Gordon G

Cost Benefit Analysis for Attending MSU

Introduction: For my cost benefit analysis, I chose to focus on Montana State University in Bozeman, Montana. MSU is a public university with about 15,294 students including graduate and undergraduate. MSU is an out of state university, so I would have to pay out of state tuition. However, MSU offers many merit scholarships and is part of the Western Undergraduate Exchange (WUE). WUE is a program that allows out of state students from other western states to pay 150% of in state tuition instead of paying full out of state tuition. Unfortunately, WUE is only available to a small fraction of incoming freshmen and is hard to get. Cost Benefit Analysis: Costs: Monetary: 4-Year Tuition/fees: $ 92,695.98 o Total= 22087.44 + 22811.81 + 23536.18 + 24260.55 Student Loans for tuition, fees, room, and board 4-year (interest): $ 55,487.10 o Loan of $ 145,649.20, total repaid $ 201,136.30, so $ 55,487.10 in interest. 4-Year Room/Board: $ 52,953.22 o Room, board, tuition and fees of 145,649.20 minus tuition and fees of 92,695.98 Books: $ 4,800 o $1,200 per year times 4 years Transportation: $ 5,056 o Bike tune-ups/maintenance of $130/year times 4 years = 520 o 3 plane tickets from Bozeman to Durango per year at $ 378 each (378*3) times four years: $ 4,536 Cost of moving to Bozeman: $ 516.80 o Gas: car gets about 20 mpg and has a 16 gallon tank. Wed have to fill it three times to get to Bozeman, so if gas is about $ 3.30 per gallon, wed pay $ 158.40 for gas one way. Multiply by two in order to account for the return trip: $ 316.80 o Lodging: Its a two day drive, so wed have to stay in a hotel for two nights; one on the way there and one on the way back. At about $ 100 a night, the total would be $200. Recreation costs: $ 5,192 o Ski pass at $ 1,298 times four years Non-Monetary: Time: $ 17,290

o $20/day for 32 weeks a year times four years Lost work experience: $ 2,000 o $ 500/year times four years: no more because you get more education instead of work experience. Lost income: $ 74,880 o If I worked five days a week, eight hours a day, making $ 9 an hour, Id make $18,720, times four years Stress: $ 6,400 o $ 50 per week for 32 weeks/year times 4 years Lack of sleep: $ 27,520 o $215 per week times 32 weeks times 4 years Less family contact: $ 4,000 o $ 31.25 per week for 32 weeks/year times four years Less free time: $ 40,000 o $ 312.5/week for 32 weeks per year times four years Total Costs: $ 388,791.10

Benefits: Monetary Higher income: $ 65,000 o Highest possible yearly income with paleontology career path Lower car insurance rates: $ 10,500 o Lower education levels must pay up to $300 more per year. This means I could save up to $ 300 per year times 35 years Longer paid vacations: $ 100,450 o About $ 717.50 per week for 4 weeks per year times 35 years Healthier lifestyle (fewer medical costs): $ 479,500 o Avoid medical expenses like diabetes by being more informed about health benefits/affording better food: $ 13,700 in diabetes treatment/year times 35 years Higher lifetime earnings: $ 664,728.75 o $ 34,446.25 net income per year times 35 years (working life) minus $ 15,454 times 35 (Salary made from working at McDonalds) Student benefits: $ 2,000 o $ 500 per year times 4 years Cheaper ski pass: $ 804 o $ 201 saved per year times 4 years Non-Monetary Better job satisfaction: $ 175,000 o $ 5,000 per year times 35 years Shorter working hours: $ 105,000

o $ 3,000 per year times 35 years Job stability: $ 35,000 o $1,000 per year times 35 years Ability to have a retirement: $ 35,000 o 1,000 per year for 35 years Greater diversity in job choice: $ 35,000 o $ 1,000 per year times 35 years Higher level of education: $ 2,000 o $ 500 per year times four years College sports: $ 4,000 o $ 1000 per year times four years Total Benefits: $ 1,713,982.75

