more students. In his New York Times article, Ken says,

I HAD been accepted into Duke’s graduate liberal studies program, but I couldn’t afford it. I had just paid off my $32,000 undergraduate debt, I was nearly broke, and the prospect of taking out loans was unthinkable. Going back into debt made about as much sense as running out of a burning building just to run into another.

His solution was to buy an older Ford Econoline van for $1,500 and live out of it for the duration of his schooling. Using the library for Internet, rec center for showers, and a camping stove to cook food, Ken successfully went to graduate school without accepting defeat and taking out loans.

Ken utilized his writing skills to pen a beautiful book called, Walden on Wheels. The book focuses on minimalism, living debt free, and his journey at Duke. With national attention, a New York Times article, over 300 (mostly) positive reviews for his book, and even a visit to Letterman, Mr. Ilgunas is an inspiration for vandwellers worldwide. More importantly, he did something truly extreme to avoid student loans and pay for his tuition. It worked.

Belle Knox: Full-time student, part-time pornstar

Belle Knox (her chosen pornstar name) is an 18-year-old student at Duke University, who is studying women’s studies and eventually wants to go to law school. Many of her peers pick up side jobs to pay for some odds and ends amidst piling student loans. Belle decided to take up a different line of work and searched Google for, “How to become a pornstar.”

She’s headline news everywhere. Rolling Stone calls her the “top new adult-film” actress and a “studious college freshman.” Dr. Drew featured her on his show and said he’d be, “chompin’ down on cyanide capsule right now [if I was your father].”

When Belle talks about her pornography experiences she says,

I can say definitively that I have never felt more empowered or happy doing anything else. In a world where women are so often robbed of their choice, I am completely in control of my sexuality.

From there, Belle found a talent agency and started flying across the country — mostly LA — to film scenes on the holidays and school breaks. Each scene filmed equates to about $1,000. After about 61 scenes a year, she can completely pay for her exorbitant tuition demands. She’ll avoid the fearful debt this way.

Steve Stanzak: Finding affordable housing in the library

When you’re staring at around $55-60,000 a year in total costs, you’re bound to get creative. When Steve Stanzak of New York University struggled to find affordable housing in New York City (imagine that!), he decided to go rogue and live in the library basement for 8 months.

USAToday interviewed him and they found that,

…He began spending six hours a night in the sub-basement of Bobst Library at the beginning of the academic year after he was unable to pay a $1,000 housing deposit.

He slept on four library chairs and carried vital belongings — a laptop computer, books, clothes — in his backpack. He kept other items, like toiletries and clothing, in storage lockers.

Here’s the crazy part: they caught him because he used an online journal to catalogue his journey. Imagine if they never caught him?! How long could he have managed — putting four chairs together in the place of a bed?

In a strange twist of fate, Steve was rewarded for his library dwelling when NYU offered him a free dorm room. Success!

What’s reasonable when tuition costs are unbearable?

When I searched Google for “ways to pay for college,” I got some fishy results (i.e., Forbes, Fiscal Times, and Huffington Post). Frankly, none of the articles actually help people pay for college. Most just regurgitate old information about getting financial aid (aka, student loans). The worst is the Huffington Post article, which suggests paying for college with “cash” (they must be getting creative to rank higher in searches). I would imagine most people understand that cash is a monetary tool for paying bills. Not sure who’s benefitting from that horrible advice!

I remember feeling hopeless to do anything about my student loans prior to starting Frugaling. The debt piled higher and higher — without escape or end. When I finally faced this reality, I suddenly saw a way out.

It’s easy to get desperate when you see interest-bearing accounts metastasize with ever-daunting sums. Ken Ilgunas, Belle Knox, and Steve Stanzak are three people that used this extreme fear of student loans to prevent them from falling prey to them. Question their legality, morality, and safety as much as you want, the three of them found a way to make their educational dreams a reality.

Significant student loan debt is a scary place, and it seems like these three reacted in powerful ways to stem their deficits. But it makes me wonder, is it even worth it at some point? When is a graduate degree, while in a Ford van worth it? When is it worth becoming a sex worker (aka, pornstar)?

