Posts Tagged ‘College Graduates’

More on Major Student Loan Debts and “Victims”

Friday, March 13th, 2009

Yesterday, I wrote about the economic possibilities that could come from canceling all outstanding student loan debt. Over the last week, though, I’ve been reading some articles and new ideas on the entire student loan industry. At one point, I was called the national poster boy for student loan debt (what a claim to fame, huh?) and using that now rustic accolade, I have to make a comment or two about what I’m seeing out there regarding student loans.

While there are too many deceptive and shady practices in the student loan industry, many graduates who are burdened with certain levels of debt need to get over their predicament. I read a story where a guy graduated with some $35,000 in student loan debt and because he began missing payments and couldn’t find a job, over the course of five years that number skyrocketed threefold. Look, in that situation the “problem” likely is the fact that the guy isn’t willing to put himself in a position to be able to afford his payments. Doing some quick math shows that this guy was probably required to pay some $230 per month in order to make his payment.

Come on. Anyone can make $230 per month by working at a gas station or at a retail shop. I don’t want to hear about this guy complaining that he is a victim. I’ll listen to his story about how his life was torn apart and how he’s been stunted from advancing as quickly as previous generations of college graduates (trust me…I know), but don’t act like you’re a victim when – after five years – you couldn’t position yourself to pay $230 per month.

Quite a while ago I wrote an entry called “Personal Clarification on Student Loan Debt” where I stated quite clearly that I am no victim. One of the major problems that I see brewing out of the student loan debt dialogue is this victimized stance that so many people take. Hey – I signed the paperwork to get these loans and while I didn’t fully understand how much the loans would effect me post-graduation, I wasn’t taken advantage of by anyone in the student loan industry. Sure, I think that the “system” which decides who gets free rides and who has to pay is fundamentally flawed. I’m glad that it has been changing (too slowly) over the past six years since I graduated, but don’t paint me as a victim.

On a similar note, I’m not playing the old “fish story” game here either. In other words, I’m not suggesting that the guy whose story I read about only graduated with $35,000 in student loan debt and since I graduated $118,000, then I’m more deserving of pity. First, I don’t want pity (though money would be nice). Second, I’m not interested in promoting a race to the bottom between various student loan borrowers. I have a ton of student loan debt and though I’ve been diligently paying it, I’m still going to be on the hook for a while. That doesn’t mean that I deserve pity, though!

I sincerely hope that an honest national dialogue opens up about how to address the gigantic student loan debt burden that will continue to stunt our economy for the foreseeable future. Once policymakers realize that personal social advancement and personal wealth accumulation are not possible when America’s 20 and 30-somethings are saddled with unmanageable debt, then we might see some positive action. My fear, though, is that no one will realize this until it’s too late (imagine an economy that is poised to succeed but can’t figure out why drastically reduced home prices aren’t selling units and consumer spending is continuing to constrict). Here’s hoping that some forward-looking policymaker or legislator sees this problem early-on and begins addressing it as soon as possible!

Paying for Higher Education and Post-College Life

Sunday, February 1st, 2009

The New York Times ran a great article a few weeks ago talking about how college students are now shouldering more of the costs of their education. To me, this is good news! Students paying more of their education expenses means fewer student loans are being taken out and fewer student loans means a less stifling debt burden on tomorrow’s college graduates. As someone who is spending the bulk of his monthly income trying to pay down a six-figure student loan debt, I wish that I would have paid more of my own expenses when I was in college…but hindsight is twenty-twenty, I guess.

:-)

The article in the Times is based on a study that also found more tuition dollars going to pay for administrative expenses as opposed to instructional expenses. For me, I find this to be a bit of a concern since I always want to see more dollars spent on instructional expenses and not administrative costs, but anyone who knows how to run a good business knows that you have to retain good talent administratively if you want to keep things moving smoothly. That said, I can take some of the increased administrative fees so long as it leads to better instructional results.

I’m glad to hear that students are shouldering more of their college costs, though. The current economy has so many problems that citing any one of them as “among the worst” puts it in the company of dozens. However, one of the worst problems that some young professionals are facing is their lack of ability to live on their own. In other words, there are college graduates out there who are living off of an allowance from their parents. No, the allowance isn’t their only form of income. There are young twenty somethings who actually have a job in this economy, but are still living lifestyles that are outside of their means.

