Informed Consumer Project: Loans
In the Informed Consumer project, we were tasked with educating ourselves and others on certain financial topics. We also had to create and solve six example problems relating to the topic. I chose to do mine on loans as I feel it is relevant to everyone, as most people borrow a loan at some point in their lives. During exhibition, I taught people how to determine how much interest they are going to have to pay on a loan, among other things relating to the Loan Payment Formula. Below are my six example problems. My presentation can be viewed here.
The Price of College
This project required us to look at the tuition history of two different colleges/universities, and then use that history to predict the tuition costs for when we are going to go to college. I chose the University of Colorado and Colorado State University, as they are both in-state schools, and thus less expensive. After we predicted how much college would cost at these particular universities, we made a Cost-Benefit Analysis. We determined the costs and benefits of going to school, and then placed values on each cost and each benefit. This project's purpose was to help us determine whether or not college is actually worth it. After completing this project, I was able to determine that I do not want to go to college.
The Price of College
Travis Carlson
1) University of Colorado
The linear equation for the University of Colorado was y=567.9x+3053.73. The R2correlation coefficient was .994, meaning that the predictions made in Excel are going to be almost 100% accurate.
Colorado State University
The linear equation for Colorado State University was . The R2 correlation coefficient was , meaning that the predictions made in excel are going to be very accurate.
2) University of Colorado
The average percent increase of tuition at the University of Colorado was 10.29%. That number may appear a bit high, but I believe that is due to the years 2005-2006 and 2007-2008, where the price of tuition jumped 23.75% and 17.6%.
Colorado State University
The average percent increase of tuition at Colorado State University was 8%. That number is a bit higher because of a couple of high, outlying numbers in the table.
3) University of Colorado
The anticipated average tuition percent increase of my undergraduate career at the University of Colorado is 5.41%.
Colorado State University
The anticipated average percent increase of my undergraduate career at Colorado State University is 5%.
4) University of Colorado
Between the academic years 2004-2005 and 2005-2006 is when the tuition increased the most. It went from $4,341 to $5,372, up a whopping 23.75%! This value is significantly larger than other years, as the average percent increase is 10.29%.
Colorado State University
Between the academic years 2005-2006 and 2006-2007 is when the tuition increased the most. It went from $3,790 to $4,562, up 16.92%. This value is significantly larger than other years, as the average percent increase is 8%.
5) University of Colorado
The total tuition cost between the years 2015-2019 would be $42,878.76 at the University of Colorado. The total tuition and fees cost between the years 2015-2019 would be $50,551.74 at the University of Colorado.
Colorado State University
The total tuition cost between the years 2015-2019 would be $36,739.13 at Colorado State University. The total tuition and fees cost between those same years would be $40,784.99.
7) University of Colorado
Standard repayment plan: The standard repayment plan would require me to pay $581.75 a month for 120 months for a total of $69,810.09. My total interest payment would be $19,258.38.
Extended repayment plan: The extended repayment plan would require me to pay $350.87 over a span of 300 months for a total payment of $105,259.59. My total interest payment would be $54,707.88.
Graduated repayment plan: The graduated repayment plan would require me to pay an initial payment of $335.56 over a span of 120 months for a total of $75,119.49. The amount I pay would gradually increase over the years. My total interest payment would be $24,567.78.
Extended graduated repayment plan: The extended graduated repayment plan would require me to pay an initial payment of $286.46 over a span of 300 months for a total payment of $114,004.49. The amount I pay would gradually increase over the years. My total interest payment would be $63,452.70.
Colorado State University
Standard repayment plan: The standard repayment plan would require me to pay $469.36 a month for 120 months for a total of $56,322.60. My total interest payment would be $15,537.61.
Extended repayment plan: The extended repayment plan would require me to pay $283.08 over a span of 300 months for a total payment of $84,923.17. My total interest payment would be $44,138.18.
Graduated repayment plan: The graduated repayment plan would require me to pay an initial payment of $270.73 over a span of 120 months for a total of $60,605.97. The amount I pay would gradually increase over the years. My total interest payment would be $19,820.98.
Extended graduated repayment plan: The extended graduated repayment plan would require me to pay an initial payment of $231.11 over a span of 300 months for a total payment of $231.11. The amount I pay would gradually increase over the years. My total interest payment would be $51,198.07.
Travis Carlson
1) University of Colorado
The linear equation for the University of Colorado was y=567.9x+3053.73. The R2correlation coefficient was .994, meaning that the predictions made in Excel are going to be almost 100% accurate.
Colorado State University
The linear equation for Colorado State University was . The R2 correlation coefficient was , meaning that the predictions made in excel are going to be very accurate.
2) University of Colorado
The average percent increase of tuition at the University of Colorado was 10.29%. That number may appear a bit high, but I believe that is due to the years 2005-2006 and 2007-2008, where the price of tuition jumped 23.75% and 17.6%.
Colorado State University
The average percent increase of tuition at Colorado State University was 8%. That number is a bit higher because of a couple of high, outlying numbers in the table.
