Degree of Debt

College expenses are rising faster than students can pay for them.  There is no way to graduate college without a mountain of debt.  A quality education is out of the reach of most people.  These statements and others like them just aren’t true.  It’s this either/or type of thinking that gets us in so much trouble as a nation: “You EITHER get in massive debt OR you don’t get to get a quality college education.” 

The truth is, though the average college student graduates with $22,900 in Student Loan Debt¹, it doesn’t have to work this way.  In the past 40 to 50 years, college has become this fantasy experience in our nation.  We have allowed it to become this all-expenses-paid right-of-passage full of alcohol, dating, parties, and entertainment (with a few classes thrown in).  That may be fun, but it is expensive.  We’ve sold a false bill-of-goods to our children and now, those who are graduating deeply in debt are struggling to pay for an education in an economy when fewer jobs are available.  They are angry, and rightly so, but their anger is somewhat misplaced if it is used only to blame Corporate America for a bad economy.  Perhaps some anger is due to themselves and poor choices that they have made and unrealistic expectations that they have built their young fantasies on.  Perhaps some anger is due their parents, teachers, and guidance counselors who sold them on the myth of the college experience. 

Let’s look at this myth a piece at a time.

#1 – Let’s be honest here.  Not everyone has to go to college.  Not only that, many people should NOT go to college.  Their study skills, life goals, and sheer desire may not be there.  Maybe they are going because they feel they have to in order to find a good job, or because their parents want them to go.  For some, a start in the work force is what is needed.  Others may consider trade schools or union trade apprenticeship.  Let’s not forget stay-at-home parents.  Financial concerns should never prevent someone from getting to college, but desire may (and should).  All too often, we tell kids they must go to college if they want to be somebody.  Many of the most accomplished entrepreneurs never went to college or dropped out without a college degree.  Steve Jobs and Steve Wozniak dropped out of college.  Billy Joe McCombs of Clear Channel Mediadropped out of law school.  David Geffen of Dreamworks fame dropped out.   Walt Disney dropped out of high school.  So did Vidal Sassoon.  So did Richard Branson of Virgin Records and Ray Kroc of McDonalds.  Mary Kay Ash of Mary Kay cosmetics never went to college.  Hyman Golden of Snapple fame, no college.  Frank Lloyd Wright never even went to High School.  There are hundreds of others on this list², so let’s be honest that college isn’t required for everyone. 

#2 – working your way through college is not a bad thing.  Forget the whole ‘College Experience.’   You don’t need to spend tens of thousands of dollars to party for four years.  It is completely possible and realistic to work 30-40 hours a week and still attend 8-12 hours of classes.  Late nights? Yes.  Hard work?  Yep.  Severely curtailed dating life? Absolutely.  No one said it has to be easy.  What’s more, the value of working during your degree cannot be underestimated.  Part time jobs in food service, retail, and even janitorial are great character builders and offer an education in and of themselves.  You learn how to deal with people.  You learn how to serve others.  You learn the value of a dollar earned.  You learn a trade that will always be a valuable back up when times are hard.  I earned my way through college the first time working in fast food.  I know that I will always be able to support my family in the roughest of times.  I am not afraid of cleaning toilets and I am not ashamed of flipping burgers or washing dishes.  A waiter or waitress can make great money if they are hard workers and good at entertaining people too.  What’s more, the flexible schedule of restaurant work allows you to go to school during the day and work at nights and on weekends.

#3 – in almost every situation, going to an Out-of-state college is not worth the investment.  In-state tuition is cheaper and the ability to stay with relatives* makes it much more affordable, compared to paying exorbitant out-of-state tuition and dorm fees.  Yes, I know that every kid is itching to move away from home.  Yes, I know that Florida State University is right near the beach.  Yes, I know that every guidance counselor in high school wants you to apply at every college in the U.S.   But, the truth be known, you can get an excellent education at your State University. 

* it was pointed out to me that some states have larger rural populations that make staying with relatives an untenable proposition.  The savings on in-state tuition as well as using some of these other tips (especially number 4 below) still makes much more sense than going out of state.