Conclusions: Based on the estimations, the long-term benefits of attending college, in this case at Montana State University, would be about $ 1,325,191.65 greater than short-term costs like tuition, fees, room, and board. These calculations were made using a best case scenario, but they still reflect that in the long run, attending college could potentially be a worthwhile investment and needs to be honestly considered as a realistic possibility. Reflection Questions: 1. After completing my analysis, I found my college to be worth the investment. My results were gathered using a best case scenario and at first I didnt really believe that the benefits could be 1 million more than the costs, but when I thought about it more, it makes sense. If I can get a fairly well paid job after college, no matter how expensive college was, I would still make more money over my working life than I would spend in four years of college. I think that some of this difference also comes from my value of things like job satisfaction and vacation time. I almost think that some of the non-monetary benefits (and costs) are more important than the monetary benefits/costs. In my opinion, one of the best reasons for going to college is that it gives you a greater ability to do what you want to with the rest of your life. True, you may have to work very hard to stay on top of your loans, but at least theres the chance of doing what you love while youre paying back your loans. I dont want to spend the rest of my life searching for jobs and working low paying, low satisfaction jobs just to put food on the table. So in a way, even if the costs were greater than the benefits, Id rather be happily working off my debt in a good job than be miserable and debt free in a bad job. 2. Im pretty confident that I could get a return from my college investment, but thats assuming I could get a job. Using paleontology as a possible career path, I could make a net income of about $ 34,446.25 a year. If I was able to get a job right out of college, I could break even in about 13.5 years. Of course, that is assuming that I could make a net income of $ 40,000 right out of college. $ 40,000 is on the low end of the average pay for paleontologists, but its pretty likely that right out of college I wouldnt make that much. In addition, if I decided to go to

graduate school and get a PhD, I wouldnt be able to start paying for my undergraduate degree until after graduate school. If I do decide to continue my education after college however, it greatly inflates all of my potential benefits; everything from job stability to income would increase with a doctorate degree. One other important point that I have mentioned before is that the non-monetary benefits of having an enjoyable job are very important to me, so a return on my college investment might not even be monetary. It might just be loving what I do every day. 3. I think that this cost could persuade me to attend a different college, but only if it was still a good school. Many of the benefits after college come from attending a good college, so if I attended a school where I didnt get as good of an education, it wouldnt really be worth it in the long run. MSU is attractive to me for many reasons. Some big factors are its location and sports, but its academics are also important to me. MSU has a good reputation academically from what I hear, mostly through talking to people who have family members attending MSU. For this reason, I would be tempted to stay at MSU or at least another college with a good reputation, even if it is expensive. As for the location and sports, I feel that if Im going to be pay $ 145,000 for college, I should go to a place where Id enjoy being. I got an offer from a small college in Iowa to come run cross country for them, and it would probably be a good school, and would almost certainly be cheaper than MSU. However, I would hate to live in Iowa for four years, so I didnt give the offer much thought. This kind of comes back to the importance of things other than money. If I enjoy my college experience more and get more out of it, it seems fair to me that it would be a bit more expensive. 4. There are many factors that could raise my estimated tuition cost, including budget cuts, construction costs, and many other things. As far as costs in general go, some of the things that could definitely be higher than expected would be food, transportation, and loan interest. All of these things are basically estimates except for the loan interest, but that value could change based on what repayment plan I use. Another somewhat related possibility would be an inability to get a job right out of college. A lot of my non-monetary (and monetary) benefits are very reliant on my ability to get a job. If, as some college graduates do, I cant get a better paying job than one that doesnt require a college degree, my costs might outweigh my benefits. Taking this in to account, I would still probably get a job that I enjoy more than working at McDonalds or something. Also, I would still have it easier than some. Id be more competitive for some jobs because of my degree, and Id be more likely to hold on to a job position once I got a job. 5. If I made $ 40,000 a year, I would have to pay $ 5,553.75 in taxes, giving me a net income of $ 34,446.25 per year, or $ 2,870.52 per month. 10% of this would be $287.05, which isnt enough to pay off a loan of $ 145,649.29.With that loan amount the lowest monthly payment I could get is $ 643.28, which is 22% of my monthly income. This would leave me with $ 2,227.24 per month, which I think would still be a reasonable amount of money to live with if I was only supporting myself. I dont know how many hidden costs Ill incur once I graduate, but I still think that I can live off of $ 2,000 per month. Ive already had a fair amount of experience parceling out money. I go on cross country trips where my parents give me a little bit of money that I have to budget to pay for food for any time frame from overnight to four days. I think that this will help me be better at parceling out my $2,000 per month much better after college. Another

