I think there are a variety of reasons, many of which I’ll probably still discover but I do have some theories (proven and not).
1. College is too expensive.
From the baseline tuition expense to room and board, college is ever growing out of reach of the average middle class family, not to mention lower-middle class or low income families trying to reach higher education and keep the American Dream alive. I remember as a little girl my mom started a fund and telling me she had to start saving then because by the time I went to college it would be $20,000/year. I never thought that was possible. More than a new car? My mind swam. Well sure enough, I matriculated to the private University of Miami which has surpassed that $20,000 annual tuition expense.
Thank God I had the smarts to earn academic scholarships, a service background for more scholarships and honor student opportunities, as well as a mom who wasn’t earning nearly enough- thankfully getting us maximum Pell grant and other University awards- including free living arrangements on campus. I never told anyone that, well, because I never heard of anyone else receiving that kind of deal, and I thought it meant we were really poor. Poor really wasn’t the “in” thing at UM. I didn’t even know what “Coach” or “Louis” was before the U.
This can definitely delve into a discussion of how the increasing cost of tuition has made higher education an elite institution, oftentimes out of reach of good students. Not to mention all the students who are working their way through college and struggling to balance real life responsibilities even while they are in school. (I was lucky enough only having to work for my spending money)
I remember hearing that 1% of the world has a college degree. I really hope that changes- I hope that the Congress continues to pass increases to federal aid to help students and crack down on the loan industry for taking advantage of poor and minority students.
2. Student Loans are not the magic college credit card.
That six month grace period ends so quickly you might as well fill out the deferment paperwork now. While loans are definitely a big help for living expenses for many friends I know, I still think we are taking out too much and living too large. I took out a loan to fulfill study abroad dreams and I don’t regret it. Yet, when my mom was cosigning all those loans, I really didn’t see the numbers adding up or realize how much of a burden it would be….now. These first few years when I’m trying to get life in order yet have a $250/month bill to Sallie Mae and other loan companies. I think I was late every month the first six months which surely didn’t help, but I’ll get to that in point 4.
And as the national student loan scandal spotlighted by New York Attorney General Andrew Cuomo, loan companies certainly don’t have the students’ best interest in mind. They are out to wine and dine school admissions officers to get your information and sell sell sell you loans you may not even need, and certainly at higher interest rates if you happen to be a minority student (in a practice called redlining). Even my university sold our social security numbers to Sallie Mae according to this St. Petersberg Times article. Again, we aren’t the only one. This higher education blog is a good summary of what's going on around the country.
3. Banks suck.
After college I left my credit union conveniently located on campus- and nowhere else in the city- and joined a bank whose size and marketing appeal to young folks surely meant they would cater to my needs. Yes, I chose the giant Bank of America. Well now I know that was the worst mistake, eh-hem a $640 mistake after all the fees they managed to add to my drowning account one month when I miscalculated how many emergency Dunkin’ Donuts coffee runs I had made. Apparently I’m not the only victim of Bank of America's bad policies.
Now I’ve switched to a local bank with free checking and more personal service. While it doesn’t have great returns at least I’ll be able to pay my bills until I find a better way to save money. In a recent Newsweek article there is a good breakdown of financial priorities which I am using like a Bible for my daily saving inspiration. The author, Linda Stern, places health insurance as the #1 necessity. Good job with health insurance, check. I’m ahead of the game. Next, “Get Creditworthy” another one I don’t worry too much about since my mom’s great credit transferred to me; however, I have missed some bills and have had creditors call about missed payments from hospitals, doctor visits, and student loans before so I’m not entirely sure where I stand. My favorite advice she gave was to 1. pay down high interest credit cards. (I definitely have debt there, you know a nicer hotel in the Dominican Republic and a night on the town). 2. budget online. I like mint.com and wesabe.com the best. 3. open a Roth IRA and then look into mutual funds. That is like Chinese but I'm going to try.
4. Becoming an Adult and Accepting Responsibility 101 was not offered at my school.
I am the first one in my family to graduate from college. A great achievement, sure; but also a bit of a burden. I’m charting unknown waters here with little help from those closest to me as far as advice goes. Bless my mom, for a waitress and service industry professional her entire working career, she has offered me great financial, career, and life advice. So a bit of this is learning as you go, making those Bank of America mistakes, picking up the pieces and moving on, and hopefully improving as you go.
Just recently two friends forwarded me a Washington Post article "Fulfillment Elusive for Young Altruists In the Crowded Field of Public Interest" that scared me out of my boots- eh, it’s 80 degrees but boots sounds better than “flip flops.” Basically the article focuses in on how so many graduates are going into public service, international service, they even mentioned child health causes and are stranded in low-paying, no future jobs- and yes they are all living in D.C. with aspirations of working abroad. The main girl in the article could have well as been me. Plans to serve in PeaceCorps, a history of service in Africa, same life outline going on… Apparently my friends saw the connection to my dreams in this article; and the scary outcomes that so many people in their 20s are facing.
Just check out my other friends doing awesome things:
Joelle is building a school in Tanzania
Billy is volunteering 2+ years in Tanzania teaching and building a children's center
Kristen runs an organization to build development projects and schools around the world
This post was inspired by the fact that tonight I washed my hair with $1 shampoo and $1 conditioner I found at CVS. It was the cheapest I could find and I had to pay in change. Tonight I ate some soup out of a can (which made me think of other canned items like beans and franks from the church food pantry my mom used to run) and am doing only 1 load of laundry because I have to save my $10 quarter roll for emergencies. I hope what I have shared will either scare my friends in college enough to start saving serious amounts of money or live more within their means- because, well right now all I have is this advice to give.
I’m not complaining. Like that Newsweek article pointed out, “young and poor is a time-honored stage of life. Someday you’ll remember it fondly.”
My original title for this entry was Dollars and Cents, but then I realized I didn’t have too much of those lying around to share.
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Word.
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