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.