Thirty & Broke

[Martha]

Thirty & Broke is the title of a Business Week article from this week. One of the major themes of the article is how rising college costs are making it difficult for young people starting out. Some numbers from the article:

The consequence of student loan debt on graduates in 1987 and 2002:

1987 2002

changed career plans
11% 16%

delayed buying a home
23% 38%

delayed getting married
9% 14%

delayed having children
12% 21%

(source, Nellie Mae statistics)

Why it is so much harder to pay for school in 2005 than it was in 1990:

Median family income: up 5.8%
Total cost at private four year colleges: up 47%
Total cost at public four-year colleges: up 63%

( source Census Bureau college board)

Federal student loan debt for four year bachelors degree:

• For 1992-3, 24.8% of public school students and 40.4% of private school students graduated with student loan debt
• For 2002-3, 58% of public scholl students and 69.2% of private school students graduated with student loan debt
  

(source, ACE Center for Policy Analysis)

 

[wildcat]

Interesting Martha. I certainly belong in that category --- educated and broke.

 

[Marshac]

And it's only going to get worse- part of the proposed budget cuts include cuts to the federal student loan program. Seems like a short-sighted place to make budget cuts IMO.

 

[gratefuled]

It's interersting to consider studies like this in light of 401-K proliferation.

Data seems to support this theory: high-school graduates who buy their way into the workforce with college educations financed by student loans are less likely to maximize their 401-K contributions at the early career stage when 401-K contributions are most productive thanks to interest compounding. As retirement savings lose traction, career lengths increase.

It's a trap; buying your way in impairs your ability to buy your way out. Which is an economic efficiency...retirement is unproductive. You toil not, neither do you consume.

So why play the game at all? I'm sending my daughter to welding school. Try outsourcing that to an Indian call center.

Ed

 

[Gone4Good]

I'm sending my daughter to welding school.  Try outsourcing that to an Indian call center.

Ummm, try telling that to the welders at Delphi who are at risk of having their $30 / hr wage cut to $10 / hr.

Delphi's demand: Take $9 an hour

 

[gratefuled]

Wow. Ouch. On second thought, I'm teaching her how to grow dope.

Ed

 

[Gone4Good]

Wow.  Ouch.  On second thought, I'm teaching her how to grow dope.

 

[Brat]

I'm sending my daughter to welding school.

The concept isn't as crazy as some might think.  It's just that welding isn't as in demand today as other crafts.  Consider electricians.. a major problem in days past for women was pulling wire.  Today electricians use wire pullers.  The biggest problem is social.  Architects love female carpenters on projects.  They tend to be more careful and the quality of work is usually higher.  

The skills most in demand in the future are the ones that must be performed where delivered.  The operation of medical equipment, for example.  The operator must be here, but the evaluation of the output can be outsourced to professionals elsewhere.  The demand for nurses is increasing, as well as opportunities for professional growth.

 

[Nords]

Wow.  Ouch.  On second thought, I'm teaching her how to grow dope.

She can make a great living designing & welding the entrance gates to gated communities & luxury homes... say, would she do custom work with low shipping expenses to Hawaii?  Can I send a photo & dimensions?

 

[Sisyphus]

I think that part of this is due to the fact that very few people have any clue about managing money. They want the instant gratification of getting the degree and will worry about the money "later". Take a look at the agressive marketing credit card companies do on college campuses (a CONSTANT presence), and the average credit card debt of college students (around $3k per graduate).

We all know the costs of college are going up. However, I finished college less than 10 years ago and had classmates with tens of thousands of dollars in student loans. They went to the same school... same classes... same standard of living. I just chose to work really hard (nearly full time job, plus an internship) while carrying a full load of classes. I wasn't wealthy, didn't have scholarships, missed many of the parties, and paid for nearly all of it on my own. I was willing to work hard and chose a state college I could afford.

I think this is just another symptom of a society that doesn't understand how credit works, how loans work, and how compounding works -- charge now, worry later.

This post probably sounds like I'm ripping anyone who finishes college with debt... that's not the case... there are some situations where it's the only option. It would help everyone if the cost of college quit skyrocketing. It would also help if kids went into college with a better financial education than they are today.

 

[haha]

This post probably sounds like I'm ripping anyone who finishes college with debt... that's not the case... there are some situations where it's the only option.  It would help everyone if the cost of college quit skyrocketing.  It would also help if kids went into college with a better financial education than they are today.

I borrowed every cent of student loans I could get my hands on. I reasoned, correctly I believe, that 1) I would never be 20 and in college again and 2) No one was ever likely to offer me these credit terms again.

