Millennials-Advice to break through the road blocks of high cost of education

[Greencheese]

Let's be real, asking a 17/18 year old to do the ROI on a $100,000+ education with no do overs and possibly life ruining debt levels isn't exactly fair. I came from an excellent high school (nothing expectional but I certainly was ahead of many of my peers) and other than my parents I didn't really receive any help with college. I was at one point getting 5-10 college brochures a day with amazing photos of the campus and everything around it. However nobody (outside of my parents) said what's the return on your investment for this education? It was always you will go to college so pick one (military being the only exception). I chose accounting and I chose a slightly more expensive school that I could graduate earlier from which was a net benefit in total cost vs income. I had a manageable debt load and make excellent money for the area. However I know several people who followed the college "advice" and have crippling debt loads of $100,000+ and are spending upwards of 75% of their take-home pay on loans (minimums, not extra payments). Under any other circumstance that would be terms for bankruptcy but in this case we just shrug and say they deserve it?

And regarding average debt, c'mon people. If 1 person graduates with $120,000 in debt and 3 graduate debt free sure the average is a manageable $30,000 but in actuality 3 people ascended to middle/upper middle class(typically) and one person is in such crushing debt that they may not ever climb out of it. How is that exactly fair?

 

[LOL!]

[...] How is that exactly fair?

But I read around here that Life is Not Fair.

One could suggest that no one should be allowed to borrow more than a maximum for an undergraduate education. Say $30K. That would prevent some folks from over borrowing, wouldn't it?

Or do you have another proposal?

 

[youbet]

The student loan debacle could be easily solved within the free market system by allowing student loan debtors to declare bankruptcy just as other debtors can. In short order, lenders would become much more selective about to whom and where they're making loans. Borrowers whose burden is too unmanageable and painful could get out of some portion of the debt through a court administered bankruptcy plan, but would have to live with the consequences of a bankruptcy on their record.

I think that within a few years, the average quality of student loans would be increased dramatically and the abundance of snake oil loan salespeople at private, for-profit schools would decline. We might also see a slowdown in tuition increases when fewer students are being offered easy, no-questions-asked loans.

 

[CRLLS]

1. Seven in 10 seniors (68%) who graduated from public and nonprofit colleges in 2015 had student loan debt, with an average of $30,100 per borrower. So, of the students that don't graduate without any debt, the average person owes the cost of a new well optioned Toyota Camry. That's not exactly the 6-figure debt burdens that the articles on the subject would lead you to believe everyone has.

It has been a few years since I told our kids we would pay $x per year for their college. Go where you want but that is it. I also told them "Coming out of college with $20-25k in debt is not all that bad. It is (was) the average cost of a car. The education will last a lifetime. The car, maybe 5-8 years. Where would you rather spend the money?"

DS#1 went to school on the 5yr plan, then later paid is way for a Master's Degree and Teaching cert. He is now a teacher. DS#2 went to CC for a semester and then enlisted. He is 18 yrs in now. His GI bill will pay either him, or his wife or his daughter for their college years. Not a bad deal, really!

Debt is not bad, if used for the right things and in the right amount. And the Service is a good alternative for those who follow another calling. I am very proud of both of our DS's and the vocational choices they made.

On another note, I wonder if there are any studies showing average salaries, say 10-15 years out of college. while comparing say a 25th ranked University against say a 150th or 200th ranked one. Except for a few outstanding grads, I'd think they were closer than we think.

 

[Luck_Club]

The student loan debacle could be easily solved within the free market system by allowing student loan debtors to declare bankruptcy just as other debtors can. In short order, lenders would become much more selective about to whom and where they're making loans. Borrowers whose burden is too unmanageable and painful could get out of some portion of the debt through a court administered bankruptcy plan, but would have to live with the consequences of a bankruptcy on their record.

I think that within a few years, the average quality of student loans would be increased dramatically and the abundance of snake oil loan salespeople at private, for-profit schools would decline. We might also see a slowdown in tuition increases when fewer students are being offered easy, no-questions-asked loans.

+1
Supply & Demand 101.
Gov't interfered with it causing this problem.

Interestingly enough I heard being proposed on a news channel, that the current system should be scrapped. Instead of charging interest, that the GOVT should charge a fixed percentage of income for a fixed period of time. That way if you have a good or great economic outcome you pay more, than those who may not be so lucky.

GOVT can solve all.

I see lots of credit reports (landlord). Student loan debt burdens are huge for these kids! The other devastating credit mar are medical bills. But that is a whole other topic.

 

[LOL!]