As someone who spent the last 6 years advising college students around New Jersey, trust me – I’ve seen these folks! They are the ones who are still driving around in brand new cars and purchasing homes as the economy is going to shit – and they’re doing it on an entry-level salary? I don’t think so. These kids have the luxury of getting their car payment, gas expenses, and mortgage payments financed by the national bank of Mom and/or Dad.

Don’t get me wrong. I don’t begrudge those whose families have enough money to pay for these expenses, but let’s look at the long-term prospects of this scenario. You have middle class parents who are subsidizing expenses which their children are incurring that their children really can’t afford. This means that the parents are saving less for their own retirements, which ultimately leads to parents turning the tables and needing their children to give them an allowance at some point!

Again, I’m not totally opposed to this structure, but my problem exists in the fact that those young professionals who fall into this category are not being trained properly on how to manage their income and expenses. Improper financial training and irresponsible financing are the EXACT same problems that led to the mortgage meltdown in this country. By not allowing young adults to either make it or break it on their own, the problem will only perpetuate itself in a different form.

That’s why I was glad to read the Times article linked above. Let college students begin this new revolution in financial education by learning how to shoulder the burden of their education expenses. It’s a great way to kick start their lives in the real world and while it may be stifling at times, learning to manage money and live on a strict budget will only help – not hurt – the entire financial system.

More on Growing Student Loan Debt for College Students

Sunday, November 23rd, 2008

Once again, the Daily Record printed an excellent article today regarding the student loan crisis and how mounting debts are saddling today’s students. One of the greatest economic catastrophes of our time is brewing in this student loan mess and no one is addressing it directly. Oh sure, there are plans to offer existing and future college students a break either by an Obama tax credit or an increased Pell Grant, but that does nothing for the students who are graduating college, year after year, with high five and six figure debts.

People need to realize that the current economic issues are all linked together. One of the reasons why there are so many houses for sale on the market is because graduating college students simply can’t afford to pay the crazy prices that are being asked. This is a two-headed problem – first, the prices are way out of sync with the value of the homes and second, college students aren’t graduating with a few thousand dollars of student loan debt any more. In today’s world, college students are averaging $20,000 in student loan debt. Some of us have broken six figures in these debts! From the article:

When Melissa Norelli graduates from Fairleigh Dickinson University three years from now, she’ll owe about $129,000 in student loans.

Her private loan officer told her to consider it like a car payment — for a BMW. Norelli, who is studying to be a teacher, said she’ll probably have to walk to work because she’ll have a $900 monthly student loan bill.

“I was naïve to the fact it would be so much money,” said Norelli, 20, of Langhorne, Pa. ” I love my school and my major. But, I didn’t think it was going to be so scary, so overwhelming.”

An annual study on student debt shows that the average debt of college graduates with loans grew by 6 percent in just one year from 2006 to 2007. The average debt rose from $18,976 to $20,098, according to the Project on Student Debt. The report also points out that the debt is rising faster than starting salaries for graduates, which only grew 3 percent in the same time period.

It’s all related. Ms. Norelli graduates with a six-figure debt in a really tough job market which cannot offer her enough compensation for her to buy a home so she spends more time living at her family’s home after graduation, which returns a small financial burden on the family. You have a home that cannot be sold, a college graduate that may not be able to find a high enough paying job, and a family that now has to spend money instead of putting it away for retirement. It’s a vicious cycle and the scary thing is – it’s only one, small cycle in this incredibly crazy market.

I wish all of my best to Ms. Norelli in her future endeavors. As I said in the previous entry, no one should be projecting their personal situations on the brave young people who are profiled in these articles. A few years ago I had the honor of being on the front page of USA Today as a profile in student loan debt. The most annoying thing to come out of that experience was the amazing amount of people who thought that because 50 years ago they could join the military and get a free education, that I should have done the same thing. Or the arrogant jerks who said that I should have worked through college to pay down my debts (I did). These people just LOVED to talk about their success in the wake of another person’s concerns – truly the lowest of the low.

