Earlier this year my youngest cousin was considering where to go to college. It caused me to reflect on my own education and consider what, 10 years later, I’d learned and would have wanted to tell my 18 year old self (even though he’d never listen!). After reflecting on it for a couple months I wrote this letter to her.
I’ve removed the personal details of the letter. This was a sincere reflection on my own experience and my best effort at passing the knowledge gained on to someone I care about going through the same incredibly big decision of where to begin the rest of her life. I wanted to share it with others who may also benefit from another experience and perspective.
If you or anyone you know is at or soon to be at this very exciting junction in life I hope you’ll consider sharing with them as well 🙂
Happy almost bday and congratulations on almost graduating high school! Hearing about you and your dad visiting colleges the other week reminds me of when I was doing the same thing with my dad about 10 years ago (I can’t believe it was that long ago!) —you are right on the cusp of very exciting times ahead.
I’m writing to you because I know you are considering which college to go to which along with being a major life decision is also one of the biggest financial decisions you may make in your life. As you are making this important decision about how to best prepare for the the next stage of your life I wanted to take a minute to share with you my perspective on the decision of where to go to school.
One of the most valuable things I learned while at college was how to start thinking critically about things —that is to think objectively about an issue in order to make a more informed decision. Doing that requires taking in contrasting opinions and alternative (and often unpopular!) perspectives. My goal in writing this is not to tell you what to do but give you another perspective to help you make the best decision for you.
Warning: This is kind of long. It’s long because I think it’s one of the most important decisions you may make. It’s long because I have spent a lot of time thinking about this since I graduated. It’s long because I wished someone would have told me a version of this to me. And it’s also long because being family, I care about your future. All I ask is that you read it and think about it —a decision of this nature warrants considering as many perspectives as possible before making a decision.
So you know, my perspective has been shaped by my financial education (I majored in finance), my experience as a recent grad and my work building and managing a million dollar company. It’s also been influenced by what I’ve seen and heard second hand from my friends who took out student loans.
Before I start, I want to give you full disclosure: I went to SDSU and was incredibly lucky to have my parents pay for my education. I did not truly appreciate the incredible privilege this was until well after I had graduated. What I am sharing with you here is exactly what I would share with a younger me if I were put in your shoes and trying to decide —it’s what I know now that I would have wanted to know (and didn’t know) when I was 18. To be honest I don’t know how well my 18 year old self would have received it. Hopefully you will see this completely unsolicited advice for what it is —an opportunity to look at your decision through a different and if only slightly more experienced perspective so you can make the best possible choice (people pay big bucks in the business world for that!!).
You are considering private schools and I can understand why. I was set on going to a college in the UC system for probably similar reasons. I’m not going to spend much time talking about the quality of education you’d get there verse a public school for two reasons: 1) Having only gone to a public university I don’t know but more importantly 2) I don’t think it matters —in my opinion the #1 factor that is likely to determine the quality of your future and the opportunities you have available is the amount of (or lack of) debt you have to pay back afterwards. That’s a bold statement. Let me explain.
I know that graduating college probably feels like an eternity from now but it will come up sooner than you think —along with the obligation to start paying back your loans. As a finance major and a business manager I’ve learned a lot about debt – mainly to stay out of it whenever possible. It can be a heavy burden and take away many options in life and in business. The good thing is that the decisions we make now can significantly impact how much debt we have later. But it’s so important to really think about it now before committing to anything because taking on a lot of debt involves considerable compromises.
Right now I’m traveling, maybe for months or maybe years, I haven’t really decided. I never could do that if I was in debt. Here’s some other things I couldn’t do after school if I was paying off debt:
Buy my Mazda3 (which I love and gets me everywhere). Travel out of the country on multiple trips through my 20s. Take a job I was interested in without worrying about if I’d be able to cover loan payments. Fail at things and try new things without worrying (as much). Live near the beach or go on copious amounts of adventures with friends (with significant debt I’d have to prioritize paying that instead by living at home and not going out). Switch jobs to join a friend to work on a project I believed in even though it didn’t pay much. The ability to do all these things and so many more have enriched my life incredibly —and ironically, have contributed more to my education than my 4 years at school could ever have.
