Team #5241 Page 1 of 16

STEM Sells: What is higher education really worth? Team # 5421

Team #5241 Page 2 of 16

I. Executive Summary

Dear High School Administrators,

It has been brought to our attention that recent high school graduates and their families has been “forced” to pay more for an undergraduate degrees. Seniors are always wondering if it is

worth to go to college when they filling out their college applications. Our team wants to provide you with models to help answer the question.

In an attempt to look beyond the sticker price and find out how much students actually pay for his education, my team developed a model. The first part of the model can be used to calculate how much a student is expected to pay in a family with one parent and one child. Using the model, our team found out that such family with a $35,000 annual income has to pay $ 1919.20 regardless of any scholarships in two out of four years of undergraduate degree; however, such family with a $75,000 annual income does not get any financial aid, nor does such family with a $ 125,000 income, therefore, they have to pay the full tuition, before any scholarship deduction. The second part of the model can be used to calculate how much a student in a

family with two parents and three children is expected to pay. Using the model, our team reached the conclusion that such family with a $35,000 annual income should expect to pay $ 75.56 of financial aid per child in two out of four years of college, obtaining an undergraduate degree; such family with a $75,000 annual income is to expect a total amount of $5005.56 per child in two out of four years of undergraduate degree, and families with $125,000 are expected to pay $21,978.10 per child in two out of four years of undergraduate degree. We believe that students can use the aforementioned models as a tool for evaluating education choices. However, please be aware that this model has its limitation. Our model is a very good representation of how much EFC a student will have to pay. However, there are other factors that affect the liability and sensitivity of this model.

One of the many factors that affect the model is students’ loan interest rate, which dramatically increases the total expenses a student may finally pay for college if he/she applies for student

loan. Another factor that needs to be considered is state college expense. While our model was a general average of the whole 50 states, some states like New Hampshire require more tuition

costs per student, in which our model may not be a good estimator for the total money paid for college cost. Sincerely,

Team #5241

Team #5241 Page 3 of 16

II. Table of Content

I. Executive Summary ............................................ page 2

II. Table of Content …......................................... page 3

III. Introduction Background Information ………................................... page 4

Restatement of the Problem ………................................... page 4 Global Assumption ……….................................. page 4

IV. Part One ………................................... page 5-7

V. Part Two ………................................... page 8-11 VI. Part Three …………………………………………..page 11-14

VII. Conclusion ……....................................... page 15

VIII. Bibliography ............................................ page 16

Team #5241 Page 4 of 16

III. Introduction

Background Information The speed of science and technology innovations in the United States has being ranking at the

top of the world for a long time. In order to keep its reputation as the frontrunner, the United States has “a need for approximately one million more STEM (Science, Technology, Engineering,

or Mathematics) professionals than the U.S. will produce at the current rate over the next decade”, according to Council of Advisors on Science and Technology (PCAST)’s Report to the

President, February 2012. The lack for STEM professionals is not the only hindrance for the United States to keep its edge. As Michael Mitchell, Vincent Palacios, and Michael Leachman pointed out in May, 2014, state funding for public higher education has decreased dramatically for years for most states, causing the students and their families to pay more. Is it worth to go to college? This is a question that lingered in a majority of high school senior's head when they were filling out their college applications. High school graduates are questioning about their field of study, career of pursuance, and most importantly, their burden of debt. Our team wants to create a model to help students to find out if it is worth to go to college.

Students can use our model as a tool for evaluate their education choices.

Restatement of the Problem

For task number one, we are assigned to build a mathematical model that is able to determine how much an individual student will need to pay for an undergraduate

degree taking scholarships, household wealth, and the costs of financing into consideration.

Apply this model to students from: - Single parent/one child household with annual income of $35,000 - Two parents/three children household with an annual income of $35,000

- Single parent/one child household with annual income of $75,000 - Two parents/three children household with annual income of $75,000

- Single parent/one child household with annual income of $125,000 - Two parents/three children household with annual income of $125,000

Build another model that contrasts the short- and long- term liabilities and rewards of entering the workforce with an undergraduate STEM degree/ as to other career

preparation paths. Build a ranking system that high school graduates could use to be informed about their

educational future.

Global Assumption

Obtain a bachelor’s degree in four years. Students are not married and do not have kids.

Every parent filed tax report and their information is accurate. Students are dependent on their parents.

There is no inflation.

