Parents, please read this if you have kids who are in or plan to go to college. It could make the difference between them having a good life vs. a life of despair.
My parents impressed on me the need for a higher education. I remember my mother telling me, “You can lose a fortune, but no one can take away your degree.”
She was singing to the choir; I knew I had limited talents, and I also knew I needed to utilize those skills if I were to have a successful life. I wasn’t athletic, I am too truthful to be a salesperson, and I’m an introvert. The things that interested me were uncommon. However, school came easily for me. I seemed to understand things that others didn’t, and I had a knack for doing well on standardized tests.
Understanding how stuff worked and how seemingly unrelated things connected was as exciting to me as watching the Super Bowl was to someone else. I have always become wholly absorbed in learning the most trivial things and becoming an expert on a topic.
I grew up in an era where science was king and America was at the forefront of science. A time when it was thought that anyone could do anything. When it came time to go to college, my attendance was not in question. However, my resources were. Those resources were limited not only financially but also informationally. I had little understanding of where to go or how to pay for it. My father made that decision easy. “You are going to a community college,” he said. And so it was written. The community college was nearly free in terms of tuition costs. I had been working as a janitor during the summers and had enough money to buy a new 1972 Pinto for $2,700. College plus a car? Life was good.
To be honest, I enjoyed my 2 years at a community college. I made good friends, had a lot of fun, and did well. But what next? I still didn’t understand how the higher education system was wired. I knew that I would need to go to a state school to complete my degree, as tuition was lower. I applied to exactly one school, and to be honest, I’m unclear why I chose that school. I thought it was because my best friend, John, was going there. John now tells me that I was the one to convince him to continue his education. Perhaps it was just fate.
The 1974 tuition for that school was roughly $500/year ($3,270 in today’s money). My parents agreed to cover that, but I was responsible for my personal expenses, from clothing to shampoo. Naturally, I was expected to finish in 2 years, which I did. Just like the community college, I did very well in school. What next?
I was a Biology/Chemistry student, and I knew graduate school was needed to go further. I planned to become a university professor, and the graduate school I had my sights on would pay me to attend and even provide a stipend. I worked hard in grad school and did well, but felt that I was being called in a different direction. I left with a Master’s degree and didn’t pursue the PhD that I had initially intended. I applied and got accepted into medical school, which was roughly $14,000 a year. I actually debated going to that school, as other schools that I considered were in the $10,000/year range. However, I believe that my career as a doctor would allow me to repay a reasonable student loan. It turned out that my school made this burden even easier.
Due to circumstances, parental pressure, and self-luck, I made a lot of good financial decisions when it came to my educational choices. I entered medical school debt-free. I knew that I would have medical school loans, but taking them out was a reasonable decision.
During my decades of psychiatric practice, I have worked with every age range, from teens to seniors. My career has allowed me to gain insight into what teens think, their emotional maturity, and their understanding of the real world. I’m here to report that their knowledge of the real world was not that different from mine at their age. In other words, not very good. Almost all had a feeble concept of finances and how student loans would impact them or their parents.
Universities have steadily increased their tuition, far exceeding inflation and, in fact, surpassing many other costs, including those for housing and health. Part of this was due to the readily available and ever-expanding student loan machine, which eventually included parent PLUS loans. Student loans were originally a government program, but have long become privatized. The government guarantees the loans, and they are unforgivable by bankruptcy.
Colleges and universities saw this windfall, and tuition has reached astronomical proportions. Students are enticed by the promotion of the “college experience,” which often seems marketed more like a vacation than an education. Colleges promote their fancy dorms, deluxe gyms, and football teams more than their libraries.
The US News and World Report became an artificial college rating benchmark, and schools saw ways to manipulate their rankings to allow even higher tuitions for those places deemed highly competitive.
The old dogma that a college degree was necessary to have a good life was not countered by the realities of astronomical tuition prices or the fact that many degrees didn’t justify their high cost in the real world. Yes, if you were wealthy, a degree in Art History might be a fine option, but does it make sense to incur tremendous debt for a potentially low-paying job? That’s assuming that you could find a job in your field of expertise. No one seems to be talking about that reality.
There have always been professions that fluctuate in demand, such as teaching, engineering, healthcare, computer science, and the like. However, many of these graduates are now facing difficulties in finding employment, yet they still have to repay their student loans, which begin six months after graduation.
We have been charmed by colleges that showcase their beautiful campuses, fun parties, and happy student life. The reality is that any college can provide a great experience, or not; it depends on the student. I was treating a college student who was attending the same university that my daughter was going to. That student said that the place was terrible and unfriendly. My daughter had the opposite experience and still sees friends from that school regularly. She thought it was a wonderful place. It is what you do in college that makes it a good experience, not where it is.
You may think that I’m a super-frugal guy. That isn’t the case. However, I was fortunate to be raised in a family of limited means. We delayed our gratification for things we wanted, my mother cooked most meals from scratch, and we repaired things or did without. Life went on, and I knew that happiness wasn’t equated to my latest credit card purchase. Having stuff is excellent as long as it doesn’t become a means to an end or a financial burden.
I live in a nice town, and in a nice house. My kids attended good schools. We go on vacations. I use a credit card. However, I never have a balance on a credit card, and we now consider foods like steak as a special occasion food. Trust me, there are many delicious foods that aren’t $15 a pound! We are not deprived.
However, it would have been easy to have changed my life situation. If I ran up my credit cards, went on trips via loans, or got into BNPL in the past, my current life would be significantly different. Society says we must buy, buy, buy, buy, and experience the exotic. Why is that? It’s not to make you happy, it makes the rich richer and you poorer. More importantly, it leads to tremendous stress. That trinket you bought on Amazon, the one you lost interest in five minutes after receiving it, well, now you have to pay for it.
