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The high cost of the other American Dream, education
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Tess Vigeland: We just talked about student loans and taxes. So let's merge the two with a proposal from commentator Leah Ingram.
Leah Ingram: My husband and I are finishing our 2011 tax return, the one that will determine how much financial aid our daughter gets for college next year. We already know that we'll be disappointed.
According to the price calculators on college websites, my husband and I should be able to afford about $48,000 a year for college. With two daughters two years apart, we'll have six years of college tuition payments, adding up to nearly $400,000, barring any increases.
Today's college tuition is triple what my husband and I paid in the 1980s. We've done well in our careers -- he a college administrator, me an author -- and we've been home owners since 1999.
One of the benefits of that home ownership is the mortgage-interest tax deduction. When the tax code was introduced in 1913, it included this deduction as a way to encourage home ownership, which is still considered the America Dream. But isn't getting a college education also the American Dream? That's why I'm proposing that we make college tuition 100-percent tax deductible, regardless of parental income.
The government already offers some tuition tax deductions: Up to $4,000 annually, no matter how many kids you have in college, and $2,500 per student for college expenses. The catch? There are income limits to each of these tax deductions, neither of which my husband and I qualify for.
This all leaves my husband and me stuck between a financial rock and a tuition hard place: We worry we earn too much for financial aid, we've never earned enough to fully fund our daughters' college savings plans and we don't earn enough to pay the $48,000 a year for private college tuition, despite what the calculators say. Even state schools where we live in Pennsylvania are no bargain.
So imagine this: What if during the six years our two daughters will be in college, we could deduct our tuition payments on our taxes? We could give our daughters the greatest gift of all -- a debt-free college education.
Vigeland: Leah Ingram is the author of 14 books, including "Suddenly Frugal: How to Live Happier and Healthier for Less." What do you think of her proposal? Tweet it to me @radiotess or post on our Facebook page.
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There are three ways you pay for college. You save for it; you pay for it out of current income or you borrow for it. Usually it is a combination of all three.
I'm sorry that Ms Ingram hasn't saved enough; that her current standard of living doesn't allow her to pay the costs out of her current income and that she isn't willing or able to borrow the costs. This does not make the funding of her child's college education my responsibility.
It is NOT the American Dream to own a home or to obtain a college degree. It is YOUR dream. It's a nice dream. Good luck with that. My dream is to own a sailboat. I shouldn't get a tax deduction to own a boat any more than you should get a tax deduction to pay for a college education.
Ms Ingram's Adjusted Gross Income is far north of $100,000. (I actually know how to calculate the Expected Family Contribution using the information on the FAFSA). The idea that the guy working at the local oil change shop needs to support her kid's college education indicates that Ms Ingram has no idea how the tax code is supposed to work.
Welcome to the club, joined it two years ago, serial number 1 is in 2nd year of college, s/n 2 is one year away from starting, s/n 3 is 4 years away. My goal 3 kids thru college, undergraduate degree from college of their choice, no student loans. I comfort my self in knowing that the those tax breaks that I don't qualify for help provide a diverse environment in colleges - as my kids kids get to go to school with kids whose parents couldn't bother.
The problem with tuition is not finding ways to save or to pay the price, the problem is how to reverse the trend of charging too much for tuition. As an academic I can tell you what all professionals studying this situation tell you....most of the tuition charged pays for administration costs as universities become businesses and as they try to compete globally for students. I'm listening to the Governors of South Carolina and Ohio proud of the number of Chinese students they are attracting to their universities....they can pay the tuition they say. Meanwhile, both states have a high level of high school dropouts and poverty wage jobs.
If we do not start demanding that these global adventures come with a domestic pass.....charge the out of state/out of country fees and keep the in-state/domestic fees low. If free market economy is going to last, these corporations, and universities are that, will have to appease the masses.
This commentary is sad is several regards:
1. These parents feel they must send their children to private schools, the public universities and colleges in Pennsylvania are not good enough. That is sad and I would think many of the students and their parents at Penn State and other public universities & colleges might disagree.
