College Debt

After reading a newspaper article this past week about college loans, I need to state the obvious. Getting a college degree is expensive. Just like buying a house or a car, taking out a loan to go to college should be done with a lot of forethought and financial planning. Before signing on the dotted line, figure out how the loan is going to be repaid, and how much you may need to finish the degree. Also include your future salary and how long it will take to pay everything off.

The article was about a college graduate moaning that she’d never live long enough to pay off her college loans. It went on about how many people have huge college debts. I don’t understand what they’re complaining about it. Why did they get the loans without figuring out a way to repay them? Didn’t they stop and consider all the consequences of signing up for $80K in college loans to learn how to be a $30K a year teacher? Didn’t someone at their high school tell them it how much it costs to go to college? Didn’t someone teach them how to manage their finances? Whining about self-inflicted problems means someone didn’t take the time to count the cost. A little math and algebra would have saved them a lot of future headaches. They could have calculated an amortization table and understood the impact loans and credit card debt would have on their future life.

The other day, I found a beautiful house that’s for sale. Four bedrooms. Three baths. A indoor swimming pool. The photos made it look so wonderful. I’d love to own a house like that, but paying $700K for a house is WAY outside my checkbook’s reach. That total doesn’t include closing costs, moving costs, insurance, property taxes, and HOA fees. If for some reason I decided I had to have the house, I’d have to come up with a plan. 1.) Work as a maid for whoever owns the house. 2.) Get a job and save all my money for years. 3.) Take my IRA to Vegas and take a risk. 3.) Hope the stock market goes way way up. 4.) Write a super-best-selling book. Since none of those options is practical or probable, I’ll walk away from the house and look for a cheaper place that won’t be a financial burden.

College should be the same way. I’m not saying people shouldn’t go to college unless they’re rich. I’m saying students should make a plan of how they’re going to afford it before diving into an ocean of debt. Scholarships are a great way to go and don’t have to be repaid (nerds rule the world!). Working while going to school may require a lighter load of classes and more years to complete the degree, but graduating debt-free is a good way to start a career. Going to a state school rather than a private college is sensible. Make a plan and work the plan. Use algebra to figure out what kind of debt you can shoulder after you get out.

Let me be clear. Everyone needs training or education past high school in order to qualify for livable-wage jobs. Whether that training is the military, a vocational school (a lot of blue-collar jobs pay way more than college-educated jobs), an apprenticeship, or college is up to the individual and what their talents or passions are. Junior high and high school students need to be instructed and encouraged to continue on after graduation, and taught how to do algebra so they can count the costs of their future. Maybe the whining will stop after that.

One Comment
  1. A certain amount of student loan makes some sense for professionals IF their after-college earning will make it possible to pay off the debt. As you indicated, that would be part of the “have a plan to pay for it” strategy. A tragedy of life is that we don’t train our children in financial understanding. Parents rely on the school system and the school system assumes it should all be taught at home. Unfortunately, without the parent’s basic understanding of finance, they can’t teach or model good choices to their children so generation after generation muddles through until we have a giant financial mess. Good post, Carol.

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