Interestingly enough I heard being proposed on a news channel, that the current system should be scrapped. Instead of charging interest, that the GOVT should charge a fixed percentage of income for a fixed period of time. That way if you have a good or great economic outcome you pay more, than those who may not be so lucky.

This is what the PSLF (Public Service Load Forgiveness) program does. The problem is that it incentivizes students to take out bigger and bigger loans, then to figure out how to reduce income afterwards in order to stiff the lenders.

It also incentivizes public service employers to pay lower wages.

An egregious example is a physician making $300K+ a year in the "public service" sector not paying back the full amount of their loans with interest. People do things like keep their income and tax returns separate from their spouses, so the family has plenty of income while the debtor looks poor.

So I wonder how to prevent folks from taking more than the typical advantage of such programs. Perhaps limiting the loan amount covered by the PSLF program would be a start.

 

[Texas Proud]

The student loan debacle could be easily solved within the free market system by allowing student loan debtors to declare bankruptcy just as other debtors can. In short order, lenders would become much more selective about to whom and where they're making loans. Borrowers whose burden is too unmanageable and painful could get out of some portion of the debt through a court administered bankruptcy plan, but would have to live with the consequences of a bankruptcy on their record.

I think that within a few years, the average quality of student loans would be increased dramatically and the abundance of snake oil loan salespeople at private, for-profit schools would decline. We might also see a slowdown in tuition increases when fewer students are being offered easy, no-questions-asked loans.

This would only work for the non gvmt guaranteed loans....

The other problem is that it would probably dry up any private lending as almost any student is a bad risk... sure, some of them are much worse than others, but since (a WAG) maybe 50% of the people drop out, going to a university is not a sign that they will make it...

I think that making the schools have some skin in the game should be started... make them keep say 10% of the outstanding loan amount set aside for any future losses.... maybe they pay 25% of the loan loss... those private schools pushing bad loans on bad students would stop right away... and as we know, most of those schools are scams anyhow....

 

[NW-Bound]

Too much money made available drives up the cost of education.

Solution? More money. Money can solve everything. More, more, more.

 

[harley]

+1

Some of us (like me), graduated at or near the top of our class at the School of Hard Knocks.

I recall having failed a few courses along the way....

That's not failure, that's gaining good judgement (see my sig line).

 

[harley]

Let's be real, asking a 17/18 year old to do the ROI on a $100,000+ education with no do overs and possibly life ruining debt levels isn't exactly fair.

That's why people have parents, guidance councilors, etc. If they aren't mature or experienced enough to know if borrowing the money is a good or bad idea, take advice from (hopefully) wiser heads.

And regarding average debt, c'mon people. If 1 person graduates with $120,000 in debt and 3 graduate debt free sure the average is a manageable $30,000 but in actuality 3 people ascended to middle/upper middle class(typically) and one person is in such crushing debt that they may not ever climb out of it. How is that exactly fair?

I would assume that the person who accumulated $120K in debt was going to law school or med school or something that would result in a salary that would equate to an average student's $30K debt, as far as percentage of income after graduation. If they accumulated that kind of debt getting a degree (even a PhD) in Sacred Music or 15th Century English Literature or anything else that results in a $30K/year salary, then yes, they deserve it and it's fair. People are allowed to make choices, even stupid ones. I've made many, and I own them all. You can't legislate morality or common sense.

 

[ugeauxgirl]

I grew up in the rural south- my parents were the first in their families to graduate from college. Around my town, graduating from any college was a plus- no one really talked about Ivy league schools, and to be honest, I never even considered it. I don't even know which schools are on the top 100 list, and we aren't pushing our kids towards those. In fact we've saved enough for an in-state education and after that money is gone, they are on their own.

I help hire people for my mega corp, and I rarely notice the school applicants graduate from. I look at job experience, character, drive, and ability to work with other people. I have never given a recent grad extra consideration because of an impressive school, but I have given them extra marks for working their way through school and keeping up their grades, This shows they are disciplined and can manage their time. I am sure there have been applicants who spent a year or two at a community college to keep the costs down. It never appears on their resume, because only the school you graduate from shows up on your diploma, but I wouldn't care if it did. Seems like a perfectly acceptable money saving strategy to me.

regarding 2 and 3, work really hard to make yourself as indispensable as you can be, while making sure your job skills are up to date and marketable in case you want to or have to leave.

 

[imoldernu]

For those who are actively involved in researching current schools, costs, ratings, and in the interest if the student, I would recommend this website.

https://www.niche.com/colleges/?degree=4-year&sort=best

My own alma mater is #7 in the initial list, but that was long ago...

The link is infinitely sortable, by $$$, rating, type of degree,and availability of scholarships as well as featuring actual student ratings and experiences.

