Does debt have to be part of the college experience?

When I started down the road of going to seminary, I made a commitment to avoid student debt. It is something that, even if it meant taking 10 years to get a two year degree, I am committed to avoiding. I’d already made that mistake once. The first time I went to college, it was funded almost entirely with student loans. When I got out of school, I owed about $15,000, and eventually got a job that paid a whopping $12 an hour with which to pay it off. (I shared my story and experience in greater detail here).

I wasn’t alone, though. Most of my friends and classmates had tons of student debt, and a number of them are only now getting out from under it all, 13 years after we graduated. Entire generations have been crippled by college debt—to the point that it’s not assumed that if you go to college, you’re going to come out owing tens of thousands of dollars.

What I wish I’d known then was whether or not this could have been avoided. Could I have gone to school and not come out the other side drowning in student loan debt? Was there any way for me to eliminate it up front, or at least minimize it?

This is one of the reasons I’m looking forward to reading Alex Chediak’s forthcoming Beating the College Debt Trap (despite it being written based entirely from the perspective of the American college system). Recently, Alex agreed to answer a few questions about his new book. If you’re a student or parent figuring out how to pay for school, or a graduate looking to pay off your loans without living with 18 roommates, I hope you’ll find the discussion helpful.

You wrote a book for students a few years ago called Thriving at College. Your new one, Beating the College Debt Trap, is also for students. How do the two differ?

Thriving at College is about making the most of the college years, about using that season in life as a launching pad into all that’s associated with responsible Christian adulthood. But while I briefly addressed money management skills, the whole idea of paying for college is more or less assumed.

In the four years since I wrote Thriving at College, the economics of college have continued to evolve. In 2013, a majority of families (57 percent) reported a student living at home or with a relative, up from 43 percent in 2010.[1. Douglas Belkin, “Parents Shell Out Less for Kids in College,” Wall Street Journal, July 23, 2013.] Online education is increasingly popular. “Non-traditional” college students (i.e., not 18-23 year olds enrolled full-time) have become increasingly numerous. And, of course, a greater percentage of college students are borrowing greater amounts of money each year, even though starting salaries for graduates have been virtually stagnant for a decade.

For many in our society, college seems maddeningly out of reach. But this is an illusion. The hopeful message of Beating the College Debt Trap is that Americans from all socioeconomic backgrounds can, armed with accurate information, and through the exercise of discernment, resourcefulness, and creativity, get the training they need to access a meaningful career without going broke in the process.

Is this a book for families with more challenging financial circumstances?

First generation students certainly face unique challenges with the college experience. It’s not just that their parents have a limited ability to guide them through the maze of standardized testing, college applications, and filling out the FAFSA. It’s that they don’t have the professional networks that many of us take for granted. I’m talking about the people who encouraged us to pursue specific majors and colleges and exposed us to countless opportunities for advancement. As I discuss in the book, first generation students tend to undermatch—they pick colleges that are below their academic abilities. Some of these colleges lack the financial means to give generous need-based tuition reductions, which means the very students most in need of assistance end up carrying higher than necessary debt loads.

But plenty of middle class families fall into the trap of borrowing obscene amounts of money so their children can attend “the college of their dreams”—as if the incremental value of a “prestigious” college is higher than the incremental value of a college degree. Provided you graduate, the research shows that where you go to college is less important than that you go to college. The other way this trap works—and I know I’m on sensitive ground here—is this notion that “my child must attend a Christian college, whatever the cost.” The nurturing environment of a distinctively Christian institution has its advantages, and I do think it’s often worth it if you have the money, but it’s not as if Christian students can’t be successful at secular universities. I’ve met graduates of Christian colleges with debt loads greater than twice their annual starting salary. They simply would have been better served going elsewhere, and that’s by no means intended as a critique of their institution.

What is the argument you make in Beating the College Debt Trap?

The central message of the book is that Americans from all socioeconomic backgrounds can, armed with accurate information, and through the exercise of discernment, resourcefulness, and creativity, get the training they need to access a meaningful career without going broke in the process. I unpack this in four sections which build on each another.

First, I examine some of the assumptions people make about the college process. There’s the perspective that just about everyone should aspire to earning a bachelor’s degree. This view fails to account for the diversity of talents and interests young adults have, not to mention the diversity of jobs in our economy. Associate degrees and trade schools, for example, can represent excellent paths to rewarding professions. Then I examine the assumption that college debt is fine because “it will all work out after graduation.” This is another variation of the “everyone is doing it” myth. The point of this section is that unmasking false assumptions is a prerequisite for smart, informed decision-making.

Second, I assess three crucial decisions: the choice of a college, the selection of a major, and deciding what to do about loan opportunities. With choosing a college, I address three common pitfalls that lead to students spending more than they should. With choosing a major, I stress the importance of assessing your skills/interests (looking inside) and learning about the prospective field (looking outside). I also discuss the differing financial prospects for different fields, the dangers of over-specializing, and how to take the right steps during college to best stand out to employers after college.

Third, I look at the nuts and bolts of earning and spending during the college years. What can college students do to earn more and spend less? I give a bunch of ideas while explaining the importance of living frugally. The possibilities for professional development during the college years are also discussed. And I warn of the danger that credit card dependency represents for college students.

In the fourth and final section of the book, I look beyond the college years. New graduates face big hurdles in what’s become a slow-growth economy. First-job wages for college graduates have been stagnant for about a decade, even as debt loads at graduation continue to explode. In March 2014, a reputable survey found that only one in five 2012 & 2013 graduates was earning over $40,000 per year. Graduates need to jettison the entitlement mentality, roll up their sleeves, and prove themselves in the marketplace.

Underemployment is a common phenomenon for young graduates, but not all underemployment is bad. Graduates have to distinguish between jobs that have long-term potential and those that don’t. And if they job-hop, they need to do it in a way that will make sense to future employers—in a way that lets them build on their existing skills and that contributes to the narrative arc of a nascent yet discernible career trajectory. That’s how financial and professional advancement are earned, and that’s ultimately how twentysomethings can kick their student debt to the curb once and for all.

Beating the College Debt Trap is currently available for pre-order. Zondervan and Alex have also put together a great pre-order special: when you pre-order the book, you’ll receive a free parent-child discussion guide as well as discounts on Alex’s other books. Learn more about the pre-order special here, and consider pre-ordering a copy today.

photo credit: Owned. via photopin (license)