There is only so much of a person’s story that can be told in a USA Today (or in Ms. Norelli’s case – Daily Record) article. And I, for one, wish Ms. Norelli the best and hope that she can find a great job which allows her to pay down her student loan debt quicker than the analysts think is possible. Good luck! :-)

Forgetting Student Loans in the Bankruptcy Mix

Thursday, November 20th, 2008

People are going crazy right now over the economy and how they (and their families) will continue to pay the bills next month or the month after. Some people are looking at their 401k accounts and literally crying due to the literal lack of retirement funding available for them. For some folks, the way out is to declare bankruptcy. Well, as a sort of student loan guru I just wanted to remind the big student loan borrowers out there that student loans are not eligible to be wiped away in bankruptcy court.

One of my new favorite places to go to read about events in the student loan industry is Student Loan Stories. This is a great blog that covers student loans from all angles and was good enough to post the story linked above regarding how student loans are not eligible for bankruptcy. As someone who still owes six figures in student loan debt, trust me when I say that I knew about this years ago! But this is the type of information that isn’t shared nearly enough with college graduates in terms simple enough to understand. And we all know the garbage that has gone on with the student loan companies and certain colleges being offered kickbacks to recommend one company’s consolidation services over the others.

Disgusting.

Anyway, just putting out the grim reminder that you can’t put your student loans into bankruptcy. Sorry!

What does “Change” mean to you?

Tuesday, June 24th, 2008

Pretty much all of the polls show that Barack Obama is ahead in the Presidential election. Though we’re still far away from ballots being cast, I was thinking earlier about what “change” means to me. About six months ago I posted about the danger of harping on change in an election – let’s see if my idea of change as dangerous holds up!

To me, change means living a better life in all aspects. Financial change means that that I will not have to be a slave to the workforce just to make enough money to get by in New Jersey. It means that I can continue to be a higher earner like I currently am, but that I won’t have $100,000+ in student loan debt holding me back from buying a house or starting a family. What good is a high paying job if you can’t use that extra income to advance yourself, your family, or your friends in society? I began to “change” this aspect of my life two years ago by sticking to a strict budget and I’ve been in good fiscal shape ever since. If I vote for Barack Obama will he pass a law that says college graduates with a 3.9 or 4.0 GPA will be forgiven from their student loans so long as they have gainful employment for a certain number of years? There are current policies in place that allow that, but they are 10 year plans and I don’t quite fit them. Will any change Obama makes be retroactive? That’s a change I’m looking for!

Speaking of money, change means that the value of the dollar will go up without more of my own dollars being funneled through Washington. Further, change means that I will not have to give up large percentages of my paycheck just to pay for gas.

Which brings me to environmental/societal change. If I vote for change then I expect alternative energy sources to be realities in the next four years. I expect that the next time I drive from New Jersey to Chicago or from New Jersey to Nashville I won’t see hundreds and hundreds of miles of nothing. There will be windmills generating clean power for thousands, possibly millions, of people. There will be hybrid, fuel cell, and hydrogen cars all over the road. That’s real change.

Voting for change means that I will no longer have to look at local school districts and see abysmal achievement rates. Going to school in the Asbury Park, Camden, or Newark public school system won’t be a matter of life and death, but rather a matter of choosing which college to attend at the end of your senior year. Why should going to school in an inner city mean any less of an education for students? Further, why should those students who live in small, rich suburbs have their parents’ property tax dollars moved from their district to an inner city district? Income redistribution is a socialist concept and not one worthy of America’s time. Change will occur when our education system pumps out scholars, scientists, and math geniuses instead of worker bees.

Immigration needs to be changed. If I vote for change I expect that the laws of my country will finally be respected since they are not respected now. I expect that we, as a country, will change our belief of “Multiculturalism as King” and instead join the rest of the world in their view of immigrants: they are to be welcomed, rejoiced over, and assimilated. Why America is afraid to assimilate its newest members is beyond me. Hell, most of these people know more about American history than those who are born here! And we can’t make English the official language of this country? If I vote for change, do I get to call English my official language?

What about law enforcement. When I was a college student members of the Ocean Township Police Department walked into my home at all hours of the night because they were, “just checking.” As a college student I had no way to combat this disgusting abuse of my and my roommates’ civil rights. Who do you call when the cops are the ones breaking the law? That’s just my story. What about the police officers who fire 50+ bullets into one person in less than ten seconds and aren’t punished for it? How does a candidate balance the idea of change with the knowledge that without standing behind law enforcement officials, he will lose the faith of those who are supposed to protect us? Can “change” achieve a healthy balance?

