Americans are now deeper in college-loan debt than they are in credit-card debt. We owe some $829.785 billion for those sheepskins, compared to the $826.5 billion in consumer debt.
But you don’t have to go broke to go to college. You probably don’t even have to borrow money.
That’s the focus of my current Living With Less column over at MSN Money. “Finish college with zero debt” takes a look at alternatives to post-graduate debt enslavement. (Edited to add: MSN Money changed platforms, so all the articles I did there have disappeared.)
I interviewed four people who have graduated or will graduate with no debt. One of them, 22-year-old Zac Bissonnette, authored a new book called “Debt-Free U: How I Paid For an Outstanding College Education Without Loans, Scholarships or Mooching Off My Parents” (Portfolio/Penguin).
“The repercussions on your life are actually quite dramatic. You should not sign up for (loans) until you’ve done everything you can to avoid them,” he told me.
He and the other interviewees offer a mix of clear-eyed attitude adjustments (e.g., “Expect your student to work while in school”) and practical tips you may never have considered, such as paying tuition by the month (who knew?).
Untenable (and interminable) payments
So many young people have been told since childhood that should go to the “best” school they could get into. So many parents have been told (by college admissions personnel and loan officers) that the “right” school was essential for future success and happiness. As a nation we have bought into, so to speak, the idea that everybody borrows. But we haven’t questioned what that would cost, either literally or figuratively.
Imagine graduating into a lackluster economy with loan payments totaling $1,400 a month. Starting now. Even if the only post-graduation employment pays minimum wage.
What kind of life would that be, crushed under that kind of obligation? Would you wish that on your children? On anyone’s children?
Work hard and sacrifice a little now, or borrow heavily and party heartily for four years and then face a couple of decades of debt. It’s your choice.
My husband gets students who work 20-40 hours/week in his program. They often flunk out. Sometimes a balanced amount of loans are the smart thing to do. In our (masters– I don’t recommend doing a PhD unless you are fully funded by the school) graduate program the students who work jobs more than 10 hours a week generally don’t get high enough grades to qualify for the cushy second year scholarships that we offer. That’s another way of shooting themselves in the foot just to save 10K.
I did work 10hrs/week for my extra expenses and the semesters I worked more than that my grades suffered. Depending on what your goals are, that can be a problem. Ability to get summer employment, especially in high school, can also be a problem (and your savings are counted more heavily against you in financial aid than your parents’).
Many of the very elite, well-endowed, schools actually give much more financial aid than other schools. It cost me less to go to my elite small liberal arts college than it would have to go to my flagship university, and my senior year was completely free. (The regional university where my mom worked would have PAID me to go, but then I never would have been able to get into the top graduate program in my field– not worth the difference of a few thousand dollars). Some of the ivys pay the entire tuition amount and some room and board for kids whose parents make below a certain amount (used to be 50K/year, but now I believe it is higher).
My big piece of financial advice for college: Don’t buy a car. Use the bus, walk, or bike. If your parents got you a car and aren’t paying for college, sell it.
@Nicole: Certainly there are students who get free rides at the elite, well-endowed (hee hee) colleges. And certainly if you’re in a PhD program you probably really can’t spend 20 hours a week flipping burgers. The PhD students who taught classes at the University of Washington had all they could do to manage their own work plus ours. They all looked pretty tightly wound.
But those are, unfortunately, either the elite students or the students with serious financial need. A huge number of students have parents who make (on paper) “too much” to qualify for much aid, or are average students who don’t qualify for academic or athletic scholarships. Should they pile on unmanageable debt (I’m not talking about “a few thousand”) to go to a “name” school when they can get an excellent education elsewhere?
Some of the people who answered my query for interviews for that column wrote the same sorts of things you did. One woman said, “I’m getting my PhD at Harvard and it hasn’t cost me a dime” — her mom was a single parent from “the ghetto” and she herself had excelled academically so Harvard was giving her enough money to pay for living expenses, even.
That’s wonderful. I applaud her. But most people AREN’T her. Most people WON’T qualify for that kind of funding.
I didn’t write the article for people like her, i.e., people who won’t have debt because of their specific circumstances. That’s why I didn’t include my own situation, either; at almost-48 I went back to college (I had one year, in 1976) and wound up with enough money to pay me to go, including a three-year full-ride transfer scholarship to the University of Washington plus some other scholarships and grants.
Most students aren’t me, either. To hold myself up as an example, or to say, “You know, the Ivies offer a lot of funding,” would ignore the experiences of the very smart students who for whatever reason do not qualify for a ton of help.
Thanks for your comment, and thanks for reading.
“Work hard and sacrifice a little now, or borrow heavily and party heartily for four years and then face a couple of decades of debt. It’s your choice.”
