Hindsight: Evaluating College Benefits After Graduation
It’s that time of year… college graduation parties, barbecues, lazy days at the beach, sunburns, family vacations, and good old relaxation. However, for thousands of America’s youth traveling back home with their new diploma in hand, it will be a humbling transformation as they evaluate their college benefits. It’s that moment you go from 4 (or 5) years of unabated freedom and a tease of adulthood, back to Mom and Dad’s rules and fixing up that abandoned bedroom; or even worse the bedroom was converted into a game room and you’ve been relegated to the basement.
Once the reality of being a kid again sets in, some of you will begin a furious job hunt as the Rents’, who were so congratulatory just a few weeks ago, begin blasting you on a daily basis about how much that piece of paper cost them. The rest of you studious grads will already be well on your way, settling into the routine of your new job or internship. In either instance, a little voice inside your head will subtly wonder if this is what life’s meant to be. As theory subsides to practicality, every newly minted young professional will go through this “quarter life crisis”, some later than others, but it’s coming. The burning question of “What’s next?” will force you to look inward at how you’ve gotten to where you are today. Inevitably your quest for passion identification will spark the query, “Why did I go to college and what are my college benefits?”
“The great aim of education is not knowledge, but action.” -Herbert Spencer
Soft Skills Vs. School Skills
I fondly recall my first few days as a student at The University of Tampa, blown away by the independence, beautiful weather, and roughly 50:1 Female to Male ratio. I loved every minute of freshman year, but I would be completely lying if I said I had any clue as to why I was there or what I was trying to accomplish. Most current undergrads share a similar conundrum.
I transferred to the The College of New Jersey and received a quick message from our Dean at Orientation, “Look I’m going to tell you guys the way it is… college is an incredible experience in which you’ll dive into your classwork and be pushed hard to make the grade. But the truth of the matter is, later in your career you’ll remember little if anything of the coursework that you were taught. However, what you’ll never forget are the soft skills you’re going to pick up along the way.” Oh by the way, those “soft skills” come with an average price tag of $44,750 per year (private college).
He went on to say that of all the recruiters they dealt with, the number one fault and coincidentally most important trait they looked for, was communication. Fans of The Carnegie Institute will agree with this hypothesis, asserting that “15% of financial success is due to technical knowledge, the other 85% is to human engineering… Personality.” Wait, so you mean that funny, energetic waiter we had Friday night might be smarter than the 4.0 lab rat I cheated off in Trigonometry 201? Guess it all depends on the metrics.
Is college teaching the right subjects? Time Magazine ran an interesting article, College Costs: Would Tuition Discounts Get More Students to Major in Science?, which spurred then Governor Rick Scott of Florida to propose freezing tuition rates on strategic areas such as engineering, science, health care, and technology, while letting the costs of humanities and other majors rise. These strategic areas are not soft skills; these ones are not supposed to be forgotten upon graduation. A classroom may be a great simulator for the sciences, but reading a boring textbook usually doesn’t help you sell the whale client.
It’s true that academics focus primarily on what is measurable, but not necessarily what is meaningful. Maybe this is what Einstein meant by saying that, “Imagination is more important than knowledge.”
So, do PHD’s and enormous books on economic theorem help in this regard?
The Cost of College Benefits
One of the starting points for America’s financial troubles begins here on the perfectly landscaped and never-ending construction sites known as college campuses. The Bachelor’s Degree has now become the equivalent of Mom and Dad’s High School Diploma.
If your parents express a hint of regret, tell them to get off your case as their financial woes pale in comparison to what future generations will cost to educate. According to BLS, Consumer Price Index, since 1983 the cost of a car has increased 44%. The cost for a tank of gas: 192%. What about the hyperinflation associated with Medical Care: 330%. Last but not least, college tuition has increased by 688% since 1983. As the single fastest-growing household expense, the projected cost for a baby born in 2013 to obtain a four-year college education at a private university is $424,425!