I’m not saying this to make you feel bad if you have to take on loans —education is a privilege and it’s blind luck really as far as how much we have to pay towards the true cost of that privilege ourselves. And I do think getting a quality education is worth it (most of the time). Paying for your education has the not so small side effect of making you take your education all that much more seriously —it will teach you to value your education which is the #1 thing people regret not doing more in college (me included). I saw this with my friends who paid their way and I admired that about them.
But also consider that this education is only worthwhile if it’s an investment in your future…if it creates more and better opportunities for you. This used to be true most of the time, but things are changing very rapidly in our economy and our education system as well. One has to be especially cautious now because the loans we take on from college can actually be so large that instead of investing in our future we can unknowingly be taking away from it. It sucks, but it’s true. And college is really only the very, very beginning of your education! It really is! What you learn after college and more importantly the attitude you cultivate to learning throughout your life —in my experience— is SO MUCH more important. Not to say college isn’t important (and incredibly fun), but it’s not where education ends, it’s where it begins.
What you choose to do and who you meet and what you experience after graduating will continue to teach you for the rest of your life. You can’t control how and when and where those influential moments will happen but you can prepare yourself to take advantage of them when they arrive. That’s why it’s so important to consider this decision carefully, because it can have such an incredibly large impact towards you’re ability to seize future opportunities and embark on exciting adventures later on —which is a major reason for going to college in the first place.
That’s why I think it’s important to consider the opportunity cost —what would you do with an extra $50,000 or $100,000? I don’t know what you are considering borrowing but you should. $50,000 is enough to travel the world for 3 years non stop, or to pay for a significant amount of a graduate degree or start a business. All these other things you can do with the cash are your opportunity cost. And as a young professional it likely would take years to save $50,000 (it took me 4 years at above average pay and most people I know at the age of 30 do not have an extra $50,000 lying around). The time it takes to pay it back is another form of opportunity cost. Opportunity cost is drilled into us business folks because these tough decisions are at the heart of business and choosing the “best” option can actually not be the best decision due to the cost of what we choose to give up. Considering the cost helps find the most valuable and best option for you.
Asking you to think about this now is incredibly difficult because frankly you don’t have the training or life experience that provides context for making tough decisions like this yet (you will!). And I’ve heard that frustration voiced by many who took out too much in student loans without really understanding what they were committing to and what they were trading as a result. It’s incredibly hard to know. And in business (and college is BIG business) when uncertain about something, especially financially, it’s best to hedge our bets and minimize our exposure to risk —this allows us to best capitalize on unknown opportunities in the future. When you are uncertain in the markets the last thing you want is to be heavily leveraged (aka taking on loads of debt) and be committed to a specific and dubious outcome.
That’s what I think this is all about…maximizing future options. Options for you to achieve and experience whatever it is you want in life. I think of this as freedom and it’s something I’ve relentlessly tried to protect (many things and people in life will ask for your freedom). I can think of a couple rebuttals you may have in considering this:
I’ll get a better education at X school.
You might that’s true. But it might be the same or not quite as good! The potential upsides of a marginally better education (which there is no guarantee of receiving from a higher costing university) is no where near as great as the potential downsides to financially overcommitting yourself too early.
So much of my real education has boiled down to making mistakes (which is easier to do when you don’t have major financial obligations), cultivating my own drive to learn outside the classroom and a healthy dose of chance.
A degree from X school is worth more to employers.
The honest truth is that unless it’s an ivy league school or the top school for a specific technical degree (and even then it’s still debatable) it’s unlikely to matter (in the long run) where your degree is from. In fact in some industries (like the one I worked in) it won’t even matter if you have a degree. Seriously. It will be irrelevant —however the financial consequences of where your diploma came from will not be. Once you get out of school your undergraduate degree will look pretty much the same as anyone else’s.
I want to live somewhere else.
I think this argument has some merit. I ended up living in San Diego for 6 years after I graduated and I loved it. And it was easier to do having friends there. But with a lot of debt you may not be able to afford to live independently. Many people end up moving back home for years to help them be able to pay back their student loans. Plus a college campus is always somewhere else. It’s its own world.
It’s an investment in my future.
Yes college definitely can be and often is. But if paying back college loans is so costly it prevents you from saving for your future, taking trips and exploring, experimenting with different career paths, buying a house, having kids, or other life goals you have will it still be a worthwhile investment?