Those are simply not the only choices. As someone who has taken out considerable loans to pay for my graduate education, I get so tired of seeing that as the ONLY reason someone would take on student loans. I did not party heartily, in fact I did not party at all. I worked part time and went to school full time and yes still had to have loans. I also did not throw money away on a degree with no job prospects and I now earn 20,000+ more per year than I did when I started school (with an associates degree mind you, I did undergrad and grad work at the SAME time to maximize the speed I earned my masters degree). My degree choice also allowed me to send out only 4 resumes ,in this economy, and get 4 interviews and 2 job offers.
So really, please paint a more accurate picture of student loan debt. Not all of us are 22 year old kids who blew a ton of money or worse our parent’s money. Some of us are adults who made a conscious choice to better ourselves and better serve the communities in which we live.
@CandiO: You’re right. I should have been more specific, i.e., think long and hard about going into ruinous debt you can’t manage for an undergrad degree that may not lead to a high-paying job.
That guy with the $1,400-a-month payments? He took out $75k in loans to go to a great school and is now…a teacher, making $24,000 a year (before taxes).
If you know a young person who’s determined to borrow big-time, do an Internet search for “student loan repayment calculator.” Add up the total anticipated loans for the three or four (or more) years. Run them through the calculator. Ask the student if s/he really thinks it’s possible to pay that much plus all other expenses — and if s/he really thinks that’s a great way to live for 10 or more years.
It may not matter. A psychology professor I interviewed said she tried to tell that to her students. They said things like, “Yeah, but I’m going to get a good job after graduation.” When she noted that the average salary obtainable with a four-year psych degree was something like $25k, they’d reply, “Oh, but I’m going to get a better job than that.” Denial is not limited to mature adults who thought that adjustable-rate mortgages plus HELOCs were a great idea.
Thanks for your comment.
Work hard and sacrifice a little now, or borrow heavily and party heartily for four years and then face a couple of decades of debt. It’s your choice
I’m going to join the chorus that says these are not the only choices and it’s unfair to put everyone who borrows into a party category. I realize it makes a nice sound bite but still………
I have a child who borrowed. I borrowed. Partying was not his thing. He went and got a two year degree in what he loved at a private school. He worked hard and this degree required outside additional work besides studying the books. His mom (me is a widow on a pension) . Had he worked more than 10 hours per week he would not have been able to study properly. Additionally he was raised as an army brat over seas with no chance to work in high school. while he has decided to pursue other opportunities such as the Army for continuing his education further, I dont think that the use of loans was the wrong choice in the past.
My daughter is starting law school next week and she has been strongly advised not to work at all during the first year. We paid for her undergraduate studies but now she’s on her own. She has managed to sock away a small savings (from summer jobs and part time work during the school years) to help her get through her first year (living expenses), but there is absolutely no way she can afford the tuition and fees without student loans. The best she can hope to do is minimize how much she borrows. She has already declined one of the loans that was offered that would have given her a nice amount of spending money for living expenses. But she figures she can tighten her belt and do without that. She just accepted enough to cover the tuition and fees. Hopefully she will be able to work part time during her second and third years. Our contribution is to keep her on our health insurance, pay her cell phone bill (included in our plan), pay her car insurance (included in our policy), and give her cash gifts for her birthday and Christmas. 🙂
@Deedee: Law school isn’t the same as freshman year. It would be hard to work during law school. Not impossible, but definitely very, very hard. If she can borrow the absolute minimum and still get her degree, I’d definitely do that.
Suggest she look into securing an occasional evening babysitting job. I did that while in school; in fact, I still do it from time to time. The kids were in bed by 8 p.m. in most cases, so I’d be paid $10 or more per hour to do my homework. That extra $40 to $60 per night really came in handy.
Thanks for reading, and good luck to your daughter.
Donna, can I put in a good word for state schools? New York’s SUNY system has a number of good-to-excellent universities that can be attended for a fraction of the cost of a private college. The quality of education at many is phenomenal, and if anything, students have more opportunities for hands-on practical experiences.
After graduation, my friends and I had the same employment opportunities as our peers, but owed far less. It wasn’t a bad way to start out.
(Incidentally, I borrowed, worked, had three majors, and still managed to party fairly heartily. Man, I miss the energy I had at 21.)
@Kris: State schools are the ones that Bissonnette is talking about most of the time. (Me too: I went to the University of Washington.) Some people have the idea that a private college is ALWAYS better. It ain’t necessarily so.
And yeah, I wouldn’t want to *be* 21 again — but I sure wouldn’t turn down some of that energy.
Thanks for reading.
I’m not sure it’s wise to urge all students to try to avoid debt at all costs.
