If you spend even a minimal amount of time with people in their 20’s and 30’s, you’ve heard one story so many times by now that it’s a kind of cliche. It goes: “huge college debt, can’t find a job in the specialty I studied, financial freedom a long way off.”
With over a trillion dollars in student debt floating out there at present, economists are predicting a collapse that could rival the mortgage debacle of 2008. The only thing that seems to be preventing this at the moment, in fact, seems to be that most of this debt was extended by the federal government, which tends to just go on and on quietly bailing itself out. According to the Education Department, payments are only being made right now on 38% of that total. Part of that is due to students who are still in college and have a “grace period,” but a significant chunk of the non-payers are folks who have just given up trying to pay back their loans.
There’s allot of personal pain in those trillion dollars. If you’re about to enter college and you don’t give a good deal of thought to how you will avoid this type of suffering, you may be doomed to repeat it. Here are some typical mistakes that will practically guarantee that you’ll join the ranks of those wounded by big college debts.
1) Focus only on vague long term goals that your degree will help you achieve
It’s good to have a long term vision of where you want to go in your career. But one of the worst and most common scenarios failing to get a good first job out of college and then spending six years working in a restaurant. Studying in a sub-specialty can be one way of combating this. Rather than a general business degree, for example, get a business degree specialized in accounting, technology or project management. People typically change direction several times after they graduate. But having a sharper focus can increase your chances of getting that all-important first job.
2) Don’t stop to think what percentage of your likely salary you will need to use to make monthly college loan payments
A standard rule of thumb is that it’s acceptable to have to spend about 10% of your monthly salary on loan payments. If you don’t actually run the numbers on how much your projected debt will cost you every month after you graduate, you may end up eating a great deal of peanut butter. Even 10% is hard enough when you consider monthly costs for rent, food and other basics.
3) Study the classics
I confess that I was an English major in college. But that was in the 1970’s when pretty much every college grad with a pulse could get hired somewhere. Not so anymore. I know it’s considered tasteless and crass to criticize liberal arts education, but in these times any student who decides to study philosophy is headed for trouble. Better to get a degree in software development and read the great philosophers in your spare time.
4) Choose a career path that doesn’t exist any more
There’s a real danger in looked at a website or two (perhaps like this one!) and quickly decide that some career or other looks pretty nice. Don’t decide so quickly. Find a way to talk to someone who is actually in the business you’re interested in and ask what they think the future holds here. I happen to be in media. I can tell you that studying graphic design for magazines is an absolute dead end, while getting a degree in social media can make you a very interesting job candidate. Find out what’s up today in your area of interest from someone who has already been successful there. It can be surprisingly easy to get at least a phone talk with someone in senior management if you send them a nice email. People are often flattered to be asked for advice.
5) Take a nice long time to finish school
Many online schools in particular offer accelerated programs or flat fee tuition structures that can really help you save — IF you work hard to get through school quickly. If, on the other hand, you dawdle along, end up taking courses that don’t actually count toward your major or fail some classes and be forced to retake them, you will get hammered on cost over the long run.
6) Pick a school because it has a familiar name
Some colleges spend millions on advertising and others are just so old that you’ve seen their names a million times. Neither of those two things guarantees that they will provide you with a good education. The key is to find out as much as you can about the particular academic department you are going to study in. Who is the chairman? Have any highly successful people graduated from it? What does it offer that’s different from the same department at another college? There are lots of less-known colleges out there, including some state schools, with spectacular programs in certain majors, even if they don’t have big names.
So many articles talk about degree holders making more money, having better health and even happier marriages (yes, that has been documented) than non-grads that it’s easy to think that success is probably inevitable if you go to college. It’s not. You’ll have your best chance to benefit from a degree if you pick one that has a real “here and now” application, and a cost that’s reasonable given the salary you are likely to earn with it.