I was driving around a campus of one of our major Minnesota Universities, my Alma mater actually, and it really struck me. It’s August 2016 and it’s that time of year again when college campuses start to come alive. The once dormant campus in the summer is now crowded with young and old kids of all ages carrying back packs and going from here to there.
Getting out of high school and starting college was scary and exciting both for the same reason. Exciting because you are maturing into a young adult, free from home, free from the rules of your parents, free to do what you want and be who you want to be. And yet, scary, because with maturity comes responsibility and accountability. You couldn’t blame anybody but yourself for your failures and mom and dad would not be on campus to pay your back or fix your problems.
I can still remember my freshman college orientation. I can remember who was with me and where we were. It is such an exciting time in a young person’s life. A lot has changed since I graduated college 25 years ago. There was no internet, no online courses, no online sign up, and even computers themselves were relatively new.
STUDENT LOAN DEBT AND BANKRUPTCY
And yet, with the passing of time, some things remain true then and still remain true to this day. I think we can all agree that debt sucks, no matter what kind of debt it is. But, student loan debt really sucks because it is not dischargeable under section 523(a)(8) of the Bankruptcy Code unless you can prove hardship which is possible but very difficult.
Like an anchor around your neck, you will not shed student loan debt your whole life. I think it is amazing that we don’t let 18 years old drink alcohol because they are not responsible enough and yet we allow 18 year old children to sign student loan debt with virtually no limits. Have you ever read these student loan documents? Do you know how sophisticated these documents are? Did you know the schools and banks have armies of lawyers and accountants draft these documents to protect the schools and banks? And yet, who protects our children? Who protects our children from making life long financially destructive decisions at the tender age of 18? Our children spend more time picking their screen saver picture than they do trying to understand the student loans they are signing and what the long term consequences of signing the student loan(s) are.
As a society, we help the banks and schools without even knowing it. We all say to our children you have to get an education, you have to go to college, education is where it is at you can’t make money or succeed without an education. Parents wear the college jerseys and other logo’s like a badge of honor and pride. The drum beat our kids hear is you must go to college and even beyond. I would argue not everyone should go to college. Many people are not cut out to go to college but maybe a vocational school instead. Everyone is different. But, for those of you who chose to go to college, please pay close attention to this part of the article.
Before you even apply to go to college, I want you to read the following 10 promises that I believe every Minnesota college student should make to them. I really and truly believe if you read and abide by these 10 simple promises, you will curtail the size of any student loan debt by half or more! Yes, that is right. If you believe these statements and comply with them, truly comply with them, I think you can save yourself half or more on student loan debt! I put together a STUDENT LOAN CREED containing 10 simple promises you should make to yourself. Here we go!
The STUDENT LOAN CREED
1) I WANT A QUALITY Minnesota EDUCATION WITHOUT SUFFERING FROM OVERWHELMING STUDENT LOAN DEBT.
For those of you wanting to pursue college, who doesn’t want a superior education without overwhelming student loan debt? I think we can all agree that we desire a good education, but I also think we can agree we don’t want to spend the rest of our life paying for that education.
Who wants to go to school but then suffer with overwhelming student loan debt you cannot afford to pay back? If the question I would you go to school and get a degree if you knew the student loan debt would be this massive anchor around your neck for the rest of your life, many would say it is not worth it. But I for one don’t take no for answer. I do want a quality education but I don’t want to be saddled with student loan debt the rest of my life! So, read on!
2) I BELIEVE STUDENT LOAN DEBT SUCKS!
When I went to college, I can remember people around me saying "don’t worry about student loans, you will be making enough money to pay them when you are finished with school." I remember feeling like yeah well, debt is debt and I don’t like debt period! How come doctors and lawyers from the 50's 60's and 70's could graduate with little or no debt but as the generations come and go it seems like student loan debt keeps growing and growing? Call me cynical but I think the cost of school, which has far surpassed the rate of inflation has more to do with how much can the student borrow vs the actual cost of school. Kids today pay more for business school or vocational schools than I did for law school! That is ridiculous!
As I said before, debt sucks but student loan debt really sucks because it is not dischargeable in bankruptcy. Congress made student loans nondischargeable under Bankruptcy Code Section 523(a)(8) unless the student loan can prove undue hardship (very difficult to do). Bottom line if you incur student loan debt, chances are you will always have the debt until it is paid in full.
3) I PROMISE TO SHOP SCHOOLS AND TUITION RATES
The way in which we learn has changed dramatically since I went to college and law school. No longer do you need to be physically in the classroom. The internet has caused an explosion in on line grade schools, high schools, and colleges and universities. With the reduction in the need for actual brick and mortar buildings, I would think the cost of education would plummet.
Why it has not is another blog topic and I would argue a subject for Congressional investigations. The point is, college students today have more choices about schools than we ever had before. College students today need to spend much more time investigating which schools make the most sense for them and especially which schools can offer the best rates for the degree the student wants. The bill for a four year degree should never be a surprise to anyone. Sit down with a pen and paper and calculator and compare the overall cost of going to different colleges and universities. Never before have colleges competed so fiercely for students. Make them compete more buy shopping around. Heck, if it is far cheaper to get an online degree do it! I often wonder how much of student tuition dollars go to pay for college sports most students don’t give two craps about. I suspect, but I am not sure, most online universities do not have sports or subsidize sports.Promise yourself you will spend time shopping around and crunching numbers before you even apply to the school. You wouldn’t buy a car before figuring out the cost and the payment would you? Why wouldn’t you then figure out the cost of your education which will cost you far more than that vehicle!?