Team #5241 Page 5 of 16

IV. Part 1: Cost out of the pocket

Tuition costs in an average college generally increase with a certain limit determined to them

on the grounds that over the long haul instructional expenses increase because of an increase

in wages, compensations and inflation. Therefore, it is hard to predict a reasonable amount of

tuition, taking in consideration some major factors such as scholarships, financial aids, because

of the variation in in such factors. We need to create a model to determine an expected

amount of money that an individual needs to pay, for one parent family with one child and two

parents’ family with three children, to complete his undergraduate degree (which, in general, is

four years).

Assumptions: Considering the situation above, our partial assumptions are:

1. All the factors (average income, compensation, inflation) remain unchanged,

2. Every individual is in consideration that he/she goes to an average college,

3. Every family owns its own home but not considered as an asset,

4. Each student is dependent on his/her parents,

5. Students are not to take part in any subsidized loan,

6. Every family files any of the IRS Form 1040A or 1040EZ,

7. Families don’t have public assistance.

8. NY State is the representative for all states in the U.S.A.

Amount paid out of pocket after the deduction of scholarships, and financial aids or any other

grants depends on the amount of income a family earns and the size of the family, and the

number of students that are heading to college in a certain family. According to the definition

of a dependent student’s out of the pocket cost, we will use the term “EFC (Expected Family

Contribution)”, taken from the catalogue of The Financial Aid website of the federal

government. According to the document “THE EFC FORMULA, 2015–2016”***, a single parent

family with one child, having a specific set of Annual income, should expect to pay according to

the following table:

Income EFC ($)

25000 169.13

30000 1123.38

35000 1928.71

40000 2691.70

45000 3454.55

49999 4308.06

Team #5241 Page 6 of 16

Respectively, a two parents’ family with three children are expected to pay according to the

table below:

We formulated the data in the tables according to the calculation guidelines in the “EFC

Formula 2015-2016”. Families with annual income more than $49,999 will be granted no

financial aid according to the Federal Government. Therefore, families with income higher than

$49,999 will be considered as no scholarship candidates.

THE MODEL

1) One parent with one child:

𝐥𝐨𝐠 (𝐄𝐅𝐂) = −𝟏𝟗.𝟕𝟎 + 𝟓.𝟎𝟑 × 𝐥𝐨𝐠(𝒊𝒏𝒄𝒐𝒎𝒆) + 𝐚𝐦𝐨𝐮𝐧𝐭 𝐨𝐟 𝐬𝐜𝐡𝐨𝐥𝐚𝐫𝐬𝐡𝐢𝐩

A linear regression with logarithms of both the explanatory variable (Income) and the response

variable (EFC) produces the best approximation for the given data; with r2 being 0.92 (which

indicates that 92% of the data can be explained by the regression model above, to determine

the amount of EFC in a given value of income.

1) log(EFC) = −19.708 + 5.03 × log(35000) + 0 = 103.28 = $1919.20

2) Second scenario (single parent with one child) does not get any financial aid because

the income ($75,000) exceeds $49,999.

3) Being in the same category with scenario 2, scenario 3 also does not get any

financial aid because of having an annual income of $125,000, which exceeds the

given criteria (𝑖𝑛𝑐𝑜𝑚𝑒 ≥ 49,999)

However, the amount of EFC such family will have to pay may vary on the amount of

scholarships the child gets despite that we considered no scholarships for the

students but we considered it in our model.

Income EFC ($)

25000 0.00

30000 0.00

35000 0.00

40000 247.50

45000 493.90

49999 1480.14

Team #5241 Page 7 of 16

2) Two parents with three children:

√𝐄𝐅𝐂 = 𝟎. 𝟎𝟎𝟏𝟓𝟓(𝐢𝐧𝐜𝐨𝐦𝐞) − 𝟒𝟓. 𝟓 + 𝐚𝐦𝐨𝐮𝐧𝐭 𝐨𝐟 𝐬𝐜𝐡𝐨𝐥𝐚𝐫𝐬𝐡𝐢𝐩

Another linear regression (since the exempt distribution differs in each additional number of

children going to college) was formulated to compute the total amount of EFC in the case of a

family with two parents and three children. In this case, to produce the best result in the

correlation with EFC and income we used the square root of the response variable, EFC, to

determine a plausible approximation on the total amount of EFC using a given value in income.

A (residual) 2 value of 0.86 explains that the graph can approximate 86% of the data.

