On the Web
May 26, 2015
Video: College Borrower’s Remorse
Parents should watch this video with their college-bound children.
The young adults featured in “Voices of Debt” have one thing in common: a lack of understanding of the financial implications of debt at the time they were taking out their student loans. So it’s critical that parents start this conversation early with their children.
The compelling video, produced by Manhattan ad agency The Field, speaks for itself. Similar videos can be found here.
I agree that financial literacy is an important lesson that should be taught before college.
Duhhhh…give me a break! How can people be so stupid??
Big education has just become like big pharmacy, a money making business. College administrators now earn up to a million dollars a year…why????
But it comes down to the student who signs the paper work…this is not free! You have to pay this money back…Maybe they should have taken personal finance principles in high school.
Community and state colleges need to offer a mandatory course on debt and loans, prior to taking out loans. Develop a career/payback index for all majors. Many don’t pay off, many do.
My first home was with a mortgage rate of 16.25%. Interestingly, this home was my most profitable home from a return on investment. Things can work out but people need to understand and take responsibility.
In today’s economy and job climate, it is no wonder that young people are reeling whenever they think of their student debt, but I think this is just the beginning of making life-affecting decisions. Did they know what they were getting into when they took out these loans? Probably not. But did they think about the cost when they decided on which college to attend, what they majored in and what their job prospects would be, or when they chose the 4-year campus experience over the community or online college route? Did they consider getting a job with a company that offered tuition aid while they worked toward their degree? Probably not. But they should consider the cost of their education as an investment in their future. Sure, it will take years to pay it off. They probably won’t be able to buy a hot car (I don’t understand why a $35,000 student loan should take 20 years to pay off when it only takes 6 years to pay off a $35,000 car) or a house or even marry until it is paid off. But when all is said and done, that degree is theirs forever and always. They own it. Now if you are looking for sympathy, mine would be with the parents who co-signed loans and are on the hook for it if their kids don’t pay, or who used their retirement money to finance their kids education and are now facing a grim future of their own.
Financial education is needed in high schools and at home. Parents and children need to change their thinking about debt and their willingness to accept it. Kids have no idea how long it will take to pay off $35,000+. Parents have no idea what they are getting themselves into by minimizing 401(k) contributions so they can help pay for their kids college now.
This is a serious problem and it is not correcting itself. A recent documentary (Ivory Tower) explains that the cost of college education has increased over 1,000% in about 30 years. That’s ridiculous! But since our culture deems college as a necessity to a successful life, we finance it and worry about the consequences later.
The only solution right now is for parents and their kids to get creative in how they achieve that degree and commit to NOT financing it through loans. Maybe it’s a 5-year co-op program, PT night school, employer-paid tuition reimbursement, 2 years of community college & 2 years of your diploma college, or a combination of the above. Since higher education is not getting any cheaper, it is up to the customers to change their behavior.