Starving Artist

gennaHaving already helped two children through college I am well aware of the costs associated with higher education. I am also well aware of the various methods for both saving and paying for these costs. I admit, I have not completely funded either one of them. We have our own budget and expenses and as we all know, money does not grow on trees.
We were very fortunate that both children attended either in-state and/or community college institutions that had guaranteed admission programs. This helped keep costs down. Now that we have our third child planning to attend college this fall, we are getting our first taste of out-of-state private college costs.

Without stating the college or even the location of said college I feel compelled to give a little background. My third tax deduction is a very talented artist. Her passion is biased towards anime and manga. Wanting to follow and advance this talent, she naturally looked for art schools with strong programs related to animation. Needless to say, there are not a ton of schools out there within this area of study, much less ones with stellar reputations. But they do exist.

To make a long story short she narrowed her choices down to three institutions, built up her art portfolio, applied and got accepted to all three. Two of the three are out of state private colleges. The third is an in state college with a new and up and coming animation department. Her first choice, one of the two out of state colleges, is one of the best institutions out there. It is where the Disney’s and the Pixar’s of the world go looking for talent.

Being an IT guy, I call them the Oracle of the Art world. They are the best and they know it. And charge appropriately.

I always thought the term starving artist existed because many artists have variable income streams and practice their craft for love, not money. And this is most likely true. But if any of them are graduates of this school, I’m beginning to think student debt might also be a reason.

However, the issues of student debt is not limited to artists. In fact it affects over 40 million people, both young and old, and has consequences beyond just the college experience and education.

Here are some sobering statistics:

  • Nearly 70% of bachelor’s degree recipients leave school with debt.
  • The class of 2015 graduated with, on average, $35,051 in student debt. According to Edvisors, a financial aid website, this amount is the most in history.
  • The total outstanding student loan debt in the U.S. is $1.2 trillion, that’s the second-highest level of consumer debt behind only mortgages. Most of that is loans held by the federal government.
  • One in four student loan borrowers are either in delinquency or default on their student loans, according the Consumer Financial Protection Bureau.

All this debt may be preventing Americans, from making the kinds of big purchases that drive economic growth, like a house or a car, and reaching other milestones, such as having the ability to save for retirement or move out of mom and dad’s basement.

Facing the possibility of increasing costs and debt, many students look not only to traditional grants and scholarships but also to more modern, creative, crowdsourcing sites such as go-fund-me for meeting all their financial obligations.

According to GoFundMe, the number of education-focused campaigns on its site has risen dramatically in recent years. The number of GoFundMe campaigns specifically mentioning “tuition” rose 4,547% from 2011 to 2014.

  • In 2013, 41,683 GoFundMe campaigns raised a combined $4.63 million toward educational costs.
  • Within the first nine months of 2014, 106,793 educational GoFundMe campaigns had been created, raising a total of $13.14 million.
  • Sure there are some stories like this one where a student is able to crowdsource her entire tuition but most are not nearly so successful.

The numbers mentioned above may sound like a lot but lets do the math:

  • 4.63 million divided by 41,683 equals: $111.07
  • 13.14 million divided by 106,793 equals: $123.04

Every little bit helps but it is easy to understand how difficult and discouraging trying to afford college can be.
Unfortunately the solution(s) to this crisis are not simple nor easy, if one truly exists at all.

In an interesting article, Student Debt Crisis: The Recession Started It; Colleges Sustain It; And Politicians Make It Worse, the author states the solution to the growing tally of student debt is two-fold: get the federal government out of the business giving ever-increasing amounts of money to virtually any student with a pulse; and seriously grow the economy, so wages rise to make college loan repayment a far lighter burden for today’s graduates.

I’m not sure if what the author proposes is the right or best answer but he does make three very interesting points:

First of all, a 2015 study conducted by two researchers at the New York Federal Reserve Bank found that the flood of easy federal money into higher education had a predictable effect: higher tuition and fees. In fact, the research found that for every dollar of new subsidized loans, tuition went up by 65 cents. This “pass-through effect” was seen most clearly in “…expensive, private institutions that are somewhat, but not among the most, selective.

Secondly, the decline of vocational education in high school coupled with the increasing complexity of the modern workplace has naturally boosted demand for additional training beyond what high schools commonly offer today. Many colleges have had to expand their offerings in an attempt to address this gap. Unfortunately this fact tends to raise the cost of obtaining this training and generates politically-motivated attacks on for-profit schools. These comments do not address the underlying fact that these schools have expanded in recent years to meet demand caused by changing labor force needs which is compounded by a lack of relevant high school training.

Lastly, speaking of politicians, student loan forgiveness operates to encourage students to take on more debt in the expectation that they won’t have to pay it back. Signed into law by President Obama in 2010, a program nicknamed “Obama Student Loan Forgiveness” made new borrowers eligible for student loan forgiveness after 20 years. Meanwhile, Sen. Sanders has called for large-scale student loan forgiveness.
Borrowing money with the expectation of forgiveness leads people to borrow more money, just as a person ordering dinner at a restaurant may order a more expensive meal if he knows someone else is picking up the tab.

So with all this as background, and us not thrilled by the possibility of becoming yet another one of these student debt statistics, my daughter and I have embarked on a campaign of sorts. She is applying for as many grants and scholarships as humanly possible and I am supporting her as best I can, even if some of it is moral support. Perhaps we will even start a go fund me campaign. Hopefully we will earn more than the average . . .

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