I joined the Army, which at the time offered a program called VEAP (basic summary, it was absolutely the worst GI-bill type program since WWII. It offered a paltry monthly stipend and that was it.) Thanks to scholarships and an ungodly amount of work at both jobs and a small business I ran, I graduated with my bachelor's degree and no debt at all. Even more remarkable is that it took me six years to get a bachelor's degree.
As I progressed through life, I saw something interesting. People who were willing to go into debt were able to do things I couldn't do. They went to better schools. They finished in four years. They went to graduate school. They got great jobs. They paid off their loans.
When you consider the fact that I spent 4 years in the Army, it took me ten years to get my bachelor's degree. Now, not all of that was due to finances. There was a lot of aimlessness, transferring schools, changing majors in there, too. But there was also the fact that its hard to maintain a full-time courseload while working 30 or 40 hours a week, too.
Did I have it all wrong all along? For years, I thought I did. I went to law school for a year last year. I even got a half-ride scholarship. I figured that student loans couldn't be all that bad, so I took out what I could.
I've since dropped out of law school. I work in a field tangentially related to law and business. A lot of the folks I work with are recent law school grads who are dealing with up to seven years student loan debt, not just one.
My opinion: generally speaking, people who avoid student loan debt will come out far ahead of people who do not. Because I work in the public sector, my co-workers will have any unpaid balances forgiven after 10 years in the career. However, without that, their student loan debt would be a crippling burden for more than half of their working lives.
I am the first to admit that a lot has changed since I first went to school. When I left High School, I tried a little community college in California. The total cost of attendance was about $10 a credit hour. When I got out of the Army, I attended a small liberal arts school in Texas. Nobody I knew there paid the sticker price, but if you did, the total cost of attendance was about $2,500 a semester. That was for a private school education. These days, a state school in Ohio will cost about $10,000 a year in tuition, alone.
That's a pretty big sum of money for a high school graduate with few employable skills to their name. I realize that not all people have families of means who can help them get through school. Sometimes it really is just on the shoulders of a young person to figure out how to pay for this stuff.
Is it even possible to get through school without accumulating a mountain of debt? Yes, I believe it is. Or, at a minimum, it's possible to graduate school with very little debt.
For a young person looking for a plan, I'd offer the following:
First, community college credits transfer to big-name schools the same as if you'd taken the credits at the big-name school. So, 2 years of credits from your junior college, that cost you a total of $2,000, will transfer into a school like Dartmouth where the credits would have cost $80,000.
If you can, live with relatives. Minimize your expenses. Take Summer classes and get 2 years of education in just 15 months. Even if you have to take out student loans to pay for all of it, you're talking taking $2,000 in loans, versus at least $20,000 at a state school and nearly six figures at some exclusive private schools.
Then, transfer. There are other advantages to a community college as well. For one thing, if you did poorly in High School, community college is a great do-over that can still get you accepted into Stanford. The other is, community colleges have a lot more degree options for people who like to work with their hands. You can study everything from nuclear reactor technology to diesel engines. While your friends are making $45,000 as brand-new district attorneys with $150,000 in student loan debt, you could be making $100,000 a year as a welder in South Dakota after a 2 year welding certificate.
Other genuine career-options for people with 2 year certificates and degrees:
- In some states, you can get an RN degree in 2 years. An actual full-blown RN, with median wages of over $60,000 a year and career opportunities in pretty much every county in the United States
- Most community colleges have MSCE programs where you learn to be, say, a network engineer with computers. Again, starting wages are excellent and job opportunities are some of the best in the country.
- Diesel mechanics, which you can learn in a 2 year program at many junior colleges, have median pay of about $40,000 a year.
http://www.bls.gov/ooh/installation-maintenance-and-repair/diesel-service-technicians-and-mechanics.htm
http://www.bls.gov/ooh/healthcare/registered-nurses.htm
http://www.bls.gov/ooh/computer-and-information-technology/network-and-computer-systems-administrators.htm
For determined students on a budget, community colleges aren't just an option, they're a great one.