It’s also worth keeping in mind that many who take out large student loans are doing it to specialize via masters and doctorates in a high paying career like law, medicine, etc. If they are incredibly sure that that’s what they want to do for the rest of their life this might make sense (although I’d argue it doesn’t for most) given the high expected future pay off. If you are investing in a liberal or otherwise general education (read: undergraduate) you typically cannot predict where it will take you or a large pay off with a high degree of certainty (although there may be!)
Here’s a couple other things worth considering:
The average salary of a college graduate is about $40,000.
This probably doesn’t mean much to you right now. But by the numbers it’s most likely where you will start (I started at $31,500 with a business degree). This isn’t a bad thing —unless you need to be making $70,000 just to stay above water on your loan payments.
Most people don’t know what they want to do after college.
This was (and to some degree still is) me! It’s totally reasonable to not know what you want to do after college because you haven’t spent much time in the real world outside of academia at that point. That’s totally OK, in fact it can be a wonderful thing, if you have the freedom to experiment, try things out, and to fail and start again. But it can be incredibly constricting if you are under extreme pressure to pay off massive student loans that continue to grow and grow.
If all this freaks you out or makes you angry or depressed it probably should a bit. I would be upset too. A good education shouldn’t cost as much as it does. Bernie Sanders agrees. It’s not fair that some people (like me when I went to school) don’t have to even think about this stuff. If it was me in your situation my first instinct would be to ignore all of this outright and pretend none of it applies to me. And I could do that, but it wouldn’t change the reality of the decision I’m making, it just makes me blind to it. But this is the perfect time for you to feel all these things —before you’ve decided. You are in the driver’s seat and you have the ability to choose where you go. Maybe you have thought about these things already and to you the upside is greater and you are OK with it. That’s great as long as you’ve considered the reality of it and aren’t deceiving yourself. I find the best way to make tough decisions that I’m happy with is to consider what the worst possible outcomes are and then decide if I can accept those should they occur.
Take time to recognize how all of this makes you feel. This is what my zen teachers are constantly reminding me to do. My experience is that our body often already knows the answer it just takes a while for the mind to catch up. Knowing you, my gut is that regardless where you go, you will enjoy yourself and learn a ton. From that perspective I doubt you can actually pick the wrong school.
I realize this all may come off as rather negative. I don’t mean to make you feel bad if you need to take on student loans and this also isn’t to discourage you from going to and enjoying college. I think investing in an education is worthwhile, it helped me immensely. But at your age there’s a tendency to feel like it’s free money and that the consequences are in the distant future where things will be figured out. There’s a tendency not to think about it, and that makes students vulnerable. Because there’s also a tendency for schools not to talk about it and parents and others involved often do not really know the full extent of the situation. I’m not sugar coating any of this because I think you are an incredibly bright person and deserve my honest opinion so you can decide for yourself.
My hope is to get you thinking deeply about the amount of loans you take out because it is a serious decision with real consequences in the near future (your early and late 20’s is the near future…trust me!). My hope is that you make an informed decision so whatever path you choose you can accept and appreciate both the ups and downs that come with it. And if it motivates you to take advantage of every aid and scholarship opportunity that’s a bonus. College was such a great period in my life and I’m sure it will be for you too! There’s plenty of exciting times and things ahead and really this is all just one perspective on how to best prepare for them.
Below are a few resources I’ve cobbled together to give you other (similar) perspectives. As is probably obvious by now I would strongly recommend getting a high quality and affordable education through the state system over a private school if you will be the one paying for it. I believe it will actually set you up with more freedom and more options post graduation. That’s my opinion based on my values and it’s what I would do if I was faced with the choice today. I wasn’t sure I’d like SDSU and honestly it took me a while to adjust (I’m not awesome with change). So I promised myself that if I didn’t like it after a full year I’d transfer somewhere else. I never transferred. I suggest considering a similar strategy.
Also I like to see the impact of financial decisions over time —it makes it less abstract for me. I make better decisions the more aware I am of the true costs involved. I would encourage you to map out your total expected costs in a similar way.
Other recommended reading before you make a decision:
Anything you can find by Seth Godin on the subject.