#4 – You don’t have to go all four years to the same school.  Save money by taking your basics at a community college or online.  At the current schedule of fees and costs, I can take English 101 at a Maricopa county community college for $76 a credit hour.  Contrast that with taking the same class at ASU for $658 a credit hour².  That is TEN TIMES the cost for the same class that will transfer!!!  I recommend community college for most kids as a starter for several reasons.  Financially, it is significantly more affordable.  It gives the young adult a chance to experience a wide range of classes before locking into a degree program.  And, it gives them a chance to see if college is even right for them.  The only ones that I recommend go right into a full university are those kids who have earned a full ride scholarship.  If they’ve already worked that hard, they are ready for college, and they don’t have to worry that their classes are more expensive.  I do recommend that any students starting at community college talk with an adviser from their prospective degree university to make sure that classes they choose at the community college will transfer.  The great thing about a community college is it gives you a chance to experiment.  Take 2-3 classes of basic requirements and 1 class that looks interesting as an elective.  Most students change their degree program at least once.  Attending community college first allows you to try different things before locking in, and allows you to do it at a much more affordable rate.

#5 – Scholarships are available for more than just perfect grades or football.  There are thousands of scholarships and grants available for students.  You just have to find them.  The college financial aid counselor will point you towards some of them, but others require research.  The first time I went to college in my late teens, this meant hours in the library looking through Scholarship and Grant books and then writing essay after essay.  This time, it’s all on the internet and you can often apply online.  Often, you must still include an essay, but you can copy and paste right from your MS Word document to the online form.  Much easier. 

#6 – Extra-curricular activities are just that: extra.  Unless you have a scholarship that demands your participation in a specific sport or other program, then these things are tertiary to your primary goal of getting a good education and secondary goal of paying for the degree without drowning in debt.  If you have time then you can join a sport, a club, or a fraternity or sorority.  These things may be fun, but they just aren’t what you are there for.  Not only do these things distract you from your education and waste time that is better spent elsewhere, they cost more money.  Brutal realism is required for good financial health.

#7 – Get a degree that matters.  Very few students that I have dealt with over the years in Youth Ministry have had any clue what they really want to do for a living.  Often they have these fantasy jobs and sound certain of their goals with all the assurance of youth.  Anyone who has dealt with High School and College age kids knows the truth.  What they think they want to do coming out of High School is rarely what they end up doing for a career.  General degrees in business and education prepare you for almost any career.  Get an Associates and/or Bachelors in these fields and then specialize with a Masters degree.  If you spend four years on an Art History degree, don’t be surprised if there are few jobs open when you get out of college. 

#8 – You have to earn your stripes.  The most important lesson that we, adults, can teach kids is that you must expect to work your way up from the bottom.  You have to pay your dues. When you get out of college, you just might not be able to find a job right away.  Yes, I know, the college recruiter said that you would be making $100,000 a year within six weeks of graduation and that the college will help you find that job.  Guess what… The college recruiter’s job is to get you to come to their college (and bring money with you).  They are not always so honest about what happens after college.  What’s more, they cannot control the economy.  You will probably have to start at the bottom of your degree field and earn you way up.  You may have to do jobs you don’t like to earn your way to the job you want.  You may even have to struggle in a different field for awhile till you can even get into the company you want.  Prepare for that.  Acknowledge it now and save yourself the stress.  This is another good reason NOT to get into huge college debt.  Being debt-free or mostly so upon graduation gives you time to find your niche.  This is a good reason to work your way through college.  If you can get in on the bottom floor in a field similar to or the same as you will be working in, you may find that internship or first time job that puts you ahead of the rest of the field when you get out of school.

#9 – You don’t need credit cards to get through college.  The sad truth is that most college students  graduate with student loan debt AND credit card debt.  The average college senior graduates with an additional $4,100 in credit card debt⁴.  That is in addition to the $20,000 plus in student loans.  Credit card companies love to come to student events and give away free Frisbees and pizza for everyone who applies for a credit card.  Students, whose parents have often spent a lifetime in debt, now sell themselves into debt slavery for a slice of pizza and a toy that they won’t even have by the time they pay the bills.

#10 – College doesn’t have to take four years.  In fact, a six year degree while you work is much more realistic and will provide you with an opportunity to gain experiences that you might not have otherwise gotten.  By working your way through a realistic class schedule, you will be able to have the flexibility to take internships, study abroad for a year, serve for a summer in a charity, or any number of other life experiences that will help you be a better, well rounded person and also impress future employers. 