Second, the GI Bill is better now than ever. You get the equivalent of tuition and fees at your state's in-state tuition rate, plus a living stipend (free money to live on.) So, you can attend NC State, and have the GI bill pay for your apartment and groceries, too. The military still offers three-year enlistments. While in the military, you will be eligible for tuition reimbursement if you attend college part-time. (I was never able to. Some branches and jobs are more accommodating than others. Research carefully.)
You will also be able to take as many CLEP tests as you want for free. That's the college level examination program and the basic gist is that you take a test and get credits for a specific subject. For instance, I took two exams in American history and by passing them, got 6 credit hours in American History. Not all schools accept CLEP credits, so again, research carefully. One of my biggest mistakes was not attending the University of North Texas, which would have accepted 36 CLEP credits, versus attending Texas Wesleyan University, which only accepted 6. Graduating a year early would have been, by far, the better move financially.
For those who are not sure they want the rigors of military life, day-in and day-out, the Reserves have generous GI Bill benefits and sometimes have cash enlistment bonuses of up to $20,000. Obviously, any military commitment is a big deal, especially during a time of war. However, spending four years in the military has led to a lifetime of benefits from me, including VA loans to buy homes with, creditable years towards a federal retirement and money for college. You have to give a lot, but you get a lot in return.
Third, graduating early is a big fat hairy deal. A lot of your cost of attending college is the cost of simply living. If you're borrowing dorm money, etc., you're racking up debt at a phenomenal rate. You need roughly 4 years of academic work to graduate with a baccalaureate, but there's no requirement that it take you four years to get those credits. Attending in the Summer is not only a good way to graduate faster, the classes are usually easier to pull good grades in, if my experience is any indication. If you attend a High School that lets you take college classes, that's a great option as well. I've heard of kids graduating High School with an Associate's Degree. This means they can have their bachelor's in just two more years.
Your total cost of attending school includes both the direct cost and the opportunity cost. The opportunity cost is what you would have made by doing something else.
So, in this case, a simple illustration. First, a guy who goes to 4 years of school, borrowing all the way:
Tuition X 4 years: $40,000
Living Expenses X 4 years: $40,000
Total end-position after 4 years: -$80,000 (plus interest)
Versus somebody who went to 4 years of school, but attended Summers, maybe took 18 hours a semester or two, and finished in 3 calendar years, then got a job paying $30,000 a year:
Tuition X 4 years: $40,000 (the credits cost money whether he's taking them in summer or in regular school-year)
Living Expenses X 4 years: $40,000 (he will have living expenses regardless of whether he's in school or not)
Income from working in calendar year 4, versus being in school calendar year 4: $30,000 to the good.
Or:
-40,000
-40,000
+30,000
Total end-position after 4 years: -50,000.
So, those are just some general ideas. Take heart and avoid that debt. The interest on it is a mutha. It literally can be like paying a mortgage for a house you don't get to live in. I've made about a half dozen payments on the student loan debt for just one year of law-school (an amount of debt probably comparable to one year in undegrad since I had a scholarship) and I have yet to even pay off the INTEREST that has accumulated. That's just the interest that's accumulated in less than a year!
Now, some people will take on student loan debt, and it really won't hurt them. If you're in medical school, no whining, okay? You can afford $200,000 in debt if you're entering a profession where the median income for non-specialists is $200,000 a year. You're going to be a multi-millionaire, so shut the hell up about your finances. Likewise if you're a top graduate of a top law school. A new associate making $165,000 a year can handle a student loan debt of $150,000. Others, though, won't be so well served by getting into debt.
Most people, myself included, look back on their lives regretting a lot of the decisions they made and the attitudes they held as they were learning how to deal with the world. But on this one, I was dead right: avoid student loan debt like the plague. It is absolutely bad for you.
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