1)√𝐄𝐅𝐂 = 𝟎. 𝟎𝟎𝟏𝟓𝟓(𝟑𝟓𝟎𝟎𝟎) − 𝟒𝟓.𝟓 + 𝟎

= $𝟕𝟔.𝟓𝟔 (𝒑𝒆𝒓 𝒄𝒉𝒊𝒍𝒅)

2) √𝐄𝐅𝐂 = 𝟎.𝟎𝟎𝟏𝟓𝟓(𝟕𝟓𝟎𝟎𝟎) − 𝟒𝟓. 𝟓 + 𝟎

= $𝟓,𝟎𝟎𝟓.𝟓𝟔 (𝒑𝒆𝒓 𝒄𝒉𝒊𝒍𝒅)

3) √𝐄𝐅𝐂 = 𝟎.𝟎𝟎𝟏𝟓𝟓(𝟏𝟐𝟓𝟎𝟎𝟎) − 𝟒𝟓.𝟓 + 𝟎

= $𝟐𝟏,𝟗𝟕𝟖.𝟏𝟎 (𝒑𝒆𝒓 𝒄𝒉𝒊𝒍𝒅)

However, since the formulations were based on the assumption that the students go to

an average college which also incorporates community colleges, the results may vary if the suggestions that were proposed by Obama. More specifically, our model would have changed if the proposal had implemented. According to Obama, he suggested to make two years of community college free for qualifying students. If implemented, pre-model calculation (data in the table), would have changed because number of months staying in college was a factor on evaluating the Adjusted Available Income (A.A.I.). Therefore, the regression model would have influenced by an association with lower residual deviation from the expected line of best fit. In

conclusion, Obama’s proposal, if implemented, would favor the families, on the other hand, would affect the federal economy, since more than 43% of the US students are enrolled in the

community colleges (2011).

Team #5241 Page 8 of 16

V. Part Two

Restatement: Our task is to create a model that contrasts the short and long term liabilities and rewards of entering the workforce with an undergraduate STEM degree as compared to other

career preparation paths

The first thing that comes to mind when we think of the liabilities of a non-STEM degree would be the student loans. The students who have the non-STEM degree will have an early

opportunity to work and make money. In 2012, 71% of the students who graduated from four-year College had a student loan debt. This percentage represents 1.3 million students who graduated with debt of 1.1 million dollars in 2008 and 0.9 million dollars in 2004. In 2012: • 66% of graduates from public colleges have had student loans. • 75% of graduates from private non-profit colleges have had student loans. • 88% of graduates from for-profit colleges have had student loans.

(Figure: the average debt for an undergraduate STEM degree in 2012 and overtime) http://projectonstudentdebt.org/files/pub/Debt_Facts_and_Sources.pdf In 2012, the average amount of student loans came up to $29,400. The chart provides evidence of this because the average debts was incresing by year depending on the development of cost

technology.

Team #5241 Page 9 of 16

(Figure: the earnings and unemployment rates by educational atteinment in 2012) http://home.cccapply.org/colleges/why-attend Assumption: The rates of unemployment and median weekly earnings that represent Doctoral degrees, Professional degrees, Master’s degrees, and Bachelor’s degrees are the same as the rate of unemployment and median weekly earnings in STEM degrees.

Based on the data from the chart, we summarized the average number of unemployment and the median weekly earned for the people with undergraduate STEM degree (Doctoral degree,

Professional degree, Master’s degree, or Bachelor’s degree) as well as the people with non-STEM degree (Associate’s degree, little college experience or no degree, High school diploma,

or less than a high school diploma). Undergraduate STEM degree Non-STEM degree

Student Loans($) 29,400 0 Unemployment Rate(%) 3.15 8.65

Median Weekly Earning($) 1431.25 658.75

Median Yearly Earning($) (A year has 52 weeks)

74,425 34,255

The money people earned in a year=the median yearly average - the median yearly average* the unemplyment rate

Ex: The students with undergraduate STEM degree earned in a year:

74,425 – 74,425 * 0.0315= 72080.6 dollars The students with non-STEM degree earned in a year:

34,255 – 34,255 * 0.0865= 31291.9 dollars

Team #5241 Page 10 of 16

Assumption: It took students 4 years to get a undergraduate STEM degree which means that they start

working four years later than the people with Non-STEM degree.

