Monday, May 20, 2013

My Take On: Rising Student Debt Levels

Perhaps with graduation season upon us it’s fitting that this bit of disheartening news was brought to my attention this past week. According to a survey done by Fidelity of 750 college graduates from the class of 2013, students on average are facing a post graduate debt level of $35,200. Granted this survey was a small sampling, the average debt load still struck me as astounding.
At the risk of sounding like an old man I’ll say that according to this study on student loan debt, around the time I graduated from college, a sampling size of my classmates were graduating with an average debt load of around $20,000. I myself graduated from college with a self-made debt hole of about $24,000. I anticipated that in between then and now in the face of our country’s recession that the average student’s debt load would have gone down during the last half decade. But alas it continues to grow with each graduating class.
I’ve covered this topic before in detail in previous posts but I’ll recap here in the face of Fidelity’s survey results. If I were graduating from high school this year and had nothing saved for college, I would enter the labor force and work my tail off to put myself through school without debt. Whether that would mean taking a minimum wage job, taking an entry level position through a staffing agency working simple tasks such as data entry, or working in a high turnover environment such as in an entry level sales role, I would put together a plan to cash flow my education. I would plan to earn as many credits as I could at a local community college and transfer everything I can up to the limit to an in-state low cost public college. It may take me 6-8 years to cash flow everything and finish the bachelor’s degree program, but I would come out with a degree, years of experience and no debt.
In the case of my future kids, my wife and I plan to max out annual contributions to an Educational Savings Account for each of our kids as they age from 0 to 18, investing in our diversified assortment of mutual funds along the way. At 18 we would encourage our high school graduate to work while they are in college, attend a local community college and apply to transfer to a less expensive in-state public university.
Debt is not an option when it comes to our family. And it breaks my heart to see surveys like this, and notice that as each year passes more and more of our students are making the choice to sign up for what statistically and through the power of compound interest, turns into a lifetime of debt.
Although the student loan debt monster can be slayed, why engage in the battle when you don’t have to? I can only imagine at how much further north my overall net worth numbers would be right now if I had come out of college debt free. It is possible to attend and graduate from college without debt. It takes a ton of work, planning and perseverance, but I firmly believe that it can be done whether you plan for your children when they are born or if you are just graduating from high school with nothing saved. It can be done.
And if you are staring down the barrel of student loan debt, please know that I believe in you and that payoff can be done. For me it took gazelle intensity and cutting my expenses down to the bare minimums. But I became debt free and paid off my $24,000 student loan and I know that you can do the same. I’m really nothing special. I’ve been right in the middle income bracket for most of my working career now. I just rolled up my sleeves, worked crazy overtime and wanted to be debt free more than impressing other people with material possessions and social outings. The payoff has been worth it and I sincerely hope blogs like this one encourage you to follow the same path up and over “Debt Mountain.”

1 comment:

  1. There is a college finance bubble. The current system is unsustainable.