Our lack of financial knowledge starts early, and opportunities to increase our knowledge are often ignored. One of the greatest failures that can destroy a life is poor college financial decisions. We want our kids to succeed and be happy. We want them to have a good life, but our efforts can sometimes have the opposite effect.
College is not an experience; it is a place to gain a higher education that can be applied to help create a better life and hopefully benefit society. There are many other options that can achieve this. Learning a trade, going to a community college to obtain a certificate, attending a technical school, being self-taught, and so much more.
Now, you may be thinking that I’m saying you shouldn’t go to college. No, not at all. I’m saying that other options may be suitable for some individuals. Options that will cost less and produce a better outcome. So many kids are forced into college only to waste money and never get a degree. Why is that?
My kids were academically gifted, and I knew that they would have merit opportunities when it came to college choices. I began to discuss higher education with them when they were in middle school.
My wife is a professional, but she took 12 years off to raise our kids. That was a mutual decision that we will never regret. However, this meant that I not only had to work harder, but it also meant that our overall income was much less than what it could have been. When she did return to work, she initially did so part-time. I continued to wholly support our family, and every penny that she made for several years went into a college fund for our kids. Although substantial, it was small compared to the potential costs of sending three students to college.
When my kids were approaching college, we did more research. It was clear that they would be going beyond bachelor’s degrees, and we discovered that getting into a good post-graduate school depended more on their grades, test scores, and activities rather than the university that they attended.
Because of their academic excellence, they got into top-tier undergraduate schools; however, any scholarships offered by these schools would only cover a portion of their overall tuition expenses. However, great but less nationally known schools wanted them and were willing to give them free rides, as my kids’ academic credentials would help the schools’ admission statistics (I know, this sounds crazy, but it’s true).
It’s tough for an 18-year-old who could attend a school with bragging rights to decide between that school and another. They lack the mature financial understanding of a seasoned adult, and signing a loan for tuition doesn’t carry the same significance as if they had to withdraw that cash from their savings account. Likewise, high schools want their students to attend the most prestigious colleges, as it enhances the school’s reputation, and colleges are more concerned about collecting tuition rather than loan repayments.
Loan companies make a substantial profit on student loans, some of which have loan terms similar to those of payday loans. I read about one woman who paid $1000 a month for 10 years and actually owed more money than she borrowed after that period. There are many stories of people who are in 100K debt, or much more, with degrees that only offer low-paying jobs.
A line among student loan companies is “forbearance, forbearance, forbearance!” If someone can’t afford to pay back their loan, reduce the installment. Of course, the company makes more money on interest in the process.
My kids graduated from college debt-free and all went on to higher levels of education. However, now they had the tools to make informed decisions. One went on to a professional school which did have a sizeable tuition. She was accepted at multiple schools and chose the one that was the best balance between excellence and affordability. She does owe a considerable amount, but she has already crafted a plan to pay off her debt as quickly as possible. This plan was not made easy by the loan companies. She wanted to set up automatic payments, but they said they could only do this for the minimum amount, and not any other amount. This would mean she would accrue an astronomical amount of interest. She found a way to subvert that plan, but it was not with the lender’s help.
Here are some tips:
-Please look at college like any other investment and discuss this frankly with your pre-college and college-age kids.
-Explore the benefits of a particular degree. A student may want to study medieval languages, but is there a job available for them upon graduation?
-Run the loan numbers with your kids. There are calculators on the internet that can do this for you at the touch of a button.
-Start talking to them early about college and money; add information as they can handle it.
-I never told our kids that they couldn’t go to a particular school. What I did was to show them how much money we could contribute and then examine the financial burden that they would have to bear, depending on the school. For instance, school “A” might cost them 70,000 in student loans even with that school’s scholarship, while school “B” would essentially be free.
-I let them know that I would help them in any rational way that I could, but I would not sign parent PLUS loans, as I was getting close to retirement, and it didn’t make any fiscal sense for me.
In the end, they not only made good college choices, but also good financial choices. But what if they weren’t academically gifted and couldn’t get merit scholarships?
-Does your child have a clear idea of what they want to do with a college degree? If not, other alternatives, such as a gap year, may be a reasonable option.
-Consider a community college that can offer two years of general education classes at a fraction of the cost of a university. They can transfer to a 4-year college afterwards.
-Consider a local college to save on room and board costs.
-Consider the school that offers the best financial aid and quality of education combination rather than the highest-ranked school to which your child was accepted.
-Consider a trade school or certificate program. Many do very well with these options. I know of people in the trades who have a better lifestyle than mine. That is especially true for those who have some business skills and start their own companies.
-Avoid parental narcissism. “My kid has to go to the best school, as it gives me bragging rights!”
-Explore all of the many college scholarships offered. Those small scholarships can add up to big money, and many go unclaimed.
-Does your kid have special talents? I have known several kids who received free rides, including room and board, due to their athletic abilities. I have a friend with a very musically talented son who will certainly receive a scholarship.
-Be practical about a degree. My friend’s musically talented son could make it big, or not. For him, it would be beneficial to also have a degree in music education as a backup.
I could provide you with more options and statistics on the topic, but the movie linked below does a much better job than I could. Please watch it with your college-bound and college-attending students and discuss its content.
I believe that a successfully raised child becomes a kind, empathic adult who can support themselves. Expecting an 18-year-old to make a decision that will result in over $100,000 in debt is not reasonable.
We have a whole generation of recent college graduates who, because of student-loan debt, can’t get married, buy a house, or have kids. Is that what we want for our children?
Please watch this video with you kids and discuss it afterwards. It may save you and your children a lot of future grief!
Peace
Mike