That monster price tag does not even account for what has become the new norm, The Five-Year Plan, or “Super Senior”. Nothing like teaching kids right out the gates to trade a sense of urgency for some delayed success. But heck, one more year of frat parties and daytime naps, count me in! Often graduates will take it a step further, separating themselves from the pack by moving immediately on to a Master’s program (26% of graduates go to Graduate School within one year).
Today, the cost for one more year of college can easily eclipse $50,000 in tuition, room, and board (Harvey Mudd College in California costs $69,717!). That far exceeds the income recent graduates average, immediately setting them back at least two years.
College education plays an enormous role in society’s development, but it’s not necessarily for everyone. “The Millionaire Next Door” effectively points out that there is actually a negative correlation between grad degrees and high accumulators of wealth. Most millionaires were business owners, and most of these business owners listed some or no post-secondary education. That includes icons of history- Thomas Edison admitted to only three months of formal education, and Henry Ford built an empire with less than a 6th grade education!
You Have How Much Debt!?
So how does all this affect our country as a whole? Currently there are well over $1.4 trillion of outstanding student loans, a number that has tripled in the last decade and exceeds all Credit Card Debt by $620 billion! The Federal Reserve reports that 93% of all student loans are through the federal government. Of the waves of teenagers who enter college, more than two-thirds of them are getting by with student loans (44.2 million Americans carry Student Loan Debt). The average monthly student loan repayment for graduates in their 20’s is $351, bye-bye new car. This is a rare debt in which lenders require no collateral (other than your hopeful future success), and after personally interviewing many college admissions counselors, I still have never heard of an actual limit on loans available. I met with physician clients recently who are finishing their residency, husband and wife, with over $1 million of combined Student Loan Debt. Not a day of career worked yet and they’re staring at 7 figures accruing at over 7% interest compounded!
Speaking of debt, did you get carried away with the shopping at Macy’s last month? Overextend yourself by getting the new Lexus instead of last year’s model? Rack up some huge debts on the blackjack tables? Don’t’ worry, a bankruptcy proceeding can wipe this slate clean. But what’s that, you went to one of the top private colleges in your state to study biomedical engineering and were unable to find a job right out of college, thus falling far behind on your massive unsubsidized student loans? Sorry, no bankruptcy here (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005), they’re a shadow you can’t outrun.
Fortunately, there are options for graduates to get their finances on the right track. While many of them are beyond the scope of this article, borrowers should become familiar with potential forgiveness options. Most of the programs focus on teachers, healthcare professionals, attorney’s, and those serving Non-Profits or Underserved/Low-Income areas…
- Public Service Loan Forgiveness (PSLF)
- Teacher Loan Forgiveness
- Teacher Cancellation for Federal Perkins Loan
- NURSE Corp Loan Repayment
- Forgiveness for Pay as You Earn (PAYE)
- Employer Student Loan Forgiveness
Higher education is still the key to a brighter future. However, the realities of traditional college benefits cannot afford to be ignored any longer. Academicians should embrace the idea of community college, online instruction, trade school, entrepreneurism and rally around the issue at hand. This should be a collaborative effort with a student-centric approach, not a pissing contest of new institutions versus old.
Graduates must devise a repayment strategy immediately, either taking advantage of one of the aforementioned forgiveness programs or refinancing with a private lender at a slightly more reasonable interest rate. Don’t put your entire financial plan on hold for the next 10 years, but rather view this loan like a mortgage and strike a balance between debt elimination and wealth accumulations. If you’re really struggling with your student loan debt, you may want to work with a specialist lawyer who can help you to come to some arrangements that will lift pressure from your shoulders. This will make the whole situation a lot more manageable and less daunting to face. Most importantly get to work. The first job does not have to be the last job, make every experience a learning opportunity and resume builder.
Finally, when you ask yourself, “Why did I go to college?”, don’t fall in the pity trap that somehow our generation is alone and destined for catastrophe. In 1935 the Daily featured an article titled, “Senior Men Face Life With Debts, Few Jobs”, citing the average debt held by graduates at $200, with the tab for a four-year college eclipsing $2,000. You be the judge on what has changed, or hasn’t.