Think about all of these issues and think about what the idea of “change” means to you? Is it just a rallying cry (yes)? Or is there something concrete in YOUR life that you can point to and say, “Hey! If I vote for the change candidate I will benefit in this way: ____________.”

I’m just taking a shot in the dark here, but we’ve already talked about how the “new politics” doesn’t exist in this Presidential race and chances are the change candidate is nothing more than momentum and empty promises. Which gets to another point – who is making the promises?

With Obama running around saying change and yes we can, he’s making a brilliant political move. He’s wearing no face. In other words, the voters can see him in any light they wish! And how do voters define that light? By the issue of change in their minds. So I see a man who will help abolish student loans for those who graduate with near a 4.0 GPA while someone else sees a man who will change the inner cities by raising middle income taxes. Then there are the middle income people who see a candidate that will not raise their taxes and instead demand that those in the inner cities become more self-sufficient by refusing to continue government handouts and thus lowering the costs of government!

These are two diametrically opposed view points that Barack can point to and say, “Yes we can!” Well…no you can’t! It’s one or the other – you can’t have them both! As Joan Rivers said on Stern this morning, “What change? Show me the change already!”

Can a candidate really run on the idea of “change” and make the majority of his supporters happy? I don’t think so. That said, I still think we’re going to get Barack in the White House next January – he’s got the uncritical masses behind him who harp on Iraq and that’s all he needs to win the election.

Stop Being a Bunch of Crybabies and Get to Work!

Saturday, June 21st, 2008

One of today’s society issues which gets me fired up is this growing environment where today’s college graduates are shell shocked by getting a job and moving on with their life after they graduate. It seems that I see these types of stories on CNN during the day and now the New York Times is reporting on it. What is there to be confused or aggravated about?! You go to college, you graduate, and you either get a job or go back to school. Where’s the room for being shell shocked? Alright, if you want to feel sad that you’re moving on with your life after four years of a presumably good time, that’s fine. Take a week and get over it. But make sure you DO get over it!

Today’s society has infantilized this graduating class (and the last one or two graduating classes) since the time they were born. These are the kids that played in tee ball leagues where every team won because no one could be a loser. The same kids who played for CYO basketball teams where everyone had an opportunity to play even if they were the dumb kid who didn’t know how to dribble a ball. These are the kids whose parents harangued 30-year veteran elementary school teachers because their dear, sweet, brilliant child failed a test. Obviously if their angel failed a test, then the teacher has no idea what she’s doing and she needs to be fired (this situation actually occurred at my old grammar school a few years after I graduated eighth grade – ridiculous).

And now society is reporting on the fact that these young adults – who have been coddled through high school and college by overprotective parents, scared teachers, and miserable on-campus administrators – are having issues adjusting to life after college? Well what the F did they expect?!? You can’t raise a fish in a bowl for 22 years and then drop it in the ocean and expect it to survive! In that situation, the very best you can hope for is that the fish finds a little place to hide and survives without really becoming a part of the large ecosystem.

That’s what we’re making in America today – scared fish.

I’m not saying that parents shouldn’t be protective of their kids or that teachers shouldn’t acknowledge and help students who need extra help, but if we don’t start putting some self-sufficiency back into America’s youth, then the future of this country is in trouble. Hell, on the very face of it we can all look forward to paying some 40% – 50% in income taxes because we’ll be a society that needs our government to take care of us! Seriously, though, we need to get back to business in this country, but it doesn’t need to be all or nothing…

For example, if you’ve got a kid in college who keeps coming home so you can do his laundry then it might be time to teach him how to do it on his own. Yes, I know that parents get great pleasure out of seeing their kids come home and the truth is that many kids love going back home to see their families. But if they’re coming home so their parents can perform basic tasks (laundry, grocery shopping, calling professors for class scheduling or asking questions about a test, etc), then the parents are actually hurting their kids. Cut the cord. Let the kids handle their own business, but teach them how to do it so they can be a fully functioning adult when they graduate. Don’t worry – you’re not alienating your kids. They’ll keep coming home because they like you!

Of course my commentary, as always, goes beyond the scope of the New York Times article linked above. However, this is a growing issue that I see with the guys I advise all over the state for the fraternity (hello GGL and Walnuts). Thankfully, these guys aren’t from the type of backgrounds that I talk about above, but the lack of proper preparation for post-collegiate life for today’s graduates is frightening and something that we need to reverse as soon as possible.


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