The college experience myth is busted.  You can have that fantasy of fraternity parties, football games, and dating the cheerleader while going to classes, but it is going to cost you.  If you choose this fairy tale, don’t be surprised when you graduate with debt up to your ears and little prospect for financial freedom in the near future.  But, if you accept reality for what it is and are willing to put a little blood, sweat, and tears (no, not the 70s band) into your education, you can come out with something of real value at a fraction of the cost, and with the ability to earn your way to the top.  For the rest of us, the teachers, youth ministers, coaches, parents, and every other person who influences young adults: it is our duty to help these kids be realistic.  Let’s not feed them any more lies about college and debt, but give them a kick start in life by teaching them the value of hard work and an earned education.  Let us pass on the idea that the world doesn’t owe them a living and they shouldn’t expect someone else to pick up the tab for their choices. 

I am not totally hard-line against any debt.  If you have to use a little to get through your last year unpaid internship, then do what you have to do.  It is much harder to get a master’s degree debt free, but do as much as you can.  It’s just the thought of teaching our kids that debt is unavoidable, so let’s just use loans for all four years and hope that we can get a job right away to pay it all.

Finally, let us help our kids in the ways we can.  If you can financially help a kid get through college, do it.  If you can pay for a book, buy them dinner, or give them your old computer or bicycle, do it.  If you can encourage them, help them research scholarships, give them a quiet place to study, do it.  If you can help them get a part-time job where you work, or write a recommendation for their internship, do it.  If you can help with their laundry, give them a ride, or assist them with homework, do it.  Whatever happens, let’s help where we can and let’s not harm them by perpetuating myths.

As long as we believe that it isn’t possible and keep telling ourselves and our kids that, then we will continue to stick them with large amounts of debt.  But, when we quit making excuses and quit perpetuating myths, then we can change our kid’s future.

1.       http://news.consumerreports.org/money/2011/05/2011-college-grads-have-highest-average-debt-to-date.html

2.       http://www.youngentrepreneur.com/blog/100-top-entrepreneurs-who-succeeded-without-a-college-degree/

3.       http://collegesearch.collegeboard.com/search/CollegeDetail.jsp?collegeId=2353&profileId=2

4.       http://www.credit.com/press/statistics/student-credit-and-debt-statistics.html

P.S. -  It’s funny, but I’ve been accused of being unrealistic and fantasizing for thinking that things can work this way.  In most cases, it is from people who don’t want to think they have made wrong choices, so they say things like, “debt is unavoidable,” or, “it’s just not possible to live debt-free.”  Yet, I know others who have taken personal responsibility and recognized that past choices do not dictate the future.  These people are paying off debt steadily and living less stressful lives.  This includes myself and my family.  I got into deep debt during my first college experience and young adult years.  After years of hard lessons and even harder work, we are almost debt free.  That is reality, not fantasy.  Invariably, the people making the excuses and saying that debt free living is a fantasy are the ones continually making the same choices that continually get them further into debt and continually cause them suffering or don’t want to be honest about their own responsibility for past choices.   Those who are brutally honest with themselves get out of trouble, those that blame others continue living in trouble.  That is my experience.  YMMV

#Occupy Yourselves

John

“What is this generation going to do?” asked John, as he stood in the doorway of my office, “How are they ever going to survive this economy?”  John is an older man who lives around the corner from the church.  He stops in my office about once a month for a short conversation.  That’s a joke, because, if you knew John, you’d know that there’s no such thing as a short conversation when he comes around.  He’s been retired for a lot of years and forgets that not everyone has as much free time as he does.  Sometimes I groan inwardly when I see him come in, because I know I have to stop what I’m doing for a half hour, but in the end, I generally enjoy our conversations.  He has seen a lot of things in 80 plus years of life and, I have learned that if you ask the right questions, he always has an interesting story.

I can’t call John an old man, because, though he is more than twice my age, he is still very spry.  He lives his life much more fully than many people that I’ve met who are a quarter of his age.  He rides around on his bicycle and tinkers around in his tool shed.  He works in his garden, and fixes stuff around the neighborhood.  And, he comes in and talks to the young pastor in his neighborhood on a regular basis.

Usually, when John comes in, it’s to talk about something specific.  He has something on his mind, be it a neighbor who isn’t taking care of their property, or to talk about some issue of the day. 

Today, he was wondering about the economy and the Occupy Wall Street protests in the streets.  He told me that this ‘recession’ seemed to be turning into a depression, and he was worried about his country.  “This generation thinks they should be given everything; they don’t want to work for it, they don’t want to earn their own way,” he told me, “How are they going to survive this.” 