3) University of Colorado
The anticipated average tuition percent increase of my undergraduate career at the University of Colorado is 5.41%.
Colorado State University
The anticipated average percent increase of my undergraduate career at Colorado State University is 5%.
4) University of Colorado
Between the academic years 2004-2005 and 2005-2006 is when the tuition increased the most. It went from $4,341 to $5,372, up a whopping 23.75%! This value is significantly larger than other years, as the average percent increase is 10.29%.
Colorado State University
Between the academic years 2005-2006 and 2006-2007 is when the tuition increased the most. It went from $3,790 to $4,562, up 16.92%. This value is significantly larger than other years, as the average percent increase is 8%.
5) University of Colorado
The total tuition cost between the years 2015-2019 would be $42,878.76 at the University of Colorado. The total tuition and fees cost between the years 2015-2019 would be $50,551.74 at the University of Colorado.
Colorado State University
The total tuition cost between the years 2015-2019 would be $36,739.13 at Colorado State University. The total tuition and fees cost between those same years would be $40,784.99.
7) University of Colorado
Standard repayment plan: The standard repayment plan would require me to pay $581.75 a month for 120 months for a total of $69,810.09. My total interest payment would be $19,258.38.
Extended repayment plan: The extended repayment plan would require me to pay $350.87 over a span of 300 months for a total payment of $105,259.59. My total interest payment would be $54,707.88.
Graduated repayment plan: The graduated repayment plan would require me to pay an initial payment of $335.56 over a span of 120 months for a total of $75,119.49. The amount I pay would gradually increase over the years. My total interest payment would be $24,567.78.
Extended graduated repayment plan: The extended graduated repayment plan would require me to pay an initial payment of $286.46 over a span of 300 months for a total payment of $114,004.49. The amount I pay would gradually increase over the years. My total interest payment would be $63,452.70.
Colorado State University
Standard repayment plan: The standard repayment plan would require me to pay $469.36 a month for 120 months for a total of $56,322.60. My total interest payment would be $15,537.61.
Extended repayment plan: The extended repayment plan would require me to pay $283.08 over a span of 300 months for a total payment of $84,923.17. My total interest payment would be $44,138.18.
Graduated repayment plan: The graduated repayment plan would require me to pay an initial payment of $270.73 over a span of 120 months for a total of $60,605.97. The amount I pay would gradually increase over the years. My total interest payment would be $19,820.98.
Extended graduated repayment plan: The extended graduated repayment plan would require me to pay an initial payment of $231.11 over a span of 300 months for a total payment of $231.11. The amount I pay would gradually increase over the years. My total interest payment would be $51,198.07.
Cost Benefit Analysis
Introduction
My college of choice and the school I’m doing this cost benefit analysis on is the University of Colorado. It is an in-state, public school in Boulder, CO.
Benefits
Monetary:
More job security
Non-monetary:
PARTIES
SUM OF ALL BENEFITS: $114,280
Costs
Monetary:
Tuition
Non-monetary:
Lot’s of commitment
SUM OF ALL COSTS: $189,924.92
DIFFERENCE IN PRINCIPLE: $-75,644.92
Reflection Questions
1. After completing my cost benefit analysis, the sum of all my costs has come to $189,924.92, while the sum of all my benefits was only $114,280. This does not make me feel like college is worth the price. The costs of college, for me at least, greatly outweighs the benefits of it. Nonetheless, there is a bit of me that feels I should go to college anyway.
2. I would feel very confident in my return if there was a 100% guaranteed job waiting for me outside of college, but there isn’t. While college does increase my chances of getting a higher paying jobs, there are still a lot of people with college degrees but no employment. There is a statistic that states that “a person with a college degree will earn on average one million dollars more in their lifetime than someone without a degree.” That means that if a person with a degree were to work for forty years before retiring, they would have earned $25,000 dollars/year more than someone without a degree. With that much more money, it doesn’t seem like one would struggle paying off their students loans. But a job isn’t guaranteed, so I feel skeptical about my return from my investment.
The amount of time it would take to earn a return from my investment would depend on which repayment plan I chose. I would want to get my loans paid off as soon as possible and as cheaply as possible, so I would choose the standard repayment plan. The standard repayment plan would give me a return in my investment in ten years.
3. After having a difference in principle of $-75,644.92 and having to pay back a total of $69,810, this would persuade me to attend a different university. I would keep it public and in-state, but I would go to one that is cheaper. Fort Lewis College in Durango, CO would provide this. Tuition at FLC is $5,242 per year compared to CU’s $10,719.69 per year. I would much rather attend a university such as this where it costs far less money, so attending a school that isn’t my top choice would be worth it.
4. Travel costs most definitely affected how the costs.
5. Going to college to be a musician will not yield a lot of money, as most musicians do not earn that much. Therefore, I don’t believe going to college is a smart financial decision, if I want to play music as a profession. The only way I feel like I could do that is if I went to college for something other than music and be a musician alongside that.
