Before you Start Whining about the Size of Your College Loan ( Reposted)


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I need to say, after hearing about the crushing debt with which today’s graduates are exiting college, I’m sick.  No, I don’t feel sick because of their plight.  I don’t worry about how they’ll pay back those hundreds of thousands of dollars with which they have been saddled.  I’m not going to worry about whether they will be able to buy a house soon, or start a family with all of that debt strapped around their necks. I don’t think that they were tricked into signing up by unscrupulous lenders in wide-brimmed hats and handlebar mustaches.  I certainly don’t think that the debt should be forgiven after a period of time, even if they are entering retirement.

I’m sick of hearing all of the whining about student loan debt.  I certainly want them to get out of debt, but I don’t feel any more sorry for most of them than I would feel about someone who came back from a lavish vacation and put it all on credit cards despite not having a job or the money to pay for their trip.  The reason is that both were enjoying luxuries they were not able to afford.  Now before you start to comment about how college is just really expensive and most families can’t afford to pay for college without student loans and that there is no other way, tell me, did you:

Select a reasonable school for your budget?  If you have a half million dollars sitting in the bank doing nothing, there is nothing wrong with going to Harvard or Yale and paying full rates.  Otherwise, you should have chosen a much less expensive school for which you could pay cash.

Look for scholarships?  And no, I don’t mean did you just apply for a couple of full-ride scholarships that would have covered your entire tuition for four years.  I mean did you apply for every $100 and $500 scholarship you could find?  Many of these go unfilled and a few hours spent filling out an application can reduce you college debt by a few hundred dollars if you get one of these.  Spend a summer piecing them together, and you could have college covered.  That’s a much better rate of pay than a minimum wage job.

Minimize living expenses?  OK now, be honest – a lot of people are just taking a class or two so that they can use student loans to finance their living expenses.  But even if you are seriously going to school, are you using loans to finance a two bedroom apartment with a pool and a weight room, or are you paying for a room over the garage of an old lady with six cats and helping with yard work to reduce the rent?  Before you say you can’t live like that, remember, you’re the one with no money for college.

Minimize time in school?  If you can’t afford to pay for tuition, why are you taking six years and dropping classes because you don’t feel like getting up early on Mondays?  Tuition is the same whether you take 12 hours or 21 hours.  If you’re taking out loans, get through as fast as you can.  3 1/2 years sounds good to me.

Work summers?  Unless you are carrying a full load in the summers to get out quick, you need to be working if you’re using student loans.  No lounging around the pool or heading home to live as a perpetual teenager.  It is best if you can get something related to your education or better yet, an internship.  If not, get what you can and save up some money for books.

Use community colleges?  The basic classes, like calculus one and remedial English can be had at community colleges.  Sure, a four-year college would be nice for the social life and to get away from Mom and Dad, but if you can’t afford to pay cash, you can save a lot of money by going to a community college for a year or two.

Pick a major based on ROI?  The worst thing to see is someone come out of college with $100,000 in student loan debt with a degree that leads to a $30,000 job.  If you are studying to be a youth minister, you don’t need a $20,000 per year tuition bill.  Figure out how much you’ll earn a year and don’t get more debt that you can pay off in 2 years with half of your salary.

Really learn things?  People don’t hire you and keep paying you just because you have a slip of paper in a frame on your wall,  They pay you for the skills you have and what you can produce for them.  Learn all that you can while you’re in college and make that degree mean something.

If you have done all of these things and still have some student loan debt, then I understand and don’t fault you.  But if you partied your way through five or six years at an expensive college, taking minimal numbers of hours, save me your complaints.  You were enjoying a luxury you couldn’t afford and now you need to pay for it.

Unfortunately, using student loans to go to college people can’t afford has become the new norm for the middle class.   Families who have dined out several times a week, remodeled their homes several times, driven new cars, and gone on lavish vacations have no money for college.  Then, despite there being no money available, the children decide to go to an expensive college and are in no hurry to graduate.  It is time to start getting real about what you can and what you can’t afford.  College can help you get a better paying job, but graduating with the equivalent of a house payment in student loans is a bad way to start your working life unless you are going into a very lucrative career.  Remember, however, that if you are becoming a doctor but don’t make it through school somehow, you’ll still need to pay the loans back.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

2 comments

  1. Ah, but education should be a right, not a privilege. In a country as wealthy as ours with a massive military budget and seemingly endless money to bail out banks and automobile companies, perhaps we should invest in our people. That would also go further to ending the disparity between the haves and have nots, making college more accessible to those who have the drive and talent. Education should not be a luxury. It is a necessity, and an integral component to a functioning democracy. That is the fundamental flaw in your analogy and argument.

    • Excellent! Note I fully agree with you that banks and car companies should not have been bailed out. They should have been allowed to fail and we would have been better for it after new companies rose up from the ashes. As far as military spending goes, it actually pails when compared to some other agencies and is a critical function of government without which we would not be able to conduct business. That said, I believe there is substantial waste in the military as there always is in a government department and would love to see it spent more efficiently.

      But on free college/loan forgiveness, I would love to ask you some more questions about your argument. If you would indulge me:

      1. The government has no money of its own. All money it spends either comes from current taxes or is borrowed with interest to be repaid later by future generations. So, the people getting college for “free” are getting the money they are using from others in the population, those who are producing things and therefore paying taxes. What gives them the right to the work of others?

      2. Does everyone get to get a free education? Does this mean everyone gets to go to college, or would you have criteria to get into college? If there are criteria, aren’t you taking the work of the people who can’t get into college and giving it to others who will probably get paid more per hour over their lifetimes? In other words, aren’t you enslaving those without the intelligence or circumstances to get into college? Realize that money comes from work, and work takes time, which means you’re taking part of the lives of the people who are working when you tax them and they don’t benefit from the tax.

      3. How much would each person get in the way of college? How many years? Is there room and board as well, and if so, how lavish would the living conditions be? Would millionaires get free college, or just those whose families have lower incomes? Given that the millionaires would be paying a lot of the cost of college, would it be fair to exclude them? Wouldn’t everyone go to expensive private schools since it is all free?

      4. If society were paying for it, could we decide what courses one would take? Could we require people become accountants and policemen since those are needed more than artists and historians?

      5. If college were effective at increasing incomes, that would mean that those who went to college and were successful would be paying more in taxes later. How is this different than them just taking out loans and then paying the money back through their increased incomes? Those who did not earn more because of their degrees would not be paying taxes, but they really didn’t benefit. Wouldn’t this mean that college would cost more for those who do earn more since now they’d be carrying both their costs and those of others who aren’t successful? Wouldn’t that be worse for those who currently pay their own way?

      Urgently awaiting your answers.

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