I advised my kids the same way; I would do it the same way if I were doing it again. After all, would most people prefer relative freedom between 18 and 24, or between 48 and 54? I know my answer.

In the choice between rich and old, and working and young, young is best. Only way to enjoy it is enjoy it while you are there.

Life is more than an exponential function.

Ha

 

[unclemick]

Hmmmm

Close - but no cigar. JC plus State U and no debt - 18 to 21 and layed off at 49 - pretty free since.

Of course college was cheaper then and four summers work - lumber mill, woods and two in the lab - footed the deal. Two years free room and board during JC.

Of course that was long ago and far away in the 'old' PacNW.

 

[tozz]

You're darn tootin'!  (dunno what the heck you're burbling about but feel strangely compelled to agree.)

Life is more than an exponential function.

 

[gratefuled]

Nords: no, we can't transact business by mail. Obviously (and sheesh...do I have to point this out?) we'll have to come out and perform a personal job site inspection.

Ed

 

[Calgary_Girl]

Thankfully I didn't graduate with any student loan debt at all...thanks to mom and dad. Hubby and I plan on helping our kids the same way by opening an RESP (Registed Education Savings Plan). Of course, we expect them to pay something (I paid for my books and other miscellaneous items) but hopefully the tuition will be covered.

 

[wildcat]

I borrowed. Didn't get help from parents. Wasn't smart enough to get a scholarship. So what, that's life. I will dig my way out eventually.

 

[AltaRed]

Thankfully I didn't graduate with any student loan debt at all...thanks to mom and dad.  Hubby and I plan on helping our kids the same way by opening an RESP (Registed Education Savings Plan).  Of course, we expect them to pay something (I paid for my books and other miscellaneous items) but hopefully the tuition will be covered.

We did the same thing for our sons, put them through the University of Calgary. Wanted them to get a better start than DW and I did having to pay off student loans. But we claimed all the tuition tax deductions to our own account.

 

[laurence]

I borrowed. Didn't get help from parents. Wasn't smart enough to get a scholarship. So what, that's life. I will dig my way out eventually.

Ditto, finally rolled the last of it into a home equity line.

I have friends who make almost as much as we do without going to college. He works 5 a.m. to 2 p.m. with a rotating week schedule, managing aircraft supply routes or something, his wife works ~4 to midnight managing the loading center for aircraft shipping (?), and they have their kid in daycare all sorts of hours and see each other on an odd day here or there. It ain't just about the money wrt college, there is a quality of life factor as well.

 

[Nords]

Nords: no, we can't transact business by mail. Obviously (and sheesh...do I have to point this out?) we'll have to come out and perform a personal job site inspection.

Well, of course! No pressure-- although to familiarize yourselves with the wave design on the gate, you guys might have to spend a few afternoons surfing the real waves...

 

[Martha]

I borrowed. Didn't get help from parents.

We did too. And eventually worked our way out of student loan debt. Seems like a lifetime ago.

 

[HFWR]

Ditto, finally rolled the last of it into a home equity line. 

I have friends who make almost as much as we do without going to college.  He works 5 a.m. to 2 p.m. with a rotating week schedule, managing aircraft supply routes or something, his wife works ~4 to midnight managing the loading center for aircraft shipping (?), and they have their kid in daycare all sorts of hours and see each other on an odd day here or there.  It ain't just about the money wrt college, there is a quality of life factor as well.

Those wierd hours are becoming the norm... Even our PhDs are expected to work long hours, and be on call... But, in return, megacorp allows us to attend classes like "Balancing Work and Life"...

 

[Outtahere]

I worked for a company that paid for 80% of my tuition if I kept a C average or above. There is no way I would have been able to do it otherwise. I worked a 60 to 70 hour week and went to school nights...tough but it taught me alot about what can be done when you want something bad enough.

 

[brewer12345]

Parrents picked up the tab for undergrad. For grad school, I paid for some of it, DW got some of it covered by working for the school, and the rest I found an employer to pay for. I estimate that I paid for about $10k of the roughly $70k total cash cost. Working and doing school about 2/3 time equivalent was not fun, but it got me where I am today.

 

[laurence]

Two cents more, anyone contemplating further/higher education should really try to put school first, work second. I have too many friends that tried to work full time and took ~6 units at a time. Years later they give up, disheartened because they aren't even half way to a BA.

WC, in a couple of years when you are pullin' down phat G's those student loans will be less than what you pay your Bently driver.

 

[wildcat]

Ha! You mean I will be the Bently driver for some dude pulling down phat G's. Maybe Yrs to go or Brewer will need a driver.

P-T and work is tough. I just wanted to get it out of the way (1 1/2 vs. however long it takes to do it P-T) and didn't have an employer that would pay for it.