Category Archives: Finances

College Affordability – Back in my day, I paid for college by working hard

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“Back in my day, I paid for my college by working hard all summer.”

It is hard for most students to image a time where you could cover your tuition expenses by working a summer job.  When I was going through school in the mid-nineties, I remember working each summer just hoping that I would make enough money to cover my school supplies, books, and spending money to get me through the year.

This chart shows us:

1.  The minimum wage has not kept up with the inflation rate of education.  Most students work entry-level jobs during the summer that make minimum wage.  Here is a chart that displays the percentage of inflation just from recent years (2003-2013, Source)

(Bureau of Labor Statistics)

2. We need to guide emerging adults to set goals for your summer employment that are reachable, concrete, and encouraging.  For example, “My goal for this year is to cover my books, and spending money for the year.”  The gap between their wages and debt demotivates them to get a summer job.  When you know that you are not going to make enough to make a difference in your fall loan balance, it can be discouraging.

3.  Provides an understanding of the financial obstacles that cause emerging adults to drop out of college.  While more people are attending college each year, more are not able to finish – often due to financial reasons.  The inflation rate of education is only one of the financial difficulties that emerging adults face after they leave high school.  I believe that it is essential for the church to understand the obstacles they face if we are to make them feel welcome in our churches.
David Boyd 1 (1) Dr. G. David Boyd is the Founder and Managing Director of EA Resources, who after writing this blog entry just texted a thank you note to his father for helping him make it through college.

Life with big student debt: tales from four college graduates

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I wanted to share an article with my readers about living life with student debt.

The average debt for a graduating student in 2013 was $32,500          (Source).  This number continues to escalate with the rise in college tuition.  This number includes an average of $3,000 in credit card debt.  

If you don’t have time to read the whole article, here are a few notes:

1.  Big-name schools are not always worth the big price tags.

It is important that you know that universities want your money.  They NEED your money.  As you step onto campus, please know that they are trying to sell you on their campus, their classes, and their reputation.  Many schools say that their rankings or reputation will instantly open doorways to higher-paying jobs.  In many situations, this is a marketing tool, and is not based upon real data.  Jenny Hecht says, “I didn’t know that once I had my [master’s degree] nobody would care where it was from.”

2.  Don’t take every loan that comes your way.

© 2007 Quazie, Flickr | CC-BY | via Wylio

Education financing is a big business, and there are many people who will gladly give you loans that you feel will lead you to your dream life.  However, many students are waking up from the dream, and realizing that being buried by debt is a nightmare.  Before you accept a loan, make sure that you have done your homework.

“At 18 years old, you don’t really know what you’re getting yourself into,” says Gorden, who wishes more advice had been available then. “Those last two years, I was approved for over $60,000 – for a 20-year-old, without a cosigner, with no job, no sense of a future job – and they just gave it to me.”  

As a emerging adult, you will be showered with money; however, none of it is free.

3.  Educational Debt can grow even after college.

While you can request loan deferment or refinance, your debt will continue to grow if you are not able to make your payments.  One student wrote that she owes about $5,000 more than she did when she graduated, due to a few years when she couldn’t cover all of the interest payments.  Delaying payments on a loan is a serious decision, and should not be based solely upon your dream of one day landing a higher-paying job.  

4.  Take time to think about how your debt will affect your future.

It is important that you take responsibility to think through your financial future.  Many students bury their heads in the sand, and ignore how debt will affect them.  “But you don’t really think about what it actually means to have a house worth of debt, on a higher interest rate than a mortgage, until you’re getting close to graduating and thinking about having to repay them.” There are financial on-line tools available to you to help you understand what your future loan payments will be, and how they will affect your budget.

Education is an investment.  Make sure that you make a wise decisions during the journey.

School Debt Consolidation – Don’t Get Fooled!

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Debt from Flickr via Wylio

© 2013 Simon Cunningham, Flickr | CC-BY | via Wylio

Thieves will always follow a trail of money.  In today’s world, educational debt is a big business; therefore, it should not be a surprise us that people are making a living off stealing from those who are buried in school debt.

