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.