WHO PAYS FOR YOUR COLLEGE EDUCATION?

#CollegeEducation #YoungAdultsMoveBackHome #StudentLoans #ParentsHelpingKids
Since the Great Recession, many adult children have leaned on their parents.
Sometimes, they wanted help with expenses. Cellphones and Internet service might have been unnecessary – or not invented — when parents were their children’s ages, but are so necessary now.
Some have even moved back home entirely. (That begs the question: do you really want to live your adult life under your parents’ roof?)
But a survey by Discover Student Loans may reveal a new trend. It says 38 percent of parents expect their child to pay for most of higher education, a 7 percent increase from 2018.
Luke McGrath broke down the numbers in the survey for Bloomberg News. His piece was also published July 30, 2019, in The Atlanta Journal-Constitution.
Conversely, the numbers show 28 percent of parents were willing and able to pick up the whole college tab for their kid(s). That’s a 6 percent drop from last year, McGrath’s article says. Moreover, of the 70 percent of parents surveyed who said they will not limit their child’s college choice based on price, more than half said they’re planning to rely on scholarship and grants to help cover the costs, McGrath’s article says.
As of September 2018, 11 percent of student debt was more than 90 days delinquent or in default, McGrath quotes the survey. In the last quarter of 2017, more than 44.5 million Americans had some form of outstanding student loans and almost 8 million had a balance of $50,000 or more, McGrath quotes the Federal Reserve Bank of New York.
Let’s break down the numbers in practical terms. College is expensive, and getting more so by the year. In theory, it is unaffordable for many students who could qualify to go. A college education COULD pay off in future income for students, yet many students are coming out of college not only with big debt, but slim job prospects.
Some may not earn enough money to live independently, and pay down their debt in a reasonable time.
Such a situation could chase a student back home to live with mom and dad and, therefore, put a wrench into mom and dad’s retirement plans.
What to do? First, as a student goes through high school, learn whether he or she is college material. If he or she is not, don’t force it on him or her.
Secondly, if they are college material, determine what their interests are and what they are thinking about doing for work with a degree. Get an idea what those jobs pay now. Hint: if the jobs don’t pay much now, they probably won’t pay much later. And, to add to the thought process, some jobs that pay well now may become obsolete later.
So, if your son or daughter is not college material, or wants to major in something less lucrative, add up the costs, and how you (or they) would pay for college. Remember, going to college is a decision easily postponed. There are almost always opportunities to go back to school, either on campus or online, part time or full time.
Now, think about how your son or daughter will earn money during this – we’ll call it transition – time between high school graduation and when they decide what to do with their lives. There are certainly traditional jobs that don’t require a college degree, albeit fewer opportunities than parents may remember. But there are also many ways to earn money – perhaps a lot more than a “regular” job would pay – by investing a few part-time, off-work hours a week at tasks that anyone, regardless of background or education, can do. To learn about one of the best such programs, message me.
In short, college is not for everyone. If you are unsure whether it’s for you, try courses at your local community college first. They are fairly inexpensive, particularly for basic, required early courses. You can always transfer to a four-year school after that, when, perhaps, more money would be available.
Or, if you are open enough, check out one of these non-W-2 potential income producers. You could create some great flexibility for yourself later in life, to do, or study, whatever you want.
Peter

