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Monday, July 23, 2007

Kids, College, and Loans

Let's get real. Going to college on scholarship doesn't work for most kids. While costs for higher education continue to rise and many colleges offer their students some kind of financial aid, that aid usually takes the form of loans. The scholarships that are offered do not generally cover full or even half tuition.


While graduating high school with a parent-fed college fund is a great blessing, parents today often find themselves falling short of being able to even partially fund their kids educational ventures. The fat college fund is a rarity. This is an Xbox-Wii generation. Kids are accustomed to their parents providing Razor phones and video Ipods, but this lifestyle costs a heck of a lot. We aren't very good at delayed gratification and that's what saving money is all about. In the face of the shortfall, students--who aren't really great at looking to the future anyway--blithely assume they'll get full or significant scholarships to the big name colleges to which they aspire.

This is so not reality.

Even at most state schools there is a fierce competition for scholarship money. Kids who have a "B" average might as well forget about it unless they have a significant non-academic skill. Even those who've taken Advance Placement classes and aced them, can't necessarily expect colleges to hand them a free ride. So, generally, it's all about loans.

Getting a college education is vital for most jobs, but how to handle the cost? There are private and public universities and some are "sexier" than others, although this may have little to do with the quality of the educational outcome. A recent study of students who were accepted by Harvard and decided to go elsewhere were equal to Harvard grads in job success. This study indicates that it is students themselves who determine eventual success, not a degree from a "name" school.


Getting massive school loans to go the more prestigious universities is probably not the best idea. The affordability factor makes state schools much more attractive and, for most, more than adequate. Many people believe that graduating from a big name school leads to prestige and "contacts" in the job market. Many elite universities count on this name-brand snobbery. Truthfully, a degree is a degree is a degree. For most careers, the degree gets you the job, not the university it comes from. Once the degree is framed and on the wall, no one really cares.


The exception for this might be those fantasy diplomas from on-line "universities." While more and more brick-and-mortar schools are offering distance-learning, students who graduate from purely on-line schools may still face disparity in the job market.


If you're heading to college or you've got a kid who's graduating high school soon, think hard about the growing college loan load. Particularly if students don't know what career they want, piling up college debt can be a really bad idea. For some high-earning jobs, school loans make sense. Physicians and lawyers have big earning potential. Getting school loans for these graduate degrees makes sense. There are, however, many meaningful, fulfilling careers that don't offer salaries to easily pay off student debt while still being able to live. Attending a big name school on loans to get a graduate degree in social work doesn't make a lot of sense for most students.

Think about the loan-to-salary ratio. When you finish school, throw your mortar board in the air and head off for job interviews, you need to be able to support yourself while you pay off any loans you've accrued. This is just reality and sometimes it sucks.

By all means, get a college degree. Heck, get two! Higher education can be the path to a fulfilling life, but be smart about it. After all, it is the rest of your life and spending twenty years paying off unnecessary student loans is a waste.