First, from experience I can say that students who try to finance their education by working — and we’re talking adult, returning students as well as younger people — too often short themselves on the time needed to study and reflect on what they’re learning in their courses. They also short themselves on opportunities to participate in various cultural and social activities associated with their school.
Second, some professional schools — the Sandra Day O’Connor Law School at Arizona State University, for example — explicitly prohibit students from working during their course of studies. The law school is one of ASU’s few nationally excellent programs; a student who insisted on working would have to forgo the opportunity to attend.
And third, some (but not all) professional and graduate programs line their students up to earn much more than they could before. My son, for example, now earns about $43,000, barely enough to get by in the Phoenix area. If he gets into Midwestern, a proprietary quasi-medical school, he can expect to start as a P.A. at around $90,000. His best buddy and the buddy’s wife, who are now working as P.A.’s after finishing the master’s of medical science at this outfit, both started in the six figures. With an increased income of that magnitude, he would have no problem paying off the 70 grand Midwestern charges for its graduate program.
Now, if you’re going into a program that will leave you qualified for a mediocre salary, or if you don’t really care much what you learn as long as you have a rubber-stamp diploma, then maybe holding down a job while going to school is a good idea. One strategy is to get a 50% FTE staff job with the university, which, at most institutions, will qualify you for a tuition waiver.
@Funny: I respectfully disagree about working students. If you’re working 15 to 20 hours a week and going to classes 15 to 20 hours a week, that’s 30 to 40 hours a week. Yes, it’s challenging — but as the young woman in the article notes, it can be done if you are organized.
You will likely feel “overwhelmed,” as she did. But she still managed to do some sorority activities and notes that she gave up some, not ALL, of her social life to graduate debt-free.
Be honest: How many students spend more than 15 to 20 hours a week at lectures, art galleries, etc.? And how many spend it on beer pong, “True Blood” marathons and other forms of hanging out?
Do I wish I hadn’t worked a couple of part-time jobs while I was in school? Sure. It would have been great to spend a lot more time at the Burke Museum or shooting the breeze with other students in coffeehouses. And I did do some of that. But I — and a lot of other students — also had to be realistic. There are no guaranteed jobs after graduation. We couldn’t afford to finish in debt — and your P.A.-educated friends may find that out as well, since I’m hearing that medical-related degrees aren’t necessarily resulting in immediate job offers. For example, a few years ago everyone was saying, “Be a nurse! They’re screamin’ for nurses out there!” Now I’m reading that there’s a surplus.
I wish it weren’t so. But it is. And a fair number of the 20-something students I knew were working in addition to taking out loans, because they knew they needed to limit their amount of indebtedness. Given the lackluster economy, that was probably pretty damn wise.
Thanks for reading, and for leaving a comment.
My point though was that a lot of very smart kids who actually DO have a shot at certain schools don’t apply to them because they think they won’t be able to afford those schools. Many of the best schools also have the best funding, especially with state schools suffering. Sometimes a kid that can’t afford University of Illinois at Urbana-Champaign can afford Harvard or Princeton or Carleton or Knox or Bradley. Smart kids from poor families should be encouraged to apply, not discouraged from applying these places.
Articles that don’t point that out do a disservice to the kids who have the most to gain from and the least information about these kinds of schools. That’s why in the inner city poor urban high school where I tutored there was a big ad from Harvard in the room telling kids that if their families made less than 50K, they could get a free ride at Harvard (and waive the admissions fee too).
And my husband teaches the other types of kids– the ones who take on too many loans and flunk out because they’re not smart enough to pass and work 20-40 hours per week at the same time. That’s your average college student at your average state school, trying not to take on any debt and ending up in even more debt because of it. If they limited to 10 hours/week and took on some loans then they could graduate in 4 years instead of 6 without any failed courses. And they wouldn’t constantly be skipping class to sleep and whining about how unfair it is to have to turn in homework and pass classes on top of working. If that’s the type of student you’re aiming for, it’s still not great advice. We’re in the trenches and respectfully disagreeing because we see what happens when kids try to follow that advice. Earnest hardworking kids who are much too poor to spend their time partying with beer pongs. We get those students too, but generally they’re not worried about money one way or the other.
I really like Liz Pulliam Weston’s MSN columns on this topic. Take on loans, do well in school, but don’t take on loans that are more than the average salary coming out of your program and your major and your expected job. That seems like very well-measured advice.
I’ve been writing on this issue on my little blog for a few years. I was very conflicted–saved tons of money so my kids COULD go to a private college. It was hard; my husband and I are teachers and make JUST OVER the amount that disqualifies you for need aid. Anyway, both ended up choosing free state schools–both are happy.
There was an article in the Wall Street Journal about how to “game” (their words) the system. Honestly, I just didn’t want to do that.
Anyway, you can interview my kids if you need more info–or their many friends who made the same choice.