factor that makes me more helpful is that the $ 40,000 yearly income that I used to predict my payments is on the lower end of the paleontologist pay-scale. I know that it is likely that Ill probably make only this much (or less) right out of college, but there is always the possibility that I could get a higher paying job, especially because Im not 100% that I want to be paleontology major. Conclusion: 1. I think that debt that is unreasonable is the only type that is too much for me. I know that this is kind of a vague description, so let me elaborate. By unreasonable, I mean a loan that would take 50 % or more of my monthly payment to pay off. Another thing that I find unreasonable is the length of some payment plans. I dont want to be paying for four years of college for the rest of my life. That being said, if I can live with the debt incurred by attending college, I know Ill be better off in the long run. So in summary, I think that a debt that takes more than half of my monthly paycheck and will be around for much of my life is too much. Anything less than that, while unfortunate, is manageable. Its not that I value higher education all that much, but more that I want to be able to do what I want with my life and make a difference, even if just for a few people. I dont believe that I need a high paying job to make a difference, so I am willing to deal with the costs of a low salary job, up to a point. 2. After this project, I think that the true costs of college, while large, arent as bad as many like to pretend they are. At first, when we were watching videos about student debt and financial problems, I thought that college was ridiculously expensive and wouldnt really benefit me much in the long run. Those videos gave me the impression that even if I did make it through college without too much debt, Im not likely to find a job I enjoy, if I find one at all. However, after completing the cost benefit analysis, I realized that the costs of college are really not very big when compared to all of the benefits that often result from a college education. At the time, $ 145,000 sounds like A LOT of money. When compared to the potential to earn $40,000 a year for the rest of your life instead of $ 15,000, these costs seem somewhat less substantial. Especially when I started factoring in things like job satisfaction and stability. Plus, attending college isnt just about education. There are lots of important social lessons to be learned from living in a college environment. Many friends to be made, many new people to meet. So Even though its expensive, I think that college gives more than it takes in the long run. 3. Overall, my research has informed me about many things related to my tentative college decision. For my cost benefit analysis, I had to choose between MSU and CC, which was definitely not easy. I ended up going with MSU, partially because of what I learned through looking at prices online. Through the process of this project, I gained a lot of information about my prospective college. MSU is expensive compared to instate, but is pretty cheap compared to schools like CC, where the tuition is almost twice as expensive as MSU. I also learned about some of the important financial aid options that are unique to MSU. One example that I learned about was the Western Undergraduate Exchange, or WUE. WUE is a financial aid program that is available for students in the western US. The only requirements you must meet are living in the west and having a high enough SAT or ACT score. If you do get WUE, you only have to pay 150 %

of instate tuition instead of paying full out of state tuition. If I could get WUE, the cost of college would get even smaller. I also learned more about the MSU sports program. I hope to run cross country in college, so one element that I take in to consideration is what the cross country programs of different schools are like. Because of our project, I asked my cross country coach if he knew anything about MSUs program. From this I learned an estimated time that I would have to run to be a contender for athletic financial support, another piece of information that I wouldnt have known if it wasnt for this project.