The money two group of people earned overtime, created by used our model multiplied by year:

Year Undergraduate STEM degree Non-STEM degree 1 -29,400 31,291.9

2 -29,400 62,583.8

3 -29,400 93,875.7

4 -29,400 125,167.6 5 72080.6-29,400=42680.6 156,459.5

6 114,761.2 187,751.4

7 186,841.8 219,043.3

8 258,922.4 250,335.2

9 331,003 281,627.1

As such, under our estimation, after 8 years, the students with a undergraduate STEM degree

earned more money than those people with the non-STEM degree.

-50000

0

50000

100000

150000

200000

250000

300000

350000

1 2 3 4 5 6 7 8 9

Inco

me

($)

Years after Working

Income Overtime

undergraduate STEMdegree

non- STEM degree

Team #5241 Page 11 of 16

The chart below is the ratio of average hourly pay compared with the pay with a high school

degree we found in the New York Times Newspaper.

(Figure: Ratio of average hourly pay, compared with pay of people with a high school degree) http://www.nytimes.com/2014/05/27/upshot/is-college-worth-it-clearly-new-data-say.html?_r=0&abt=0002&abg=0 From the chart above, we concluded that the hourly payment for the students with some college is rarely changed over time. The payment of graduates of 4-yr colleges is increasing at a very high rate. In 2013, the hourly payment was 1.8 times of the students with some college. It is valid that entering the workforce with an undergraduate STEM degree has a better long-term liability.

After all, we concluded that in short-term liability the people with non-STEM degree will have more advantage than those people have the undergraduate STEM degree based on the

student’s loans. In long-term liability the people with the undergraduate STEM degree have a big advantage than those people have the non-STEM degree. As time passed through they will

get more and more advantages. VI. Part Three For the last part, our team developed a ranking system that could assist high school students to make informed choices regarding their educational future. We compared STEM careers and

non-STEM career. To be fair, careers involved in our comparison were the careers that ranked as the ten best paying jobs on U.S. News. com.

http://money.usnews.com/careers/best-jobs/rankings/best-paying-jobs

Team #5241 Page 12 of 16

Assumption:

Having a high quality job means having a high quality life.

Team #5241 Page 13 of 16

Figure: Elements that we considered would be associated with type of career (Stem or non-Stem)

Justification for the assumption:

Figure contains factors that have been defined by World Health Organization as factors that can affect overall quality of life. Most of the positive factors can be satisfied by having a high quality job.

The quality of good job:

High average annual salary High number of jobs Fast growth

STEM careers Average Salary in 2013 ($) Number of Jobs Average Yearly Growth

(Job outlook)

Physician 188,440 691,400 18

Dentist 164,570 146,800 16

IT Manager 132,570 332,700 15

Pharmacist 116,500 286,400 14

Software Developer 96,260 1,018,000 22

Veterinarian 96,140 70,300 12

Team #5241 Page 14 of 16

Non-STEM Jobs Average Salary in 2013 ($)

Number of Jobs Average Yearly Growth (Job outlook)

Marketing Manager

133,700 216,000 12

Lawyer 131,990 759,800 10

Financial Manager 126,600 532,100 9

Sales Manager 123,150 359,300 8

Business Operation Manager

116,090 2,303,200 11

Art Director 96,650 74,800 3

-Data from http://www.bls.gov/ According to World Health Organization, the quantitative and qualitative factors both influence the student’s overall quality of life, but these factors could all be positive and satisfied if a

person has a good job. The ranking system above displays STEM vs non-STEM jobs and their respective average salary in 2013, number of jobs available, and the average yearly growth. High School students can compare the difference between STEM and non-STEM jobs in three different areas depending on what they are looking for. In the sample of the 12 most paying jobs in the US,

Top 5 paying careers are: Physician; Dentist; Marketing Manager; IT Manager; Lawyer -⅗ are STEM career.

Top 5 careers that have the most job available are: Physician; Dentist; IT Manager; Software Developer; Pharmacist -all of them are STEM career.

Top 5 fastest growing careers are: Physician; Dentist; IT Manager; Software Developer; Pharmacist

-all of them are STEM career

According to the sample, STEM careers have higher annual salary, more available job opportunities, and faster career growth than non-STEM careers. According to the ranking system, STEM jobs are more desirable than non-STEM jobs. However, the ranking system only

ranked annual salary, job growth, and available job numbers; students should always consider other aspect of the careers while making decisions on their educational future.