P.S. I’m STILL conflicted.
Hmmmmm, Anna had to take out a $1400(ish) loan every semester. I think we can cover it but all the numbers are scary. No one tells you that it needs to be broken down in pieces. A few dollars here and there. But we are learning and it will probably be ugly!
Thank you once again for a wonderful article! You are my hero!
SonyaAnn: I know you’re an expert at squirreling away the pennies — and that you know that even a few dollars can make a difference. I bet Anna will be just fine. She apprenticed at the feet of the master!
Thanks for reading, and for leaving a comment.
Well, I don’t mean to say that all students who hold down jobs while going to college necessarily will suffer. But I sure have seen plenty who have.
The young woman who managed to stay active in a sorority while working and going to school must be quite a powerhouse. You would need a lot of energy and drive to pull this off. Let’s remember, though, she didn’t have a couple of small kids and a pile of bills waiting for her at home, as many of my students do. The so-called “traditional” college student — a kid who goes straight to college from high school with few obligations other than to study — is no longer the typical college student. Indeed, by the year 2000, according to the National Center for Education Statistics, some 73% of undergraduates fell into the “nontraditional” category.
It’s hard to know what to tell a young person about choosing a degree program that’s likely to lead to jobs that will pay for the loan. MBAs are not getting hired. Neither my son’s roommate nor the roommate’s girlfriend, both of whom finished master’s of business from a prestigious school well known for its track record of placing graduates in good jobs, has landed work in the 18 months since they graduated. The girl is harvesting marijuana for a living; the boy went to Hong Kong in search of work, which has not been forthcoming there, either.
As we scribble, the Mayo Clinic has an ad up for PAs (plural) on its site. Good Samaritan, the largest chain of hospitals in the city, has 17 openings for nurses, one for a nurse-practitioner, one for an occupational therapist, one for a case manager, and one for a pharmacist. Today St. Joseph’s, the other large medical center here, is looking for two medical doctors, a neuropsychologist, a physician’s assistant, a nurse practitioner, four nurses, a case manager, an ultrasound diagnostic technician, two EEG technologists, an infection control specialist, and a lab technician.
Granted, it will take him three or four years to qualify himself as a P.A., and granted, by then this hot job market may have cooled down.
However, here in Arizona we are in a depression — not a recession, but an economic depression. What I’ve described up there…that’s the only hot job market in the state. A few service jobs have opened up since SB1070 deported most of the Latino population, but those are minimum-wage and, behind closed doors, sub-minimum wage jobs.
The baby boom generation is aging, and age means sickness. We’re about to have a huge cohort hit the medical system with demands not only for acute care but for steady, ongoing preventive healthcare. That means the market is unlikely to cool down until the last of us croaks over. The baby boom ended in 1960. In 1950 it was going strong.
The “Echo” baby boom started in 1982.
At 32, my son has an effective working life of about 35 years. People born in 1950 are 60 now. In 30 years they’ll be 90, and the those born at tail end of the baby boom will still be in their 80s. People born in 1982 will be about to enter their 60s. Thus it’s likely that the market for medical care workers will remain strong for a good 30 to 35 years, long enough to take most young people within shooting distance of retirement.
@Funny: Oh, I understand non-traditional students. I are one. Or were one, anyway, since I finished in December 2009.
I had no small kids at home but I did have a disabled adult daughter who needed help. I was managing the apartment building, which was a lot of very unpredictable hours (think: phone calls or door knocks at 2 a.m. or minor crises that ate three hours of evening study and assignments). I was working for MSN: writing three blog essays a week, reading the five blog partners’ sites to select work and running the message board. I was doing work-study (very physical labor) and writing for the college paper, and filling in here and there with babysitting, mystery shopping or medical testing. I was dealing with the divorce via long distance — and, although I didn’t know it for a couple of years, with thyroid and vitamin D imbalances.
Some days I could barely manage. I did get through. I wouldn’t wish it on others. But taken together my hours added up to well over 15 or 20 per week. I still believe that the group targeted by the original column, the 18-to-22 age bracket, is generally capable of working and going to school. Ideal? No. Practical? Oh, hell, yes, especially since, as you note, “It’s hard to know what to tell a young person about choosing a degree program that’s likely to lead to jobs that will pay for the loan.”
Not trying to start a pissing match, here. Just saying that generally speaking (not in every case!), it can be possible to put yourself through a very good college education without horrendous debts.
My son is going to university with a scholarship that covers most of the tuition. My husband and I pay the minimal difference and books. With a part time job my son pays for his minor expenses and I pay for his phone and car insurance. It is important he graduate without debt because he plans on being a teacher. My husband and I paid ALL our college expenses and graduated debt free. It was a great feeling and made a huge difference.