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The High Cost of Education? Are all loans bad?

If you remember my first post in this series, I wanted to address the apparent insurmountable hurdle of taking on large debt when going to school.  After reading this series, you should now realize that it is possible to afford college, and even graduate school. Also, you were given many tips on how to approach your education to get the most out of it, and even position yourself for graduate school.  Today, I want to address the realities of student loans.

I would try to avoid loans if possible, and if you need to take out a loan, I suggest you do something reasonable.  My student Bryan showed that he was able to take out a small manageable loan to give him some breathing room when he went to college.  The one benefit of a college loan, as opposed to a car loan is that when you take on a college loan, you are investing in yourself, rather than a hunk of metal that will depreciate the minute you get it.  Consider the $24,000 expenditure I presented in the first post: my friend Mike said it best:

…in my mind, there is nothing wrong with loans for college. Very rarely can you find an investment worth more than yourself. If you borrowed the $24k for worwic/SU option, that’s a monthly loan payment of $276 for 10 years. If you cap your loan payment at 10% of your net annual income, you only need an annual income of about $35k to afford it. If your college degree doesn’t lead to a career making at least $35k, you probably have issues unrelated to your level of education.

Finally, one last parting shot from me: life is a generational race.  My great grandfather was a goat herder in Sicily at the turn of the Century.  He sacrificed greatly for our family so that we could have a better life – and sailed across the ocean to America.  My immigrant grandfather had an 8th grade education and was a scrap metal collector.  He sacrificed greatly for our family so that we could have a better life.  My other grandfather was a plumber with an 8th grade education.  He sacrificed greatly for our family so that we could have a better life.  My Dad had a high school education, and was a police officer.  He sacrificed greatly for our family so we could have a better life.  He could have done so much more in the Police force had he gone back to night school, but he did not see his short term gain worth the impact that he could have on my brothers and me.  My mom also  sacrificed as a stay-at-home mom.

My brothers and I were the first in our family line to get a college education (about 82 years after my grandparents stepped off the boat to America).  I was a ‘B’ student in high school and college, yet wound up with a PhD. and am a Professor – 98 years after my ancestors stepped off the boat.  I had opportunities to go much further in my career, publish more research, and guest lecture around the world, but felt that spending time with my family was worth the sacrifice. Therefore, like my Dad, I turned down a lot of opportunities that would be beneficial to “me”.  As I see my children’s lives, I am so glad that I followed the examples of my parents.

My daughter graduated with highest honors and is a Fulbright Scholar.  My son is a 4.0 college freshman and in the honors program.  After 110 years since my family first set foot in America, my children are on their way to eclipsing my academic achievement, and certainly that of my grandparents.  Yet, I am very aware that my children are not “better” than my grandparents.  In fact, none of us can really appreciate what they did for us by foregoing their own momentary self-satisfaction to make sure that we had a better life.  Our insane college debt is mostly due to our wanting it all now, and not being willing to wait, or achieve a little less so that those who follow in our wake can have a better chance at life.

My grandfather never saw my children, but I like to think he foresaw them.  And he made decisions that allow us to be who we are today.

I hope that as you and your family plan your college future you will remember to do what is manageable, smart, and enjoy the ride.

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