This experiment began several years ago when I received a brochure in the mail advertising silver bullion coins as an investment vehicle. The “hook” was, “We will sell you two silver eagles for the price of one, if you agree to read our special report on silver.” When I saw this, I thought, “I could give one of these coins to a friend who was having money problems as a touch point for her prayers.” I sent her a coin and a notebook with instructions. Every day we prayed that the Lord would grant her wisdom in the area of finance. Every day she made an entry in her notebook.
The initial experiment was extremely successful. At the end of six months, her attitude towards money was radically different. She began to systematically eliminate her consumer debt. She changed some behaviors that were sabotaging her financial situation. Then towards the end of the six month experiment, she was able to move into her own home for the first time in her life.
Finally, when the participants are ready, they will give their coin with a blank notebook to a friend or a family member who is ready to change their relationship with money. In this way, friendship and blessings will keep flowing forward forever, even into eternity.
For a number of different reasons I have been thinking a lot about student debt. What started out as a flea bite has become a trillion dollar nightmare. I believe that government policy and the greed of the education cartel, public and private have both contributed to the scope of this problem. Guaranteed student loans that can not be dismissed even in bankruptcy have allowed the universities to increase their tuition rates at 5 times the rate of inflation. The educational institutions have no skin in the game. They get all their money up front. This is true if the student is immature or incompetent and flunks out. This is true if the student has no realistic opportunity of ever finding a job in his field. This is just plain wrong. The success of the student should in some way be tied to the repayment of the loan and some percentage of that loan should be held by the institution that is responsible for educating that student. Furthermore, bad judgment by an eighteen year old should not sentence that individual to a lifetime of debt slavery. This is just plain wrong. Student debt, like other forms of debt should be dismissed in bankruptcy.
As a society we are really pretty schizophrenic about eighteen to twenty one year old children/adults. That extends to twenty two if we are talking about college students. At eighteen you are old enough to vote, volunteer for combat, go to prison as an adult, or star in a porno film, but you are not old enough to buy a beer or a handgun. In some states the age of consent is as young as 16. Without any knowledge of compound interest or the realities of the workplace at eighteen you are old enough to sign a student loan, a contract that could ruin your life.
Young women have an additional complication. At some point in life it is likely they will become mommies. Mothers for perfectly valid reasons are genetically predisposed to want to stay very close to their babies. A six figure student debt will eliminate that option. It is very possible to rack up $160,000 in student debt at a private university. At 6% interest that will run you $1,146.29 a month over 20 years. It is very unlikely that you will ever marry well enough to ever be a stay at home mom with that kind of debt hanging around your neck. You wanted to be a professional woman? Good luck finding a job.
It was easier once. A person from another country once told me a story that he heard from his father when it was time for him to leave the nest. His father told him that in the old days, it was the responsibility of a father to buy his son a good wife and a new canoe. He then would take the young couple and their boat down to the river. Once the newlyweds were in their canoe, he would give the boat a shove and tell his boy, “Son you’re on your own now.”
Unfortunately we live in a society where higher education is still an important factor in quality of life. The top paying degrees are pretty much limited to medical, engineering, and computer disciplines. If you want a degree in anthropology, be prepared to work at Starbucks.
Parents and their children need to develop both a plan and a plan B. This planning needs to start at least two years before graduation. Possible career paths and schools need to be approached as a business decision, because that is what it is. Is it really necessary to go to a “name” school? There are very few schools where knocking a class ring is really important. If you want to command warships at sea, I would suggest The U.S. Naval Academy in Annapolis. If you want to be a Wall Street high roller a Harvard MBA still has real meaning in finding your first job. But remember, that landing that first job is all even the classic ring knocker degrees will get you. After that performance outweighs credentials. Texas A&M graduates are proud to point out that more flag officers in World War II graduated from Texas A&M than from the United State Military Academy at West Point.
Check out the difference between how schools are rated and the mid-career salaries of their graduates. There are some interesting discrepancies out there.
Are you even really good enough to attend one of these ring knocker schools? Not every high school quarterback is going to start for Notre Dame or Alabama. The old five school rule of thumb is still a good starting point. Go ahead and apply to that dream school. You never know, you might hit the jackpot and get a full free ride. Then apply to three schools that are just about right for you goals, your abilities, and your family finances. Finally, have a backup that you are sure will accept your application, a school you know you can afford.
Plan B works something like this. Attend a local community college on a Pell Grant. Make certain those credit hours will transfer to the schools that really interest you. Go ahead get high grades in your basic required courses in this low cost less competitive environment. Take that academic record to a school that will offer you instate tuition. Apply for every scholarship under the sun. With something close to a 4.0 at a junior college you are very likely to receive significant student aid. With low instate tuition and serious scholarship money it will be much easier for you and your parents to cover the difference. If you graduate with honors from a respected state school, it is more likely that you will find a job in your field or a position as a teaching assistant in grad school. If you find a job in your field, many employers will pay for your graduate degree.
The goal here is a full free ride, all the way. Know what you are getting yourself into. A bachelor’s degree in psychology is pretty worthless. However, with a Ph.D. in psychology you can teach or open your own practice. Apply constantly for every scholarship imaginable. Like the lottery, “You can’t win if you don’t play.” If school A isn’t offering you enough money to avoid debt, particularly if you are majoring in something without much commercial potential, forget school A and apply to school B. Graduate debt free. If your daddy is rich or has diligently been saving for this day, this goal will be pretty easy to obtain. If your daddy is poor or had some bad luck along the way it is going to be up to you to become an adult, perhaps before you are ready for that burden.
Now go ahead and have a good scream with Alice Cooper.