Team #5241 Page 15 of 16

VII. Conclusion

We developed a mathematical model to calculate how much a student is expected to pay in a family with one parent and one child. Using the model, our team found out that such family

with a $35,000 annual income has to pay $ 1919.20 regardless of any scholarships in two years of undergraduate degree; however, such family with a $75,000 annual income does not get any

financial aid, nor does such family with a $ 125,000 income, therefore, they have to pay the full tuition, before any scholarship deduction. The second part of the model can be used to calculate how much a student in a family with two parents and three children is expected to pay. Using the model, our team reached the conclusion that such family with a $35,000 annual income should expect to pay $ 75.56 of financial aid per child in two years of college, obtaining an undergraduate degree; such family with a $75,000 annual income is to expect a total amount of $5005.56 per child in two years of undergraduate degree, and families with $125,000 are expected to pay $21,978.10 per child in two years of undergraduate degree.

For part two, we developed a model to estimate the average income they will made depending on which kind of degree they earned in order to compare the short-term and the long-term liability. Then, we found out that for the short-term liability, people have non-STEM degree have the advantage but through the time passed, people with the undergraduate STEM degree will get the better opportunities in their life. Lastly, we developed a ranking system that consists of annual salary, job growth, and available job numbers to compare STEM careers and non-STEM. Our conclusion was that STEM jobs are more desirable than non-STEM careers in general. However, we encourage students to also consider aspect of the jobs that are not included in the ranking system.

Team #5241 Page 16 of 16

VII. Bibliography

1. "FinAid | Scholarships | Number of Scholarships." FinAid | Scholarships | Number of Scholarships. Web. 28 Feb. 2015. <http://www.finaid.org/scholarships/awardcount.phtml>.

2. "How Aid Is Calculated | Federal Student Aid." How Aid Is Calculated | Federal Student Aid. Web. 28 Feb. 2015. <https://studentaid.ed.gov/fafsa/next-steps/how-calculated>.

3. "QUICK FACTS ABOUT STUDENT DEBT." Web. 28 Feb. 2015. <http://projectonstudentdebt.org/files/pub/Debt_Facts_and_Sources.pdf>.

4. Leonhardt, David. "Is College Worth It? Clearly, New Data Say." The New York Times. The New York Times, 26 May 2014. Web. 28 Feb. 2015. <http://www.nytimes.com/2014/05/27/upshot/is-college-worth-it-clearly-new-data-say.html?_r=0&abt=0002&ab g=0>.

5. "Is a College Degree Still worth It? : Monthly Labor Review: U.S. Bureau of Labor Statistics." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics. Web. 28 Feb. 2015. <http://www.bls.gov/opub/mlr/2014/beyond-bls/is-a-colleg-degree-still-worth-it.htm>.

6. "STEM Stats." STEM Advantage. Web. 28 Feb. 2015. <http://www.stemadvantage.org/stem-stats/>.

7. "Do STEM Majors Really Enjoy an Advantage?" The College Solution. Web. 28 Feb. 2015. <http://www.thecollegesolution.com/do-stem-majors-really-enjoy-an-advantage/>.

8. Bardaro, Katie. "4-Year vs. 2-Year College Degrees: How Does the Pay Compare?" 4-Year vs. 2-Year College Degrees: How Does the Pay Compare? 29 Oct. 2009. Web. 28 Feb.

2015. <http://www.payscale.com/career-news/2009/10/4-year-vs-2-year-college-degrees-how-does-the-pay-compare>.

"Reasons to Attend a Community College." Reasons to Attend a Community College.

Web. 28 Feb. 2015. <http://home.cccapply.org/colleges/why-attend>.

9. Rogers, Abby. "A Record 43% Of US College Students Are Enrolled In

Community College." Business Insider. Business Insider, Inc, 8 Nov. 2011. Web. 1 Mar. 2015. <http://www.businessinsider.com/community-college-has-grown-over-the-years-2011-11>.

10. "Reasons to Attend a Community College." Reasons to Attend a Community College. Web. 28 Feb. 2015. <http://home.cccapply.org/colleges/why-attend>.

11. Web. 28 Feb. 2015.

<http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pd f>.

12. "Best Paying Jobs." Best Paying Jobs. Web. 28 Feb. 2015.

<http://money.usnews.com/careers/best-jobs/rankings/best-paying-jobs>. 13. Web. 28 Feb. 2015. <http://www.who.int/mental_health/media/68.pdf>.