May 1st marked National College Decision Day! It was the deadline for students to confirm where they plan on spending the next four years, or so to pursue their higher education. Many high schools across the country have programs celebrating where students plan on attending college. So many of the students and parents have big dreams about where their children will attend college until they start looking at the cost and realize that their dreams may not come to reality.
The question I want parents and students to consider before they accept and sign off on a loan to fund college is will the degree be worth the cost of tuition. If your child has decided that they want to be a math teacher, is it necessary to pay $100,000 plus in tuition costs to teach math? You could get a degree at your local state school, save on tuition and have the same outcome when you graduate minus the huge debt load you would have incurred attending the institution of your dreams.
As an advisor, I have heard stories of buyers remorse from so many young professionals who are now facing the student loan payment while trying to get adjusted to adulthood. Many of the young professionals confessed that they were not thinking about the future financial impact of paying back the student loan when they signed the dotted line and how the loan payment would affect their lifestyle when they decided to purchase a house or car after graduation. Reality sets in for both the parent and the student when the student has to move back home after college because they can't afford a place of their own and pay the student loan payment.
Unless you have a full ride or funding that will cover most of your cost for the school, think twice before you sign off on a student loan. Consider the following:
- Will the degree from the institution increase my chances of landing the job I want out of college?
- Will my degree position me to receive a salary that will allow me to pay back my student loan and other lifestyle debts?
- Why did I choose the institution- a family tradition, popularity, prestige, major?
- Can I/family afford the tuition and loan payment?
- Would I have the same educational outcome if I chose another institution that cost less?
- How will my life be impacted financially after graduation by attending the institution?
So many students and parents are getting wrapped up in all of the excitement of college. It is a very exciting time. I get it! I have a son who is about to head off to college in the fall. The issue that I am having with parents is making sure they are having a reality check with their child. Are they having tough conversations about the cost of higher education and how that could affect their lifestyle after graduation?
According to an article in Forbes, "There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. Student loan debt is now the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans."
We need to do a better job of educating our students about debt, period. Give our students a better financial head start on adulthood and not burden with student loan debt. Student loan debt is just the start of what's to come for them if they don't learn now about the financial impact debt has on our lives.
About Terrell Dinkins, MBA, ChFC®, CDFA®
Terrell Dinkins, MBA, ChFC®, CDFA® is an investment adviser representative of and offers investment advisory services through OBN Wealth Advisors, LLC, a registered investment adviser offering advisory services in the State of Georgia and other jurisdictions where registered or exempted. Main Office: 950 Eagles Landing Pkwy, Suite 216, Stockbridge, GA 30281. Tel: 404-723-9780. Website: OBN Wealth Advisors. Image courtesy of Cari Dobbins from Pixabay.