- Personal Finance»
- Mortgages & Loans
Student Loans and Jobs: Crushing Debt at the Beginning of Your Career
Do We Need New Entrepreneurial Strategies?
The best part about student loans in the US is that many students who receive insufficient grants and scholarships -- and have limited personal and family resources -- can still attend college or university. Low-interest borrowing for education seems like a great investment in a young person's future - how else will your earnings power for a great salary later be enhanced?
The worst part is that student loans for college are now SO common that nearly every student has them - even for majors, fields, or disciplines where the long-term career "investment" might not be worth the expense and debt. Why repay loans for decades for a degree that is less-than-marketable in the workplace? Why enter young adulthood with $25K - $35K - $50K or more of student loans to weigh down future relationships, homeownership, retirement savings, and more.
This may sound biased against degree and major areas where job prospects are limited, but that's not the case. Students in more 'niche' fields should try even harder to go to college for free or at least as inexpensively as possible. Whether it's a narrow history field, a creative writing degree, or something in the arts (music/visual arts/crafts/ceramics/jewelry) - many of these students will be much happier LATER in life pursing their passions without the monthly reminder of crushing debt. And remember, this is debt that cannot be wiped out in bankruptcy!
I propose that students, families, parents, and returning students consider some new strategies for a debt-free or lower debt education. Having worked in higher education, it is my experience that students choose a college (or it chooses them), they choose a major, and they sign whatever they need to sign to be able to attend - very little thought goes into a decision that take decades to pay for.
NEW STRATEGIES FOR COLLEGE WITH LITTLE OR NO STUDENT LOAN DEBT:
FAMILY RESOURCES: I think families should have honest conversations with their children about the resources available for college VERY EARLY. It's not too soon to start these talks in the 8th or 9th grades. Concepts like matching funds (encouraging the student to work hard at part-time and summer jobs), scholarships (encouraging students to study hard and maximize additional opportunities), and some candid future salary vs. debt research can be done together. I don't think this will encourage young people to only pursue lucrative careers, but rather be more informed about the choices they make!
COLLEGE PLANS: If students are undecided on their plans for a major, program, or more -- then the mature decision about not attending must happen sooner than HS graduation night. The peer pressure to continue into the "13th" grade with all their peers - especially those with headstrong plans - can make students attend an expensive private university for a year, only to flounder in their indecision. Again if students more clearly understood family resources, and their future debt, they might choose to wait. They could at least attend a cheaper community college while decisions are being made.
MILITARY or VOLUNTEERING: It's still a great idea to consider the Peace Corps, other volunteering opportunities, or the US Military (Army, Navy, Air Force, Marines, Coast Guard, as well as State National Guard and Reserves) as a way to gain amazing life experiences and travel. There are college financial aid benefits as well, but there are many other doors that open with these accomplishments.
TRAVEL: I have always believed that students need to travel outside of the country as much as they can to experience food, culture, politics, business, and more, from another perspective. Seeing the US from afar can provide many new insights and the journey itself can generate new passionate life directions. How can young people do this? There are exchange programs or short programs available overseas - or they could put together a small group of responsible friends or family to do this. For example: I know someone who dropped out of college - studying photography - and decided to travel, with a cousin, to Australia and New Zealand to take photographs for months! When he came back, not only had he seen and experienced many amazing things, but he had an amazing photo portfolio that helped him continue his studies elsewhere - ON SCHOLARSHIP! Great investment...
START A BUSINESS: There are a number of business people and entrepreneurs who believe that hungry, passionate, thoughtful young people - idea people - shouldn't be wasting four years in college at the beginning of their careers. The thought is to go start something - a business, venture, product, service- and fail, try again, make money, scratch, and fail, and finally succeed -- having learned maybe so much more than the classroom can teach. College textbooks are written for large groups, for an organized curriculum, and based on educational baselines, benchmarks, and frameworks -- real experiences might teach the student the same content AND MORE in a much, more organic manner.
MENTORING & PRIVATE STUDY: I know students with initiative who sought out mentoring relationships with "experts" in their field and learned so much from the direct supervision. Imagine instead of attending college, researching and finding the best person in your field to apprentice with, or be mentored by, even if they were overseas. Or the best four people over a period of a couple years... You could probably afford airfare, a small room rental, and "private study" with really fascinating experts in your field all over the world for less than a semester at your local GOODNAME University. If you want the skills of these experts, and not the degree - then you've started on the patch to get them. If you want the degree, perhaps apply afterwards to find that your plan makes you more competitive for grants, scholarships, assistantships and more.
I think the current cost of college and university programs for many students often outweighs the benefits. We need a new model that lets students understand the debt vs. career balance vs. skills, and helps introduce some strategies to get the same results without the current system. If nothing else, at least wait "save" your debt for graduate school, when your career becomes more clear.