FIRE.056 Student Loan Advantage

For parents/grandparents/wealthy relatives,  I realized how to make college more valuable for the student.

It seems from the news reports that America is in a student loan crisis.  A crisis that is growing under the surface of the economy that is hurting the up-and-coming generation.  I do not have any idea how to fix that, but I do have an example on how to maximize the value of college.

We know many college students have HUGE debt leaving college—hopefully leaving with a degree which at best, produces the skills to acquire a job and start a career, or at worst proving they have gained the skills to navigate and complete the complicated college process.  Completing school is a real skill.  That is why that piece of paper will always “open doors” easier.  These doors may be at the end of the completed school maze.  Maybe there was a reason we also had to take English 101, Literature, or Speech 101 as well…

We know college is getting more and more expensive—growing at a much higher than the inflation rate.  Part of the problem with the costs, revolve around a captive audience.  Supply/Demand (Econ 101).  This is exasperated by the ease of which student loan borrowing can occur.  If the customers have an easy way to pay the new higher costs, then why not raise the costs.  Yes, professors should be paid well.  But the executives and administrative staff often seem to have very nice salaries—often combined with very nice pension plans.  If only the private sector could get involved to control supply and demand, oh wait, the for-profit schools seem to be the most out of control.

Find a reasonable priced school (comm. college first, then transfer to a four-year school), all diplomas say “…Degree” on them and help in 99% of employment activities.

I had student loans for my entire undergrad and graduate programs.  I just noticed how fancy pants it sounds to say “programs.”  I don’t talk that way, why would I write that way (English 101?)  To be more normal, I should say ‘I took out student loans to pay for college’ (tuition, fees, books and a little spending).

Here is my advantage, a two-fold advantage.

  • Guarantee: My parents told me they would pay for my college.  The key to the ‘deal’ is they would pay when I graduated.  They incentivized me to graduate.  This incentive was based on me taking out student loans in my name, placing me on the hook for those balanced if I flaked out and moved to South America or something.
  • Value: Throughout the process of my hundreds of credits (seemed like hundreds), I had the understanding that I had ownership in this learning process.  I had my wallet—future wallet—in this deal.  This in many ways made the process, classes, and assignments more valuable to me since it was my financial concern.

The parental pay-off agreement is only going to work for families that are more well-off.  But, thinking about the ability for these parents to pay for the semesters up front, makes me think about the spoiled kids that always got whatever they wanted.  Being a spoiled college student never seemed to strike the same value of education as those students working their ass off in jobs to “earn” their degree.

Parents/Grandparents/Wealthy donors:  consider this prove yourself before the pay-off strategy.

As I’ve said before my parents never wanted to me to work in school.  I did end up working three part-time jobs through 5 years of school because I loved my tech jobs and it turned out that those 3 jobs are what helped me secure my first professional/career position.  Yes, my new boss was happy and I an MBA, but more interested in my tech skills and experience, along with my internal drive.

So many parts of your life actions add together, or even multiply together, to make yourself valuable.


*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

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