 

[Rdub]

There are several things I did to try and increase my odds of financial success (all depends on your definition).
1) Read a couple books on wealth while in high school.
2) Learned that people with degrees earn a lot more on average than those without.
3) The books also named a few professions that earned more on average than others.
4) Took an elective accounting class in high school and the concepts came easy to me.

I lived on my own since a junior in high school and I figured the only way I could pay for college, was to join the military, so I did. I took night classes at a college that had a satellite campus on our base and saved my money. Worked hard to get good grades and had a couple offers from the big accounting firms before graduating. I also spoke to some older guys that I thought were good with money. They were all consistent with their recommendations, 1) max out your 401k, 2) keep debt to a minimum and 3) focus on building your net worth. All were good building blocks.

 

[HadEnuff]

this thread seems to have jumped the tracks from giving advice to millennials, to explaining why life is so hard for millennials.

My advice:
1.Don't go to college unless you think you are going to pop out of the other end with some skills that will make you more employable than if you did not go to college.

2. If you do go to college, have a start-to-finish plan that includes a couple years of local community college work. Make sure that credits will carry over to your ultimate school where you 'll get your BS.

3. If you must borrow money, borrow the least amount. Do not use the easy loan money to provide you with more life style than you absolutely need. That means cheap apartment, cheap or better yet no car unless absolutely necessary. Work as much as you can to minimize what you have to borrow. Avoid debt like the plague it is.

4. When you graduate, get a job. Live within, or below your means. Do not use your credit cards to "afford" more lifestyle options.

5. Do whatever you have to do to live below your means. Roommates, live with your parents if they'll have you ( and if you do, respect that they are doing you a big favor. Pay rent, and help with chores, and do not disrupt their lives by coming and going at all hours)

6. Put money away in IRAs ASAP. Participate in any employer sponsored plans to put money away.

7. Be a valuable employee. Work hard, be dependable. Don't be afraid to keep an eye out for a better opportunity if you think there is one.

8. don't allow yourself to focus on "how much easier it was for the previous generation." That won't help you. There will be success stories from your generation. Do what you have to do to be one of them.

 

[daylatedollarshort]

2. If you do go to college, have a start-to-finish plan that includes a couple years of local community college work. Make sure that credits will carry over to your ultimate school where you 'll get your BS.

In California most of the public schools have transfer agreements with the community colleges. It is actually a law here most the 4 year schools have to follow:

"The law requires that UC and CSU schools set up a specific path of requirements that, if fulfilled by the community college student, will lead directly to admission to that school, subject to enrollment limitations and special circumstances. As a result, 8 out of 10 California community college students are accepted to 4-year California colleges and universities through a transfer."

I think Berkeley and UCLA are exempt, though Berkeley does accept many transfer students from the CCs.

 

[rodi]

College for our kids is still ahead of us... although my 10th grade son took the PSAT this year (everyone at his school did - paid by the school) and now we're inundated with colleges "seeking him as a candidate". He then went on to choke on the mock SAT and mock ACT I signed him up for.... he'll be doing some studying this summer (thank you Kahn Academy for the SAT & ACT prep courses.)

I have no idea what to tell him. He's not a straight A student, despite my nagging at him. He gets A's in the classes that interest him (Chem, physics, math)... but not so much in the ones that don't.

We're following the advice above:
- Taking AP (and starting next year, IB) courses. This year he's in AP world history and AP computer science.
- Setting his expectations as to what we'll offer towards college (fixed amount per year, enough to graduate debt free from UC or CSU.)
- Told him there's no shame in Community College first.... and might be a better path if he wants to go to a UC school (path to transfer that guarantees acceptance if you follow it carefuly.)
- Told him we have veto power over the major. He knows our criteria is based on a job at the end.

Our niece has successfully done 2 degrees without a penny out of her pocket. Her BSN was covered as long as she did her student nursing at the hospital affiliated with the college and agreed to 2 years after graduation at that hospital. As the youngest of 5 kids - she knew this would alleviate financial stress from her parents. (They would have helped her - but delayed retirement to do so.) She graduated this past fall with her DNP - so now she's a "doctor nurse". Again - paid for by the hospital she works at... and they accomodated her by working her shifts around her school schedule. She did a lot of research before picking this program... and it's clearly paid off.

Another branch of the family has nieces that have degrees that qualify them to be clerks at the local grocery store and the local insurance office (doing filing/paperwork.) BIL would love for them to move out of his house - but they can't afford to.

I hope my sons follow the path of the first niece, not the second 2.