Conclusion
1. Honestly, I find any debt to be too much debt for me. I want to live as stress free as possibly, and I don’t feel like taking on debt is the way to do that. I don’t mind living small and within my means while not borrowing money.
2. It’s much more than I initially thought. I thought most everyone who went to school were able to pay off their loans, but there are still plenty of people who don’t. This happens because they don’t get jobs, even with their college degree. This makes me question if college is even worth it.
3. Through this project and conducting research, I have been kind of steered away from college. As you can see above, the costs far outweigh the benefits. I just don’t feel like it’s worth it.
Introduction
My college of choice and the school I’m doing this cost benefit analysis on is the University of Colorado. It is an in-state, public school in Boulder, CO.
Benefits
Monetary:
More job security
- $50/week x 4 weeks x 12 months x 4 years = $9,600
- $40/week x 4 weeks x 12 months x 4 years = $7,680
- $30/week x 4 weeks x 12 months x 4 years = $5,760
- $60/week x 4 weeks x 12 months x 4 years = $11,520
- $20/week x 4 weeks x 12 months x 4 years = $3,840
- $1,000,000 over lifetime / 40 years of work = $25,000
Non-monetary:
PARTIES
- $10/week x 4 weeks x 12 months x 4 years = $1,920
- $70/week x 4 weeks x 12 months x 4 years = $13,440
- $40/week x 4 weeks x 12 months x 4 years = $7,680
- $5/week x 4 weeks x 12 months x 4 years = $960
- $50/week x 4 weeks x 12 months x 4 years = $9,600
- $10/week x 4 weeks x 12 months x 4 years = $1,920
- $80/week x 4 weeks x 12 months x 4 years = $15,360
SUM OF ALL BENEFITS: $114,280
Costs
Monetary:
Tuition
- $42878.76 over four years
- $69,810.09 to pay back over ten years
- $60/week x 4 weeks x 12 months x 4 years = $11,520
- 3 trips/year x (348 miles/25 mpg) x $3.13/gallon = $130.70/year x 4 = $522.83
- $1800/year x 4 years = $7200
- $12,258/year x 4 years = $49,032
- $10/week x 4 weeks x 12 months x 4 years = $1,920
Non-monetary:
Lot’s of commitment
- $70/week x 4 weeks x 12 months x 4 years = $13,440
- $50/week x 4 weeks x 12 months x 4 years = $9,600
- $40/week x 4 weeks x 12 months x 4 years = $7,680
- $40/week x 4 weeks x 12 months x 4 years = $7,680
- $60/week x 4 weeks x 12 months x 4 years = $11,520
SUM OF ALL COSTS: $189,924.92
DIFFERENCE IN PRINCIPLE: $-75,644.92
Reflection Questions
1. After completing my cost benefit analysis, the sum of all my costs has come to $189,924.92, while the sum of all my benefits was only $114,280. This does not make me feel like college is worth the price. The costs of college, for me at least, greatly outweighs the benefits of it. Nonetheless, there is a bit of me that feels I should go to college anyway.
2. I would feel very confident in my return if there was a 100% guaranteed job waiting for me outside of college, but there isn’t. While college does increase my chances of getting a higher paying jobs, there are still a lot of people with college degrees but no employment. There is a statistic that states that “a person with a college degree will earn on average one million dollars more in their lifetime than someone without a degree.” That means that if a person with a degree were to work for forty years before retiring, they would have earned $25,000 dollars/year more than someone without a degree. With that much more money, it doesn’t seem like one would struggle paying off their students loans. But a job isn’t guaranteed, so I feel skeptical about my return from my investment.
The amount of time it would take to earn a return from my investment would depend on which repayment plan I chose. I would want to get my loans paid off as soon as possible and as cheaply as possible, so I would choose the standard repayment plan. The standard repayment plan would give me a return in my investment in ten years.
3. After having a difference in principle of $-75,644.92 and having to pay back a total of $69,810, this would persuade me to attend a different university. I would keep it public and in-state, but I would go to one that is cheaper. Fort Lewis College in Durango, CO would provide this. Tuition at FLC is $5,242 per year compared to CU’s $10,719.69 per year. I would much rather attend a university such as this where it costs far less money, so attending a school that isn’t my top choice would be worth it.
4. Travel costs most definitely affected how the costs.
5. Going to college to be a musician will not yield a lot of money, as most musicians do not earn that much. Therefore, I don’t believe going to college is a smart financial decision, if I want to play music as a profession. The only way I feel like I could do that is if I went to college for something other than music and be a musician alongside that.
Conclusion
1. Honestly, I find any debt to be too much debt for me. I want to live as stress free as possibly, and I don’t feel like taking on debt is the way to do that. I don’t mind living small and within my means while not borrowing money.
2. It’s much more than I initially thought. I thought most everyone who went to school were able to pay off their loans, but there are still plenty of people who don’t. This happens because they don’t get jobs, even with their college degree. This makes me question if college is even worth it.
3. Through this project and conducting research, I have been kind of steered away from college. As you can see above, the costs far outweigh the benefits. I just don’t feel like it’s worth it.