Thursday, May 28, 2009

Why School Loans Suck Even More

I came across this article from Businessweek about student loan debt, and started to think through a few things as a result. According to the article, the average college grad is 33 before their net earnings catch up to counterparts who never went to college. And get this: this data is for public university grads--meaning the age is older for those of us "lucky" enough to go to private institutions.

Without going off on too much of a rant, this is all the more reason to understand what you want to do with your life while you're still in college. If the statistics hold true, the average student changes their major nearly three times before they graduate college. In some cases, this results in more time than the standard 4 years at school...which means more money being spent staying IN school. Which basically means you're likely be nearly 40 by the time you pay off all your debt. And this doesn't even include graduate schools for professions like law or medicine (speaking of which, over 50% of general medical practitioners say they wouldn't be doctors if they had to do it all over again).

Consider this: Paul Allen, co-founder of Microsoft, dropped out of Washington State College after only two years. Michael Dell, founder of Dell Computers, never finished at the University of Texas. Barry Diller, CEO of IAC Interactive, dropped out of UCLA after only 3 weeks. And the list goes on and on with the likes of Mark Zuckerberg (Facebook), Bill Gates (Microsoft), and Steve Jobs (Apple).

...It strikes me that a lot of people who drop out of college early and go on to have wildly successful careers seem to be the ones that knew what they wanted to do and just went after it. So aside from saving a bunch of money, they saved a bunch of time and were able to hone in on what they were interested in much earlier than most of us.

Maybe all those dropouts were onto something...


Kevin Pack said...

Hi Phillip. I am curious what your thoughts are as far as paying for college. Dave Ramsey, for example, maintains that there is really no such thing as positive debt and that tuition should be paid for with cash. Robert Kiyosaki, however, maintains that there are such things as positive debt and college is one of them. Basically, a person is incurring debt in order to potentially make more money - it is a positive investment. What are your thoughts?

Phillip said...

I think it all depends on your own personal situation. For some, incurring debt for tuition is ok because they have enough discipline to create a plan to pay off the debt. Of course, if you're like most Americans (statistically speaking), it seems that the lot of us are incapable of staying disciplined enough to pay off this debt with a plan.