I know John was a child during the Great Depression, as he has shared some of his stories about World War II.  So, I asked him, “How did your generation make it?”

He looked me in the eye and said, “Well, we buckled down and did what we had to do.  We worked hard.  We saved things and made due.  We worked together to help each other.  We didn’t run out to buy something new when it broke, we just fixed it.  But, it’s different today, we didn’t have computers and all this new stuff that everyone thinks they need.” 

“It’s no different today, John,” I replied, “The answer today is the same as it was back then.  People in the 1920s had luxuries, they were frivolous.  But, when the 1930s and 40s came, they learned.  They cut back and made better choices.  They worked harder.  They scrimped and saved.  They treated their possessions with more value.  Families and communities helped each other.  They grew gardens and canned food.  They quit being so wasteful.  It wasn't pretty, it wasn't easy, but you did what you had to do.  That’s what you grew up with, right?” 

“Yes, sir, that’s how we did it.”

“Then,” I went on, “That’s how this generation is going to do it.  We just have some hard lessons to learn first.  And, some of us are going to learn the hard lessons and some of us won’t.  The ones that don’t are going to struggle and blame others for their problems.  Those that learn those hard lessons will make it through together, and be better for it.” 

I don’t think he really needed me to tell him that, I think he was just looking for reassurance that someone else knew the answer too.

John smiled at me and headed back out the door to his truck.  He stopped and looked back at me.  His parting shot was, “I don’t think you’ll have to work too hard to learn those lessons.”

I hope not, John, I truly hope not.

#Occupy Yourselves

THEY

I was at Starbucks about a month ago and saw a guy come in and ask for a free cup of coffee.  He looked like he might be homeless, but not so far gone that he really was living on the streets for any length of time, more a panhandler than someone really in need.  The Barista said, “I’ve told you before, you can’t come in here and get free coffee and you aren’t allowed to ask customers for money.  You can have water, but that’s all.”  He gave the guy a cup of water and the panhandler said, “What, no ice?,” as he walked out the door.  A female customer at the cash register started castigating the barista. 

“Why couldn’t you just give him a cup of coffee?, she asked, “Why did you have to be such a jerk about it?”  She continued to harangue him about how Starbucks can afford to give away coffee because they make so much money.  Why should the barrista care if they lost a few cents giving away one cup of coffee?

I wondered at the irony of her situation.  Here she was castigating Starbucks for being rich and not being as generous as she thought they should be, but she, who was standing there waiting to pay $5 to Starbucks, never once offered to buy the homeless guy a cup of coffee. 

It’s so much easier to blame They than to blame ‘I’.

They are mysterious. 

They are aloof. 

They are different from us. 

They are faceless. 

They cause all the problems.

They are to blame.

They don’t care. 

Government.  Politicians.  Corporate fat cats.  Banks.  Investment Companies.  They.

As if some alien species came to earth in the last few decades (during the Bush years if you are a Democrat or during Obama’s administration if you are  a Republican), suddenly, there is this ober-class of people who are to blame for all that’s wrong in this country.

Any serious student of history can tell you that it’s always been this way.  J.P. Morgan.  Leland Stanford.  John Jacob Astor.  Dale Carnegie.  Cornelius Vanderbilt.  Charles Schwab. Fisk. Duke. Plant. Ford. Seligman. Frick.  The Rockefellers.  The Kennedys.  The Du Ponts. The Lehmans. Many of these names we recognize as street names and product names.  Many are responsible for some of the greatest acts of philanthropy in our nation’s history.  Many are also responsible for terrible depredations on their workers, the environment, and on consumers.

It’s no different today. 

There are rich people like Steve Jobs, so lately lamented, but known specifically for his lack of generosity and his cutthroat business decisions and tyrant management style.. Or perhaps Bill Gates, also known for cutthroat business, but also known for enormous acts of charity and generous donations. 

It sure is easy to blame those rich people for our problems.  It’s even easier to blame the anonymous banks and big corporations.  If there is no person’s name attached, they become an even easier target for our ire. 

 “How dare they have billions of dollars when I struggle to pay my mortgage, my car loans, my student loans, and my credit cards?!?!?,” we demand with righteous indignation! 

“What’s up with these politicians, why do they keep screwing us so badly with laws that don’t help the little guy?!?!?!,” we yell out with all the moral anger we can muster.

Good questions.

No.  Not really a good questions.  Actually, quite bad ones.

