The College Scam

Is college a scam? As many lives as student loans are ruining and with all the lawsuits coming out against these for-profit colleges, I don’t blame those who might think that the college path could cause more harm than good.

However, I don’t think we should blame the college experience for our economic ills. Rather, our best bet is to reevaluate how we prepare for and approach college. No matter how many new athletic facilities are built or how extensive the sushi options are at the dining hall, the purpose of the school is to educate you. Once you start paying for anything outside of that, you’re over paying and you’re risking your long term financial future for temporary gratification.

I’m willing to bet that most of those who come across my blog are probably already out college or in college. But if you have kids or other younger relatives, I recommend that you impart the following wisdom onto them to prevent them from making the same mistakes that us millennials have made. Changing the tide of generations held hostage by mounting debt happens one person at a time.

There are many things that students or recent graduates cannot control. For example, stagnating salaries or under employment are a result of corporate greed that flows all profits to the top and a baby boomer generation that is still working. I’m not interested in wasting time discussing things we can’t control. That effort should be dedicated to factors we can change. So here we go.

Go to a great state school. Unless you got into Harvard or Yale, going into 6-figure debt to go to Villanova will not make that much difference on your résumé. Nothing against Villanova. I could have used any other college (Boston University, Morehouse, Spellman, Bentley, Northeastern, etc.). The point remains that, unless the school you’re attending is #1 in the country for the program you’re studying, if it’s not an Ivy, the prestige will be marginal relative to the cost. Note that I said GREAT state school. If your state school is ranked dead last, you might want to cross borders. Even the out of state tuition will be cheaper than a private college.

If you insist on getting a private school degree, transfer from a (great) state school. Being at a state school for 2 years can mean the difference between $140k in debt and $200,000 in debt. Sure, you’re still in debt, but that extra $60k will make all the difference. If you don’t think it will, read these stories and you’ll see how terribly wrong any amount of debt, let alone 60 grand, can do.

If you don’t know for sure what you want your major to be, focus on your general education requirements first rather than change majors every semester just to test the waters. Why? Because if you declare a major and start taking classes, you’re paying for classes that may be of little to no use for whatever major you end up sampling next. Meaning, you’ll be in school longer and it will cost you more.

Work hard academically. This will help you 2 folds: 1) the better you do, the less likely you are to have to repeat a class and end up paying for the same thing twice and the less time you’ll have to spend in school. 2) it means you’re more likely to get scholarships or merit based grants to help offset college costs.

Work hard at your part-time job. No one who is in college, unless they come from a wealthy family, should be without a job. Even if it’s a few hours a day a few days a week, you should find a reliable source of income. Even with scholarships, your books aren’t covered. Not to mention there are day to day living expenses that you should not be taking out high interest loans for. Also, having a job will teach you to manage a budget. We tend to be more careful with money we’ve earned. The first time I ever balanced a checkbook was in college. I needed to know how much money I would have left until my next paycheck and how I would stretch it. This helped put me on the path to financial discipline. My family never taught me what budgeting was and all around me family and friends were having their cars repossessed or losing their homes. My little minimum wage job in college showed me what it was like to wait for my next dollar and do my best to manage what I had left.

Rent books and if that’s not possible, buy used. Resell as quickly as possible before the edition becomes useless and avoid selling back to your school at all costs. With the level of access we have to technology, there’s no reason to get $20 back for an $80 book when you can sell it on Amazon for $50.

Accept your situation, don’t compete with others and understand that it’s temporary. If you’re an under employed college student, you will be broke. Living like you’re not broke in order to keep up with the Jones Kids will set you up for failure. It doesn’t matter if your friends are shipping and going to Hawaii for spring break. You’ll have the rest of your life to travel in style. Don’t go in debt because you forgot what school is about: the degree, not the lifestyle.

Remember that your time is valuable. We’ve all joked about the 5th year senior or the guy who been in school so long he was a junior when you were in 7th grade. The truth is these people are paying through the nose for something that shouldn’t take this long. Tuition goes up about 2% every year. If you graduate in 4 years, you’re paying 6% more senior year than you were paying freshman year. So why be there for a longer and paying a 5th year of tuition which will now be 8% higher than your first year? In a lot of ways, time really IS money. Don’t waste it.

Be mindful of your major. Engineering? Can’t wait for you to graduate and give me a loan. Psychology? Well, unless you’re going all the way through for a PhD, your employment opportunities will be severely limited. Please, I do not wish to be bothered with unverifiable anecdotal evidence about your 2nd cousin with a bachelor in psych who makes 6 figures. I didn’t say you couldn’t find a job. I didn’t say you’d be a failure. Your prospects just are not the same. Jobs that require a psych degree often want people with a graduate degree. Your employment prospects will not be the same as someone with an accounting degree studying for a CPA. That’s the reality.

If you don’t know how to use credit wisely or if you have impulse control problems, keep away from credit cards. School loans will be enough to hold you back. Don’t let credit card debt be a factor.

What am I forgetting? Is there anything you’d do differently given what you know now?

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