It’s graduation season. You’ve seen or will see in these pages coverage of more than a dozen public and private high school graduations, representing a rite of passage and the hope of a limitless future.
While the ceremonies themselves are pretty boring and filled with too many selfish parents in the crowd who chatter throughout and shriek long and loud at the mention of their kid’s name, rendering inaudible the next few names, I do, at least, enjoy commencement speeches.
I’ll probably never be called upon to give a speech at a graduation — for good reason — but I do know exactly what I’d say if anyone ever gave me the opportunity and microphone.
Don’t do it.
Oh, go ahead and graduate. Just don’t make the mistake that so many are making by incurring massive amounts of crippling college debt.
While there are numerous great professions that pay well and do not require a college degree, the statistics show that a degree affects earnings more than ever. A Georgetown University study found that, on average, college graduates earn $1 million more over their lifetime than non-graduates. A recent study by the Pew Research Center found the median yearly income gap between high school and college graduates is around $17,500.
But what good does making more money do if it is just going to repay student loans?
Well aware of the aforementioned statistics regarding income, college enrollment grew by about a third between 2000 and 2010. Not surprisingly given the laws of supply and demand, the average annual cost of a four-year college has more than doubled since 2000. Since 1985, college costs have risen four times faster than the consumer price index.
It’s really lucky, then, that the government gives more grants than ever before, right? Not really. Because those grants go to folks who couldn’t begin to afford college without them and aren’t enough to fully fund college, those who are given grants are 88% more likely to accumulate student debt. The good news (or bad news) is that it’s easier to get a student loan than a car or home loan.
More need for college plus higher prices for college plus easily available grants and loans have created an unprecedented amount of debt for those with the least ability to pay it back, recent and future graduates.
Forbes reported last year that US student debt was $1.52 trillion — that’s trillion, with a “T” — and that more than 44 million people owed debt to the tune of nearly 40,000 on average.
Nearly two out of every three students graduating college today has accumulated debt and 2% of those with student debt owe more than $100,000. And keep in mind, plenty of former students who never graduate also pile up debt.
Older people decry the way millennials put off adulthood — and millennials commiserate about the difficulty of “adulting” — but one of the main reasons for this is the massive mound of student debt.
It’s a big part of why young people are living at home with mom and dad longer and why they are not interested in buying houses and why they are putting off getting married and starting families as well as businesses. All of the above means less contributing to the tax base at a time when demands for services and infrastructure are increasing.
It’s hard to even think about achieving the American Dream when you’re in the middle of such a nightmare. And, for many, it never goes away. Even declaring bankruptcy won’t get rid of most student loans.
It’s no wonder Democratic presidential candidate Elizabeth Warren is calling for universal free college tuition and forgiveness of debts.
No, she has absolutely no idea how we as a nation would pay for that radical plan, but that doesn’t mean it won’t get her some votes from debt-ridden graduates, current students and parents of future students looking for some way out.
So, high school graduates, consider your options carefully. Instead of simply taking out loans and immediately heading off to good old Overpriced U., think about living at home and working for a year or two and saving up for it. Think about community college. Think about the military. Think about a trade school.
Above all, think realistically about your future. If it definitely includes college, are you going into a field that’s going to pay a six-figure income upon graduation? If so, go to an expensive college and take out loans because you’ll be able to pay them back (as long as you can actually, you know, land one of those jobs after graduation).
If, on the other hand, you’re unsure of your future or you’re planning to be a nurse or a teacher or some other professional who is essential but not necessarily particularly well compensated, don’t go to some $50,000-per-year school that’s going to cripple your ability to start a life.
Don’t do it.