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Education and Income - Key Concepts

Education and Income

Unit Overview

  • Education, income, career, and life choices impact financial plans and goals.
  • Career and education options after high school vary in terms of desired lifestyle.

Career Exploration

  • Evaluate skills and talents.
  • Use careeronestop interest survey on Canvas.

Education Options

  • AP/IB Track:
    • AP courses offer college-level rigor and possible credit with a score of 3+.
    • IB has a higher difficulty rating.
    • Not all universities accept AP scores.
  • G.E.D.:
    • For students struggling with traditional high school.
    • Similar to a high school diploma but carries less weight.
  • Transferring (Community College):
    • Earn credits that transfer to major universities.
    • Saves money on tuition.
    • Potential drawbacks include social stigma and limited networking.
  • Apprenticeships/The GAP Program:
    • Merge learning and experience with on-the-job training.
    • Can be paid or unpaid.
  • Trade Schools:
    • Specialize in training programs like construction or cosmetology.
    • Offers apprenticeships and job shadowing.

Certificates and Degrees

  • Certificates:
    • Earned quickly and can lead to employment.
    • Must be renewed.
  • Undergraduate Programs:
    • Bachelor of Arts or Science earned at a college or university.
  • Graduate Degree Programs
    • Masters (2-3 year programs)
    • PHD (Doctoral, Law, Medical)

Public vs. Private Universities

  • Public Universities:
    • Tax-supported and cheaper for in-state students.
    • Some states offer tuition incentives.
  • Private Universities:
    • Smaller class sizes and specialized programs.
    • Greater networking and financial aid opportunities, but higher tuition.

Majors and Minors

  • Major: Primary area of study.
  • Minor: Specialized coursework to support a major or area of interest.
  • Double Majors: Earning two separate degrees, which can be time-consuming and costly.

Out-of-State Tuition

  • Reasons include school prestige or specialized programs.
  • Ways to get in-state tuition: scholarships, reciprocity programs, regional exchange programs.

Impact of Education on Income

  • Higher education correlates with higher potential earnings and lower poverty rates.
  • Example: 12.7\% poverty rate with a high school diploma vs. 4.8\% with a bachelor's degree.

Military Service

  • Advantages include the GI Bill (education funding), career training, and leadership skills.

Other Educational Routes

  • Alternatives to a 4-year degree:
    • Associate Degree
    • Trade Certificates
    • Internships

Debt

  • Debt is owing money (loans, credit cards).

Defining the Dangers of Debt

  • Loan Principal: The original amount of money borrowed.
  • Consolidating: Combining different loans into one repayment plan.
  • Forbearance: Temporary suspension of loan payments due to economic hardship (interest still accrues).
  • Co-signing: A second person supports the borrower and agrees to repay the loan if the original borrower fails.
  • Default: Failure to repay a loan.
  • Bankruptcy: Legally stating you cannot repay your debts.

Paying for College

  • CSS-Profile: Applied on College Board Website allows students to apply non-federal aid for 400 colleges/universities
  • Types of Financial Aid:
    • Loans
    • Grants (do not require repayment).
    • Work-Study (on-campus jobs).
    • Scholarships (athletic, academic, etc.).
  • Federal Student Loans:
    • Lower interest rates than banks.
  • College Loan Repayment:
    • Repayment starts six months after graduation.
    • Subsidized loans: government pays interest during deferment.
    • Unsubsidized loans: interest payments begin immediately.
  • FAFSA (Free Application for Federal Student Aid) is essential for accessing federal aid.
  • Student need is assessed using the formula: Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Aid.

The Education Effect

  • Higher education is associated with:
    • Longer life expectancy
    • Healthier habits
    • Better problem-solving skills.
  • Lower education is associated with:
    • Jobs with greater injury risk
    • Reduced job opportunities

Income

  • Earned Income: Wages from working.
  • Disposable Income: Money after taxes.
  • Discretionary Income: Money after necessities.
  • Gross Income: Income before taxes and deductions.
  • Net Income: Income after taxes and deductions.

Hourly vs. Salary

  • Hourly Income: Rate earned per hour; eligible for overtime.
  • Salary Income: Total amount earned over a year; no overtime pay.

Price Floor

  • A government regulation that establish a minimum price
  • Minimum Wage:
    • Federal minimum wage = $$7.25

Other Sources of Income

  • Pension: Payments from an employer after retirement.
  • Capital Gains: Profit from selling assets (homes, cars, stocks).
  • 401K: Retirement plan with pre-tax payroll deductions.
  • Passive Income: Money earned from assets like rental properties.
  • Commission: Percentage of profit given to an employee.

529 Plans

  • Education savings plans with tax advantages.
    Stocks: Shares of ownership in a corporation.
  • Dividends: shares of profits paid to stockholders by corporations
  • Capital Gains: selling stocks for more then you bought it for

Pay Periods

  • Weekly, bi-monthly, or monthly.

Direct vs. Indirect Tax

  • Direct Deposit, Paper Check for payment

W-4 and W-2 Forms

  • W-4: Used by new employees to determine withholdings.
  • W-2: Shows the amount of tax withheld; used to file taxes.

Classifications of Taxation

  • Progressive Tax: The more you earn, the more you pay (e.g., income tax).
  • Regressive Tax: The less you earn, the more you pay (e.g., sales tax).
  • Proportional Tax: The average rate remains the same (e.g., NC income tax).

Other Types of Taxes

  • Gift Tax
  • Estate/Inheritance Tax
  • Sales Tax
  • Excise Tax
  • Property Tax
  • Payroll Taxes (FICA)

Calculating Taxes

  • Income Tax: Income tax bracket= Income tax owed +(the amount over x percentage)
  • Payroll Tax = Income x 0.06
  • Sales Tax Amount purchased x 0.05
  • Property Tax = Value of Property x 0.01

Job Skills and Needs

Interviewing Do’s and Don’ts

  • Do’s:
    • Show up early, take copies of your resume, maintain eye contact, and send a follow-up email.
  • Don’ts:
    • Be late, use slang, look unkempt, or bring food.

How to Dress

  • Overdress rather than underdress.

Resumes and Cover Letters

  • Resumes: Overview of experiences, skills, and background.
  • Cover Letters: Introduction to a potential employer, tailored to the job.

How to Apply for Jobs

  • Physically submit a resume, email the manager, or apply online.