Perhaps we should rephrase them:  “How dare I complain about faceless bankers when I keep using their money so poorly?” and, “Why do I keep voting for the same people just so my party stays in control, with little or no consideration to the best choices for the country?”

The problem with our nation comes down to 308, 600,000 individuals (give or take a million) who need to start taking personal responsibility and quit blaming the unnamed They for our problems.

We need to swear off debt.  Quit borrowing from Bank of America and suddenly that BOA constrictor loses its power.  Don’t like that they are charging a fee for debit transactions… Vote with your feet.  Don’t spend another dime with them.  Period.

Upset that hedge funds, junk bonds, and mortgage securities were at the heart of our current economic recession?  Maybe it’s time to reconsider the idea that everyone should own their own home, including people who cannot afford one or people incapable of paying their bills on time.  Perhaps it is time to take personal responsibility for wisely purchasing just enough home for what we need and not overburdening ourselves with large houses just because, at the top of the market, we could convince a bank to give us that much.  Perhaps it’s time for families to live together again, supporting mom and pop or giving the kids a chance to save up for a better start.  Perhaps it’s time for us to educate ourselves on mortgages before we take whatever product the realtor, banker, and broker convince us to take.  Perhaps it’s time to go back to the idea of saving up a huge down payment, learning discipline in the process, and then paying off that mortgage as fast as we can.

Don’t like that partisanship in politics?  Quit voting your party line and take the time to educate yourself on the individuals on both sides.  Consider that there are people on both sides of the issue and perhaps we need to give a little credence to the other side and the middle too.  Perhaps, instead of complaining about gridlock, we should stop listening to soundbites and recognize that a nation of 308 million people are actually going to have different points of view from you and perhaps that’s a healthy thing.

At the heart of this is individual responsibility.  Let’s not enable those who are occupying Wall Street now and blocking real working people from their jobs.  Let’s encourage them to occupy themselves with working.  .  If you have large amounts of student loans to get a degree in art history, perhaps it’s time to learn a hard lesson about the real world.  Get a job.  If there aren’t jobs there, create something new.  Start a new business or create a new product.  Maybe, consider moving to a place where there are jobs.  This is the American way and it is this innovation, stick-to-it-iveness, and willingness to work that have made us such a leader among nations.  Most of those rich people that we covered above didn’t start out that way. 

Finally, let’s not lose sight of the fact that we are the richest people in the world.  As the richest 4% or so of the entire world, let’s try to keep a clear focus on the fact that there are billions of people who would be willing to tell us, in a multitude of languages, where we can stick our pre-printed 99% signs.  In one loud and raucous voice, they would shout together in Hindi, Farsi, Spanish, Swahili, Arabic, Mandarin, Urdu, and a hundred other languages that they would be more than willing to take our jobs and work without complaining, that they would gladly accept our educations and put them to work, that they would give anything to have won the cosmic lottery that is a U.S. citizenship.

For those who are occupying Wall Street and other locations – I respect your voice that times are hard.  I don’t respect mob control and I certainly do not respect the politicians who are trying to make political hay out of this.  Clean up your mess.  Put down the signs.  Ditch the ridiculous hyperbolic rhetoric of, “hitler’s bankers,” “crimes against humanity,” “enslaved.”  Grow up and join the real world.

Yes, times are hard.  Yes, the Economy is rough.  Yes, corruption has happened.

But, stop blaming “They” and start saying, “I will take responsibility for myself.”

* For the record, I spent more than a decade working for banks and mortgage brokers, including at least half that time at Bank of America.  As a corporate culture, they are not a good company to work for.  They have led the charge on almost every fee that could be charged to their customers.  They regularly reorganized, right-sized, downsized, rif’ed, and every other pseudonym for messing with their employees lives in the interest of increasing stock-holder profits.  I always wondered at what point someone would realize that you can cut a pie a hundred ways and still have the same amount of pie, just much messier.  I don’t bank with them and I don’t recommend anyone bank with them.  If A.P. Giannini truly was the man that they said he was, who built his bank by working with the common working man, then I am absolutely sure he is spinning like a dervish in his grave at the company that Bank of America has become.  Let me take advantage of this blog to recommend that you never work for, borrow from, deposit money with, invest money in, or even walk too slowly past Bank of America or any of the other large banks.  Use small local banks and credit unions for deposits, and live debt free.  If enough of us do that, then real change can occur in that industry.