4) I WILL NOT TAKE OUT STUDENT LOAN TO PURCHASE CARS, GO ON VACATION, OR USE AS LIVING EXPENSES
Remember why you are going to school fellow Minnesotans. The goal is to get a degree, to learn how to think, and to do so without the chains of overwhelming student loan debt. Do you know how many times I have heard students tell me they have to wait until they get their student loans to buy a car or go on vacation or to pay living expenses? If you use a student loan to purchase a car, go on vacation, or use as living expenses, that vehicle which initially cost you 5k will cost you much more than this with interest paid over many years. Why do you want the car to cost you say 10k vs. 5k now? I am pleading with you, if you are tempted to use student loans this way, please don’t do so! The pleasure you get now by the use of the student loan funds will be far outweighed by the amount you have to pay back over many years. It simply is not worth it.
5) I WILL GET A JOB OR FIND ANOTHER WAY TO PAY FOR MY LIVING EXPENSES, WHILE IN SCHOOL, FROM A SOURCE OTHER THAN STUDENT LOANS
Getting a part time job in college is ok. Make enough money to pay for your living expenses so you don’t have to use student loans to pay for living expenses. When I was in college, I drove school bus, worked a large retailer, and many other jobs to make a few bucks to pay my bills. These were no career building jobs just jobs to earn a few bucks. I realize it is very tempting for our youth to borrow enough student loan money to not have to work. Those of you who do this will pay a large price for doing so when school is finished. Of course, if you are really lucky and have someone that will help you with those expenses, while you are in school, that would be fantastic too!
6) I REALIZE I AM A STUDENT, I AM SUPPOSED TO BE BROKE AND HARD UP, THAT IS HOW WE GET OUR SENSE OF HUMOR
You might think I am joking about this trust me when I tell you I am not. Life is not always a glass of red wine. Sometimes, life is difficult. I have been out of college now for 25 years and I have observed a thing or two about people in the business world in that time frame. One thing I have observed is people who have had it rough generally have a better sense of humor, are tougher, and don’t get shaken by a little stress in life. In short, people who can have it tough, be broke, and still smile without acting like a wounded soldier are much better employees. What I have observed is those students who had everything handed to them, have never had to suffer financially or any other way, are not very good employees because they are not very tough and the slightest stress causes upheaval for them. What you have to tell yourself in school is that your poverty is temporary, that you schedule may not always be this busy, and if the end result is you are doing something suited to your core values, it is all worth the short term pain.
7) I WILL NOT HAVE MY PARENTS SIGN MY STUDENT LOANS
When I was going to college in the late 80's and early 90's parents never had to sign student loans. Why should they? My education was my dream, not theirs. Why should the school rope my parents in to be responsible for my dream? What if I flake out and become a thug? What if I die? Having parents cosign student loans is a relatively new phenomenon and one that students should not allow to happen. When I say this, I hear, what is the student to do if the parent doesn’t sign and the student can’t go to school? My response is figure it out! Where there is a will there is a way. My opinion is more student and parents need to stand up and refuse to lock parents in the child’s future by signing these student loans. If more students and parents would refuse to allow this to happen, the schools would have to adjust or close their doors. Instead, students and parents acquiesce and sign off each school year as if this practice of co-signing student loans is normal. Trust me, it is not normal!
8) I PROMISE, I WILL BREAK FROM DRINKING BEER ONCE IN A WHILE, TO TAKE ADVANTAGE OF ALL STUDENT GRANTS, AID, AND TUITION REIMBURSEMENT AVAILABLE TO ME.
Folks, this is not rocket science. Before you even go to school, you have to go to school and figure out what kind of programs are out there you can take advantage of. This is not the kind of research that will take you seconds to complete. This will take time and effort but the payoff can be absolutely huge! Just the other day I was talking to a friend who is the parent of a child entering college. He told me his daughter decided in her sophomore year in high school she would take advantage of taking college courses her junior and senior year in high school. When she graduated from high school she had already completed her first two years of college for FREE!! Now, this is taking advantage of the programs out there. Two years at the college she went to probably are worth 20k in savings. There are all kind of programs, grants, and aid available for those willing to look into them and take advantage of them.
9) I WILL ASK MY SCHOOL WHY THEY DON’T OFF STUDENTS MINI CLASSES ON THE DANGER OF ACCUMULATING TOO MUCH STUDENT LOAN DEBT
Okay class, time for a quiz:
1) Between the schools, banks that fund student loans, and students, who has lawyers and accountants working for them?
ANSWER: BANKS AND SCHOOLS.
2) Between schools and banks that fund student loans, and students who has lobbyists in Congress?
ANSWER: BANKS AND SCHOOLS
3) Between schools, and banks that fund student loans, and students who is more financially sophisticated and mature?
ANSWER: BANKS AND SCHOOLS
4) Between schools, and banks that fund student loans (guaranteed by the government) and students, who is left holding the bag and owing the student loan debt for years to come?
Why is it that the least financially sophisticated person in the room, the one left holding the bag in the end after the schools get paid, and the banks get guaranteed loan pay backs, but the students are not offered courses on the danger of taking on too much student loan debt? Why does the cost of school keep going up well beyond the rate of inflation? Why? Is it because the cost of school has to do more with what the student can borrow vs what the actual cost really is?
10) I WILL CALL BOTH SENATOR AL FRANKIN AND SENATOR AMY KLOBUCHAR TO ASK FOR HELP IN SOLVING THIS STUDENT LOAN DEBT CRISIS
I will call my Senators and ask why more is not being done to offer meaningful student loan reform to students. I will also ask why more is not being done to help those students and graduates with overwhelming student loan debt. Remember, the banks and schools have lobbyists- you don’t. Call both senators today!