The higher education bubble is real friends, if you’re in high school right now you definitely need to be aware of it and prepare yourself for the world in a few years.
Why a bubble?
The short of it is this, when things are easy to borrow money to buy the price of those things goes up and up. See the housing various housing bubbles in our history. When credit is ‘cheap’ (interest rates are low) then more people can ‘afford’ more expensive homes. This chases up home prices because that couple can afford the extra loan with a low interest rate. Eventually the prices get so high and people borrow so much money that even the tiniest setback in prices can cause people to get hurt on their loans (owing more to the bank than they could sell for).
Tuition loans are even worse than the loans that caused the housing bubble of the 2000s because virtually any 18 year old can qualify for government backed loans. Imagine if you didn’t need a down payment or a credit score to buy a home, well that’s essentially what the student loan market is.
College is often not a great investment:
Houses are not an investment even though most people consider them to be. That’s a post for another time, but my point is that in a lot of cases a college education isn’t a great investment. There are plenty of careers in which college helps (or is necesary) such as doctors or accountants. These people are still in demand and can be pretty certain of obtaining a good enough paying job to make their inflated tuition costs worthwhile. For many however, school is a negative return proposition. You shouldn’t be borrowing 200k for a degree that will net you a 40k salary out of school with limited growth prospects. “But I love what I do!” you may say. Awesome, that doesn’t make it a good investment and that’s my point.
But you still need the degree:
Maybe. Plenty of people are forging their own way now and recommending the same thing. See http://www.jamesaltucher.com/2010/02/dont-send-kids-college/ his site is great. For those that insist, I say good for you. I sucked it up and got the degree, and have held jobs that ‘required’ it (as well as several that didn’t ever ask). All I ask is that you don’t borrow over 20k to get the degree you want.
Tips for paying for college:
If you came here wondering how to possible afford college here are a few tips I can give you.
Skipping a traditional university to learn a trade, or do your own thing is not really that outrageous of a proposition anymore. But don’t expect to just fuck off to thailand for four years and earn 60k when you come back home. If making money is your desire, you’ll need to bust your ass at something and earn those skills worthy of an income. There are plenty of industries so starved for talent that they’ll throw the ‘HR’ requirements out the window for someone good. Actually, just find companies that don’t have HR people and you’ll be fine. The trades (plumbing, electrician etc.) all yield good wages. Mechanic certifications are also reasonably priced and can net you stable jobs. If the idea of working with dirt appalls you and your white collared family, fair enough. Software development and other technically related fields all can get you paid without college. You likely won’t be able to work for a giant like Microsoft (though Google doesn’t look for degrees anymore), but tons of mid sized firms will hire you if you have the talent. For example in Chicago, the electronic trading industry has huge demand for good engineers and would likely never pass you up just because of college. The skills road is a painful one, most people go their entire careers without building any.
Go somewhere you can actually afford:
Here’s a crazy thought, if you have no money from parents and nothing saved go somewhere cheaper for school. Go to a community college to take all your undesirable classes for pennies on the dollar and transfer to the University that won your heart.
Here’s another secret, you can be enrolled at University and a community college simultaneously. Take part time classes on campus, and take online community college courses to save an obscene amount of money. I caught on this a little too late, but was able to save a few grand by transferring some community college classes over. (I did a few while still in high school too that transferred). Find a community college that has classes that transfer directly over to your University, and take as many as you possibly can. If you have even a part time job you could pay your tuition in cash for a few semesters.
Go to a college where you can be a full time employee
If you have a skillset (and even if you don’t) there’s a possibility you can get a full time job at your college. The benefit of this? Salary plus many schools will comp their employee’s free classes. My last two years at DePaul I worked as a computer systems engineer (linux sysadmin) and received a good salary plus completely free tuition. Was I a prodigy? No not at all. But I was able to get my last two years paid for while making a salary (and benefits). Pretty sweet deal if you ask me, so I’d encourage you to look at your school’s job posting for full time gigs. Not a tech person? DePaul hired full time front desk people too, lower salary but same tuition benefits.
Scholarships and Grants:
This is an obvious one, but go to schools that offer you fat academic scholarships. Also, there are an insane amount of grants/scholarships available to anyone. Check out cappex.com (my first internship in tech was there) for an amazing catalog of free money you can apply for. If you really hustle it, you can very easily scrounge up 15k a year in money.
I guess the reason I wrote this article is to put more content out there that might get a high school student to realize there are alternatives to just borrowing a bunch of money for the school they want to go to. If you have any other questions just drop me a line. firstname.lastname@example.org