 

[Fedup]

This thread is so off on many levels. I have two millennials, one graduated from a pricey private, got scholarship with 1/2 tuition off through NMF. Cost for 4 years was $120k. Plus my company gave her $8k scholarship for 4 years.
The other I paid $80k for 4 years, she also got scholarship but smaller one like $8k over 4 years at a UC, it's Regents scholar type. No debt necessary. On top of that she makes $20k each per summer through internship. So she could technically paid for it herself if her parents didn't. Still graduating within 4 years and already have 3 job offers making $100k plus stock grants. Both kids are smart but not super smart, not MIT nor Harvard type. In fact, one were waitlisted at MIT, the other was accepted at Wellesley. While we have the money to pay for both those schools, they picked the colleges that gave them money. Same with all my nephews and nieces. Kids from one brother are on set to make $200k plus a year even graduating from a low tiered UC, but it was free. They all became doctors and the final degree is what matters. They don't all study science either, one nephew had 3 majors, Japanese, literature, and biology. They can do it if they are interested in the subjects.
Nothing is stack against them.

 

[NW-Bound]

I and all of my siblings went to the local university, as did my two children, and most of our nieces and nephews. It's close to home and the in-state tuition is more affordable. One niece and one nephew went out of state because they won a scholarship at the schools they wanted.

Not everybody had a STEM education, but nobody is unemployed, and all the jobs are related to the degrees. And speaking of school rankings, there are so many out there that who really knows what they mean. And as earlier posters said, perhaps being from a good school opens more doors at first, but after 5 years on the job, all people want to know is what one has done recently. Would you care about anything else? If you have not achieved much in your last job, they are not going to care about any degree you have from any prestigious school. Work performance is foremost.

Just now, I look up on the Web about my alma mater. They boast "#1 in the US for innovation" according to US News & World Report, "among top 10 for employability" according to some survey, "#1 producer of Fulbright scholars", "#1 chosen by international students", etc...

I don't know what all those claims mean, but they should not hurt. And the school is just a few miles from my home, at a location that I intentionally chose to buy years ago. It is still further from the school than my parents' former home though (they worked there as administrative staff). My kids had to go 10 miles, while I lived only 4 miles off campus. I did not have to live in a van while in school like that guy Ken Ilgunas, so had nothing to complain about.

 

[LOL!]

Just now, I look up on the Web about my alma mater. They boast "#1 in the US for innovation" [....]

I don't know what all those claims mean, ....

Here is what one of those claims means: ASU is No. 1 in innovation, but what does that actually mean? - The State Press

 

[NW-Bound]

Thanks. I will read that later.

I now recall that a few years after I left school, someone told me ASU had been called the "#1 party school". Probably got that vote from the students themselves. Darn, I totally missed out while I was in school. Hard to party when one worked 10-hr factory shifts each on Friday and Saturday nights. Sunday was just for resting and homework.

 

[NW-Bound]

When I was in graduate school, things got better when I got a part-time job at an aerospace megacorp. It was a real engineering job with an engineer's pay grade because I already had my BSEE.

Heck, I could even afford a custom-tailored suit for my wedding.

 

[Gumby]

I really did study nuclear science.

 

[NW-Bound]

So, were you a "peeping-tom techie with x-ray eyes" too?

I did not wear shades (still don't), but I used to wear pocket protectors. Yep. The Credit Union used to give them out. And in the mid-70s, engineering students wore a calculator pouch on their belt. A thief stole my SR-51 II, else I would still have it.

 

[HadEnuff]

So, were you a "peeping-tom techie with x-ray eyes" too?

I did not wear shades (still don't), but I used to wear pocket protectors. Yep. The Credit Union used to give them out. And in the mid-70s, engineering students wore a calculator pouch on their belt. A thief stole my SR-51 II, else I would still have it.

In 1971 I was, very briefly, an engineering student. With a slide rule.

In the physics lab they had TI calculators that wouldn't cost $5 now, attached to the lab benches with 3/4" cable, so they wouldn't "disappear".

 

[brewer12345]

Hmmm, more millennial whining. Call the waaaambulance?


I think that in some ways things are more challenging and in other ways they are a lot easier. The obvious one is college cost escalation. Clearly it is more challenging to navigate your way through without crippling debt at the end, but as previous responses to the thread have shown, there are a bunch of ways around the issue. For a lot of kids, their parents really need to step into their grown-up pants and enforce ROI considerations.


My own kids will likely split two ways. DD1 is highly academic, straight-A student, and a bit of a toil when it comes to school work. She will probably end up at a highly competitive school and I will have to figure out how to pay for it. DD2 is not a model student, to put it mildly. We will be looking for a program for her that appeals to her interest and has an obvious career option attached to it. Bang for the buck will definitely be a consideration.