You are at the top of the world right now after graduating high school. In a few weeks, your parents & friends will be three hours as you meet new people. There will be a brief feeling of homesickness, but that feeling of invincibility will soon return. Just don’t let it get to your head, you are human and
might will change your career ambitions during your junior year. Don’t worry, most kids your age don’t know their life calling and you get a beautiful family out of the mix as well.
The main reason I am writing to you today is about student loans. I know, you made a wise decision by already choosing a school with the lowest tuition rates that specializes in your prospective career field. Going to the private university would have been fine too, but it was double the cost. Learn from my experience, these next 4 years at college will cost you $60,000 before any scholarships or financial aid. It doesn’t seem like a really large amount at your age, but when you are closer to 30 than 20 years old and want to “settle” down, that same $60,000 can slice your mortgage in half.
The Hidden Costs Of College
During your senior year, you will need to start looking for employment to pay for these four years of college. You will have several job offers & there will be one you really like but the pay isn’t the highest and it is in an expensive part of the country. You will most likely have to say “no” to this offer because it doesn’t match your goals of saving for the future & still pay for life (i.e. paying off your $50,000 in student loans with a $300 monthly payment plus rent, insurance, and cell phone). You will say “yes” to a job that pays very well, it will allow you to become debt-free in five years & build an emergency fund! On the flipside, this job requires you to sacrifice your time by working the night shift & having 12+ hours shift each day.
Do not get dejected or skeptical about college from my last statement. I want you to know about the “golden handcuffs” now. They are worn by college & non-college graduates alike when they have jobs that pay so well they cannot leave them to pursue their passions. I’m not saying having a high-paying job is bad. But having to compromise for a job that pays a lot of money in order to support an expensive lifestyle or simply to payoff debt, can be detrimental.
The Book of Proverbs says, “The borrower shall be slave to the lender.” Too often, people work jobs they do not enjoy only to pay for an expensive college degree or a fancy house. The costs go beyond a non-fulfilling job. People delay starting families, have minimal quality time together as a family, and even delay saving for retirement (meaning they have to work even longer in that horrible job). By avoiding student loans as much as possible, you have more opportunities to pursue the purpose-driven life.
Even worse than working a non-enjoyable golden handcuffs job, is to be a college graduate with a low-paying job. Approximately 43% of college grads will work a job that doesn’t require a college degree & a large percentage will be underemployed. These means they borrowed lots of money to work the same job they could have gotten immediately after high school. Now they are making little money & have to make additional sacrifices to payback four years of college for degree that is collecting dust.
Would you believe me if I told you that the total amount of national student loan debt will rise from $260 billion today (2004) to $1.2 trillion dollars in 2016! Your generation is the most-indebted 20-year olds in the history of America with nothing to show besides a college degree. Other generations were more apt to have a house or business (physical assets) to account for their debt. Student loan debt will be the second most common type of debt. Mortgage debt will be the highest. A lot will change financially in the next 12 years, but I will save those details for a different letter.
I mentioned earlier that it will cost you about $60,000 to graduate from the prestigious institute you will be attending, but it will cost today’s kindergartners $100,000 to earn the same degree! Because of “tuition inflation.” You will use that $40,000 price difference to invest, buy a sports car, & build a house. Be grateful you were born in 1986 instead of 1998. A college degree increases lifetime income potential, but salaries will not increase at the same rate as college tuition. This only means more future college graduates will remain in debt longer or delay pursuing the career & life ambitions to pay the bills.
These are all the hidden costs of college that you do not think of in high school. Of course they don’t seem to affect your right now. You have no intentions of getting married & having a family. Instead you will travel the globe, stay young forever, and will pursue your dreams at any cost. You know debt is bad, but “know” you will have a job after college that will pay the bills. One day soon, you will realize you are human & how life actually works.
Pursue Your Dreams
Josh, I still want you to pursue your dreams. Life doesn’t revolve 100% around money. Life costs money & we need to earn money to pay those costs, but do not make life harder or less enjoyable than it needs to be.
Pursue your dreams.
You will probably fail, but look at Thomas Edison or Abraham Lincoln. They failed several times before inventing the light bulb & becoming president, respectively.
You will never discover your true potential unless you take risks.
Attending college & having a mountain of student debt limits the amount of risk you will be able to take. You will work simply to pay the bills and will only realize later that worked night & day to pay off debt instead of helping others and pursuing your dreams.
My Closing Advice
I’m not saying your college choice is bad. Traditional colleges serve a great purpose in preparing the leaders for tomorrow’s challenges. But it gets harder to justify the traditional college experience when tuition continues to increase quicker than starting salaries for college graduates.
Even if you only delay attending a regular college by one or two years, you can save money through something called credit by examination. Your dad earned a few credits this way in the military and saved him a couple night classes so he could be home with you & your brother instead.
It’s also how your future wife earned her degree. During your first couple dates, it will be an intriguing topic of conversation for some crazy reason. When you start thinking about the college education of your future children, you will be strongly considering this option to prevent them from not pursuing their dreams and pursuing their life calling.
I know this is a lot of information. Keep this letter in a safe spot and read it from time to time if you need some guidance in the future. You will do fine.