COLLEGE GRADS’ JOB PROSPECTS IMPROVING? DON’T STAND AND APPLAUD YET

#CollegeGrads #employment #jobs #StudentDebt
It may be the best time to graduate college since the Great Recession. But they are still not great.
So writes Ruth Serven of The Kansas City Star. Her story was published July 3, 2016, in The Atlanta Journal-Constitution.
The unemployment rate for college grads is less than 5 percent, and job prospects are getting brighter, Serven writes. But 45 percent of those recent grads have jobs that don’t require their degrees, according to the Federal Reserve Bank of New York, Serven writes.
Though there is more work available, grads still face stagnant wages and the highest debt load ever, the article says.
In fact, 42 million people owe $1.3 trillion in student debt, according to the cover story in the August 2016 issue of Consumer Reports magazine, which condensed and reprinted an article by Reveal from The Center for Investigative Reporting.
“I feel I kind of ruined my life by going to college,” the CR article quotes Jackie Krowen, 32, of Portland, Ore., who owes $162,000 in student debt.
We’ve recently discussed this topic in this space, but it bears hearing another perspective.
Many graduates are coming out of college with debt the size of a home mortgage. How can they be expected to 1) buy a house? 2) begin saving for retirement? or 3) buy some of the essential things they need to live a decent life?
On top of the debt, the students’ expensive education is not giving them work that would be worth the investment, in many cases.
Also, some students are getting calls at all hours with prods, if not threats, to make payments on that debt.
Though most consider a home mortgage not just productive debt, but an actual financial vehicle, college debt, without having a commensurate job to make its burden light, is not productive debt.
Certainly, all education has value. But some education has more value than others. If a student goes on to be a doctor, for example, and goes into debt to make that happen, that’s, more or less, expected.
A medical practice can be lucrative and usually, before the doctor gets too old, it is usually paid off. Some even practice medicine in less lucrative places, in exchange for some eventual debt relief, among other inducements.
But if one studies, say, the liberal arts, and goes into debt to pay for that education, it’s very possible, even likely, that, if he gets a job at all, it will not be terribly lucrative. The student debt, therefore, becomes perhaps a lifelong burden. As that student ages, the burden may be so great that he will retire with little or nothing to help him get through old age.
Fortunately, there are solutions that don’t involve stiffing one’s debtor. There are ways to earn an extra income for a few part-time hours a week that might not only pay better than the job you are doing, but has the potential to make you financially free eventually. For one of the best, visit www.bign.com/pbilodeau.
By all means, before a student decides to go to college, sit down with parents and other advisers and do the math. If you have to borrow money to cover most of the costs, think about how you would pay it back. If you don’t have a good answer, reconsider your future.
Colleges and universities, too, should contemplate their futures. How good would it look to produce thousands, even millions, of graduates that are so crushed with debt, they’ll be paying on it forever? Someone needs to retool education to prevent this.
We have a love-hate relationship with education. We may love it while we’re in school, but, when we graduate, often we don’t love it nearly as much.
Peter

DEBT: WEALTH VEHICLE AND WEALTH KILLER

There’s good debt and bad debt.
Of course, having no debt at all is ideal, but often, to have what you want in life, you sometimes have to borrow money.
Mortgage debt is among the good kind. As you pay it down, you are paying a part of it to yourself in the form of equity in your home. The more you pay down, the greater the equity. As a bonus, you are living in your house, too, so there’s an absence of rent payments. When your house is completely paid off, you essentially are living there for free.
In this economic milieu, when you sell a house, it’s not an automatic profit. But if you HAVE to sell your house, one of the considerations is that for however long you’d lived in your house, you didn’t pay rent – all of which goes into someone else’s pocket.
College loan debt used to be considered good debt. You were getting money for an education that ultimately was going to lead you to a better job than if you hadn’t gone to college. It made college available to non-wealthy families.
But Carolyn Thompson, reporting for the Associated Press, asserts that student loan debt is widening the gap between rich and poor. Her article ran in the March 30, 2014, edition of The Tennessean newspaper in Nashville.
Thompson’s point: those who came out of college with lots of debt – roughly 37 million people saddled with $1 trillion in debt – will have a hard time catching up with the wealth of their peers who graduated with no debt at all. In short, those from wealthier families, long term, will have a leg up financially on their cohorts that were forced to borrow to go to school.
Looking at the big picture, a college education isn’t what it used to be. Decades ago, a college education gave you a shot at jobs that those who didn’t graduate or finish college wouldn’t get. Companies hired raw brains, and trained them for the jobs they wanted them to do.
Today, some of those degrees we cherished years ago are almost worthless in terms of job opportunities. You may have studied what you loved, or found your passion in, say, the arts, but converting that to economic advancement can be difficult.
Therefore, if you borrowed money to study what you love, or to find your passion, you need to do something to pay back all that debt. Unemployment, or constant job hunting, isn’t going to make that debt go away. Even if you get a good job out of college, as Thompson asserts, you’ll still have a potential six-figure debt out of the gate. Those years it takes to catch up to your debt-free peers may find you not getting a mortgage for the house you want, and having to settle for a lesser lifestyle for a long time. It could keep you from starting young to save for retirement.
In short: if you have to borrow money to go to college, you had better find it all worth it, regardless of what you study. You may come out an expert on Shakespeare’s works, but you could be making a living pouring coffee. Though there’s nothing wrong with having smart coffee pourers, you won’t be paying down your debt quickly, and may have little in savings at age 60.
There are numerous solutions to this problem, besides skipping college altogether. If you are not college material, don’t fret. There are other ways to make money. For one of the best, visit www.bign.com/pbilodeau . You may find a way to earn a substantial income without interfering with your academic loves or passion. If it fits you, and you start before college, you could have a financial leg up on all your peers.
As radio talk show host and financial expert Dave Ramsey might advise: don’t let debt be your financial death.
Peter