Their stories are hard to hear though. These are the most motivated, enterprising, and smart people in our country and they’re struggling to get a top-notch education. It makes me wonder if we are making it too difficult for people to attain this level of education – preventing new leaders from finding success in our society.

This is just the start, too. As tax revenues continue to fall for public education and social inequality rises, stories like this will only increase. The United States seems to be leaving our future generation in the dust. You can’t pay for a college education with a couple simple part-time jobs over the summer. Those days are long gone.

How can you lead when you’re swimming in debt and held back from the freedom to become more than just a number to a lender?

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

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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.

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

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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.

5 Essentials For Paying Student Loans

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Student loans net work Mint.com account
My student loans were careening out of control. Now, I’m looking at the finish line: zero debt.

Today, I paid off more student loans than ever before: $4,000, to be exact. This hefty deposit was made directly to my loan servicer, which will pay off federal aid debts. In May 2013, I had nearly $40,000 in debt. I was careening out of control, and my only solution was to take out more student loans. Instead, I started Frugaling and changed my entire financial future.

Even though I’m making more money than ever, it’s important to safely and smartly pay off debts. While it’s best to prevent excess debt via proactive budgeting, paying it off can be dangerous, too. In my situation, I paid off this huge chunk of debt by following the proceeding five essentials. Hopefully these will help you to safely pay off more student loans than ever!

1. Pay Off Active, High Interest Student Loans

Okay, I’m going to get a little technical here. I have two types of federal aid: A and B. My “A” loans are subsidized (no interest gaining) until I graduate from school. Unfortunately, my “B” loans are a running taxicab of interest and piling debt.

The first goal needs to be paying off high interest student loans that are active. My “A” loans are not active, and as such, do not need to be the focal point. Meanwhile, my “B” loans are ticking along at about 6.7% APR. All my energy and funds are going towards these second, active interest loans right now.

2. Pay Off As Much As Your Budget Can Bear

It’s tempting to start taking some of my newfound money and buy things. Somewhere between things I don’t need and things I’ve long wanted – oh, how wonderful that would be to buy the unnecessary but awesome!

To prevent this human reaction, I’m digging deep and paying off an uncomfortable amount of student loans every month. It hurts to pay this much because I feel uncomfortable having this little in my savings/checking accounts. Conversely, it helps me pay off more each month, and prevents needless purchases while my budget is being corrected. The less access to money you have, the less you’ll spend!

3. Subsidized Loans Are Free Money While In School

The “B” portion of my loans are my enemy, while “A” is a friendly sort. My student loans started out as a subsidized group, when the country cared about educating the masses affordably and fairly. That’s sort of changed.

I have $8,500 in subsidized loans that are protected from gaining interest until I graduate. Phew! This mass is scary and will be a priority at some point. While I’m in graduate school, I’ll aim to stock up my bank account, build an investment portfolio, and diligently follow my budget. Later, after I graduate and the interest becomes active, I’ll redirect this built up liquidity to quickly pay off the rest of my loans.

4. Keep Some Handy For Emergencies/Tax Season

This might seem contradictory, but part 2 says pay as much as you can possibly bear. Does that mean you should scrap any emergency funds to pay off student loans immediately? Well, it depends on your liabilities.

As a car owner, with certain financial obligations, I need to have some money on hand in case something goes awry. Likewise, this is the first tax season where I’ll be paying Uncle Sam. While I’m happy to do it, I need to prepare for significant budget buster in mid-April (when my payment is scheduled). The key here is to pay as much as you can, while insuring yourself against totally tragedy.

5. Recognize Your Accomplishments

giphy

Bring in the reinforcements! Good habits are largely built from strong, positive reinforcement behaviors. Pavlov and Skinner are the two psychologists credited with founding the field of classical and operant conditioning. If you’ve ever taken a psychology course, you’ve likely learned about them.

Those two stodgy, crotchety scientists were pioneers in the field of education and behavior management. Skinner’s operant conditioning reinforcement schedules are as important as ever. Simply put, when you’re done paying off a significant chunk of student loans, reward yourself! Today, mine will be an extra coffee before work. What’s yours?

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