It seems there’s an assumption in America that student loan debt is an inevitable, making most opinions on debt solutions reactionary. But what if it weren’t? What if, instead of figuring out how to pay back a crippling bill with even more painful interest, we were able to prevent debt in the first place? And it starts earlier than you might think…
Financial education should start in high school. It is mind blowing that we expect 17-18 year olds to make this major financial decision — how much debt to take on in their pursuit of a degree — without first teaching them about money. Then, once in college, the sweeping majority of students will never take a personal finance class prior to graduation (or, for 41%, non-graduation). They’ll be expected to know how to pay their bills (including those pesky student loans), manage a budget, and maintain good credit without ever being taught HOW to do it. These skills should be taught in high school and college through classes and financial counseling prior to ever signing a loan application, and certainly before payment begins.
Parents, teachers, and guidance counselors should help students identify realistic college options based on both merit and finances. The college admissions mindset is typically for a student to attend the very best school that accepts them. Realistically, this isn’t a smart decision for all students. Sure, the goal should be to get into a great school, but if parents aren’t helping foot the bill or the student isn’t able to earn scholarship money, taking on an average of $28,950 (sometimes much, much more) in debt is irresponsible. Adults should work with high school students to identify schools that are a great fit academically while also fitting the student’s price point.
If you can’t afford it, don’t apply. Parents, teachers, guidance counselors: I know it’s heartbreaking to tell your student they can’t apply to their dream school, but if it’s too expensive, that conversation should happen before they even submit the application. Financial conversations are tough, but they’re tougher when a student has received that thick, happy acceptance letter and they’re already picturing themselves attending football games. Just like we encourage students to apply for schools that are “in their league” or just above based on grades and test scores, we should also encourage them to apply for schools they can afford. Plus, the cost to apply averages about $40 per application, so limiting to fewer options means more money saved.
Four year residential schools are one option, but they aren’t the only option. For some students, it may be advantageous to start the college journey at a community college. While often snubbed, community colleges are a fantastic option both to save money and for more individualized attention. At a bigger school, for example, Psychology 101 may have 300 students in a section. At a community college, that same course may have 15-20. And, many community college professors also teach at four-year schools, so students get the same instruction for less. The community college experience also typically includes sports teams, student organizations, workshops, and flexible class options, all for a fraction of the price.
…And, for many students, they’re not the best option. At some point in the last 20 years, a Bachelor’s degree has come to be seen as the requisite continuation of a student’s education. Students are made to feel like if they don’t go to college, they’ll be seen a failure. This simply isn’t true, and adults need to stop scaring teenagers into making major life decisions. If a high-schooler knows they’re passionate about photography, hair, automechanics, etc, they should be encouraged to further their education in a way necessary for their future career, rather than wasting both time and money attending a four year school to get a degree they have no intention of using. Besides, college will always be there, should they change their mind.
A gap year – or two – should be a real option. In the United States, we shy away from encouraging students to take time off from school because we’re nervous that they’ll take a year off and never go back. Unfortunately, this assumption ignores a major fact: most 18 year olds don’t know exactly what they want to do with their lives, and/or they may not be mature enough to handle college just yet. For thirteen years we tell students exactly what classes to take, when they have to be at class, hold them accountable for doing their work, and then, magically at 18, we expect them to do all of those things by themselves, sometimes hundreds or thousands of miles away from anyone they know. Many young people would benefit from taking time to figure out life, mature a little bit, or just breathe. This isn’t a new concept – it’s fairly common for undergrads in Europe, and most MBA programs in this country require time in the work place following undergrad. Besides, taking time could allow for saving money to help pay for a degree.
Understand that if you expect college to be like a resort, the costs will be resort-like. On campus dining. That picturesque quad. A brand new student center with a coffee shop. Luxurious residence halls. Student activities. The world class fitness center and pool. Part of the reason college is so expensive is because students (and their parents!) have come to expect all sorts of amenities and guess what — amenities cost money. Forbes Magazine reported that schools across the country as a whole are spending nearly four billion dollars more than they did in 1995 on new construction projects. Someone has to foot the bill, and typically, it’s the students.
The solution isn’t to magically eliminate the debt that exists; it’s to empower college-aged students. By equipping young adults with the tools they need to make smart financial decisions, we enable them to set themselves up for a debt-minimal – or maybe even debt-free – start to the rest of their lives.
This post was originally published on LinkedIn.