2. The parents have an income that suggests that they should be able to contribute $48K towards their children's education. They have perhaps made lifestyle choices during the years when their children were growing to spend instead of save. Since they did not save enough, they think that others (taxpayers) should help them pay for a private university education. The taxpayers in the state of Pennsylvania already are supporting the public colleges and universities. These parents want more of other peoples money.
3. Perhaps they could sell their current house and downsize. But they may be underwater on the mortgage. The mortgage interest tax deduction encouraged a bad "investment". The mortgage interest tax deduction should be eliminated.
4. Why is eduction different from other businesses. When the price becomes higher than the value received, people quit buying the product. When private university tuition becomes to high, people will stop attending and the university will either lower the price or go out of business. When the government (through the tax code) helps support higher tuition, the universities continue to raise prices.
5.Perhaps the parents could encourage their children to look at ways for the children to help pay for their college educations, such as the GI Bill, Americorps (Segal awards) etc.
There are numerous ways to lower college cost: start at at community college, go to state schools, and spend few more years finishing [ 6 or 8 years instead 4 to finish]. College is expensive but it is a cost that can be mitigated with a little rational creativity.
Leah Ingram makes a strong point. Alternatively, allowance for deduction of student loan interest regardless of income (just like mortgage interest) would even be a welcome change. I second her sentiments and concerns. Parents who have saved, but not the exorbitant $150,000 cost of an undergraduate degree, end up taking private PLUS loans at 8.5% interest. If there is more than one child, parents end up with essentially a second sizable mortgage with no tax break.
How about we put another tax loophole to add to our debt and further crush the less advantaged? Ms. Ingram has gotta be kidding.
Seriously, let's have the courage to drop the home mortgage deduction and make the serious choices that would help us together strengthen our future.
(The increase in college expenses needs to be addressed directly. But I suspect Ms.Ingram and her family will manage.)
listening to this story, and it impressed me that i do not recall that the inflation of the cost of education has ever been justified.
the cost of an entry vehicle, say a honda civic, has gone up over the decades, but that inflation in the price of the vehicle has been matched by a superior improvement in value of the vehicle (airbags, standard ac & cd & automatic, higher fuel efficiency, etc).
the cost of healthcare has also dramatically increased, but medical services have improved well beyond the increase in healthcare costs, for example the cure rate of cancer is well superior to the past and rare diseases such as csf leaks are being diagnosed and treated.
but what with higher education? does the considerably increased cost to student and tax payer of a state university education get the graduate a job that pays that much more with that many more benefits which doesn't require more work effort and as quickly as it did in the past?
answering this question (ehem) may inform if the cost higher education is really inflated or not.
Janet Bratter shared Chaffee Cline's photo.
April 9
SHARE THIS WITH EVERYONE YOU KNOW AND THOSE YOU DON'T KNOW...LIKE YOUR REPRESENTATIVES AND THE WHITE HOUSE.
IF THE USA WOULD DUMP THE MILITARY CRAP AND TESTOSTERONE POISONED POSTURING, WE COULD BE CIVILIZED TOO!!
The letter says "I am a 21 year-old student from Finland.
It makes me sad to hear how Americans are suffering.
Here, our taxes are high but we all benefit from them.
I grew up in the countryside and always had access to the same services that people in the city did.
My university is known around the world in my field and my education is not only free, but my government pays ME to go to university. Everyone has a right to this.
Everyone has a right to the best healthcare, there is no such thing as health insurance.
I am young now and able to take risks and pursue my passion because I will never have to worry about starving if I lose my job or my business fails.
I know that when I am old my state pension will be there for me so that I can enjoy my retirement. We call this the Nordic Model, and under it we live well and our businesses are among the most competitive in the world.
I am grateful to have been born a citizen of a country that cares for its people, and I hope that one day the USA will take example from us.
I am the 99%"
-Jeff
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