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Young Americans never think that their lives will turn into financial disasters. I certainly didn't, yet I now have a huge amount of student-loan debt that will be extremely hard to pay off. True, I now have a college degree to my name, but I don't believe my degree will be much help in my effort to get out of this deep hole.
October of 2004 marked the beginning of my financial debacle. The college search was upon me and I was sure I knew exactly what I wanted in a college: fellow students decked out in collegiate gear tossing footballs among the foliage of an attractive campus. I wanted a college experience that mimicked what I had seen in movies, and echoed what guidance counselors and teachers had been pushing in my college preparatory classes. I also felt I deserved it, after working so hard through four torturous years of high school.
Early on, I applied to my dream schools, but after the rejection notices came, I was forced to reprioritize. I dreaded the idea of community college, in part because of the acceptance letter my best friend had received from Princeton. I used this comparison as a reason why affordable public school wasn't for me. By March of 2005, Northeastern University had become my final pick, even though attending Fordham and living at home was certainly a viable option. Northeastern was farther away from New Jersey, and after all, wasn't that the basis of the college experience? Going away to school was all the rage.
I bought into every piece of college propaganda on the supposed personal and financial benefits of experiencing campus life and getting my degree. Unfortunately, I also overlooked the minor detail of how I would pay for this coveted experience. "Private loans," advisers suggested. "Everyone does it. It's good debt!"
If I Knew Then . . .
Looking back, I wish someone had instead brought me back down to earth by asking the right questions: What is "good debt" to an 18-year-old? Do you have any idea what the cost of repaying your loans will be? How will those payments compare with your anticipated income? Do you recognize the consequences of not making a payment?
To me, getting my college education was just a matter of borrowing money. About five years and $200,000 in borrowed money later, I realize that my self-appointed pressures, expectations, and desires were not appropriately founded.
My major was undecided for a good portion of my college career. From psychology to marketing, it all sounded so interesting. I finally settled on sociology, and as a consequence, my mind was opened to issues our society faces that I probably would not have recognized otherwise. My vocational hopes and dreams were framed around those issues. The once-delusional girl who entered Northeastern emerged a much more knowledgeable young adult—but one without a job. I was financially desperate.
Knowing what I now know about college education and its related costs, I realize the importance of educating high-school students about their future options. It's easy to assume that going to a distant four-year college is the best decision; however, that might be a serious mistake. Students should definitely consider all possibilities.
The Business Alternative
An idea that some students may want to consider is going into business rather than going to college. Peter Thiel, the billionaire co-founder of PayPal, recently launched an initiative to encourage students under 20 years of age to focus on their entrepreneurial ideas as opposed to dutifully fulfilling the expectation for college. The Thiel Fellowship offers $100,000 each to twenty young people who are willing to put their education on hold in order to pursue these ideas.
Thiel understands that the massive amounts of debt that many students have incurred by the time they graduate is so burdensome that while they spend their lives paying off the borrowed money, they have neither the drive nor the means to tend to other worthy pursuits. Only a few can get the Thiel grants, but his idea has much wider application. I suspect there are quite a few ambitious young Americans who would come out much further ahead if they went into a business or trade after high school and saved the money their families would otherwise spend on college tuition.
The thought of Thiel's fellowship, coupled with my personal Mt. Everest (my hefty student loans), has opened up a world of regret for me as I look back and recognize all the options I left unexplored at the age of eighteen. I often dream of how I could have worked full-time and gone to community college part-time while living at home, saving money, and paying my own way through school.
Maybe I could have worked while taking foreign language classes (another interest of mine) and, once fluent, applied to become a translator. Honestly, nearly any path after high school would have been better than amassing $200,000 in debt for an assumed rite of passage.
Unable to find work related to sociology, I eventually found a job with an internet company in New York City. I work relatively long hours and have taken on additional responsibilities, but having such insurmountable debt in this economy is not sustainable, no matter how much I work.
In an act of desperation, I created twohundredthou.com. This was something of a jest, since I didn't expect that people would give me large amounts of money toward repaying my loan, but every little bit helps. I also wanted to make a statement about the quicksand students can get into with college loans so readily available.
Unfortunately, I have received many more negative than positive responses on the site, but I'm exceedingly pleased with the amount of attention the topic of student loans has received in recent weeks. I've even teamed up with a startup called EduLender, which helps students exhaust all other college financing options before borrowing money, and then provides options for loans with the lowest possible interest rates.
Recently EduLender created a platform for all students and graduates to create fundraising pages, either to preemptively avoid debt or to help them pay off existing student loans. I hope many others benefit from the work EduLender puts into helping students find the best way to pay for a college education.
More should be done, though. High schools should make sure that students graduate with an understanding of personal finance, salary expectations, average monthly living expenses (rent, car, bills, etc.), and how the ebbs and flows of the economy can affect them.
It is also critical that high-school guidance counselors and college financial aid advisors be upfront about a student's ability to afford a given college or university, based on a number of financial factors: financial aid package, parents' salaries, and money saved or expected to be saved. An unbiased, honest opinion is priceless to students and parents throughout the college decision process and can save a ton of money and stress in the long run.
I hope that students going forward will learn a great deal from the current wave of college graduates. There are many who, like me, plunged into easily available student loans without weighing the questionable benefits against the guaranteed costs. Others can learn a lot from my mistakes. •
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