The average debt for a graduating student in 2013 was $32,500 (Source).  This number continues to escalate with the rise in college tuition.  This number includes an average of $3,000 in credit card debt.  Debt is difficult to repay for students who graduate, but we must also remember those who are not able to finish their education.

Feelings of desperation causes people to run towards news that sounds too good to be true.

Here is the article that explains the scams.

Debt is not a game.  It is real, and will affect your life.  Proverbs 22:7 says, “The rich rule over the poor, and the borrower is servant to the lender.”   As Christians, we must use wisdom as we make decisions about educational debt.

 

Building Your Credit – As two become one.

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build credit togetherAs I talked about to young couple starting marriage, one of their main concerns was building their credit score.  Credit scores are important for couple who are considering borrowing money for larger purchases like a car or home.  After two people say, “I Do.”  Your credit score affects both of you.

I searched around the web and found a great article for those who are in the process of building their credit score.

The only part that I don’t appreciate is there assumption on Point #6, “All relationships end.”  While divorce is common even among Christians, what a terrible outlook on marriage!  If you assume that your relationship is going to end, you will not fully give yourself to the marriage.  Marriage relationships require both partners to fully commitment themselves to the long-haul.

May God guide and strengthen your marriage.

 

 

Avoiding the College Loan Bubble Burst

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I bubble-dark-remember very clearly when we were purchasing our new home.  There was some discussion about some Bubble Bursting in the Housing market.  I didn’t understand what that meant, and doubted that it would ever really affect me personally.

My oh My, how I was wrong…

There has been discussion of another bubble for several years – the college loan bubble.  As the price of attending college have soared, parents and students are taking out more and more loans in order to pay the bill.  These loans are only available as long as investors and banks are willing to make the investment.

Recently a second major bank, JPMorgan has announced that they will be pulling out of the student loan market (US Bancorp stopped making student loans last year.).   While there will still be financial aid available through the US Government, these changes will have an affect on the availability and affordability of college.

While you might not be able to avoid the bubble burst, you can think wisely about funding your college education.

1.  Make sure you know (about education) before you go.

Once you hold that high school diploma, don’t automatically assume that you should go to college.  There is an usual phobia that students (and parents) have that if you don’t go now, you will never go.  It simply is not true.

Take the time to research on your own (or with a trained professional) concerning what you want to do for a job.  Research the Outlook for the profession that you desire at the Bureau of Labor Statistics and Career Infonet.  After narrowing down what you want to do, find an educational institution that can provide the knowledge and skills you need to get a job.

The goal of college is not a degree, the goal of college is to prepare you for the workplace.  If you don’t need a four-year degree, then go to a trade or technical school.

College is still a good investment when you view the increased future earnings of college graduates, but make sure you finish your program.  College debt with no job following graduation is hard.  College debt with no degree is even harder.

2.  Plan Ahead.

Planning ahead for the expenses of college is crucial in today’s world.  Talk to a financial counselor, and start taking steps now to save money towards your education.  Take advantage of AP high school classes, Clep tests, and PSEO programs that allow you start college for free while in high school.  Programs are available in many states.  As the market of higher educations makes changes, more and more options will become available.

 

3.  Use debt sparringly.blackfriday-consumerism-materialism-1251010-h[1]

Get a job to pay for living expenses.  Set a budget based on your future income (although you might not get a job right away), and don’t go over it.  Refuse to use debt for the non-essentials like a new computer or smart phone, studying abroad (unless required by your degree), or late-night pizza orders.

4.  Be wary of starting a university, if your attendance requires private funding.

If you are dependent on private funding and the bubble does burst, you may have to drop college, or transfer to another university (which always comes with additional expenses through losing credits).  Many changes are coming to the world of education, especially to schools with high price tags (which includes most Christian schools).  Changes need to occur in the Christian realm of higher education.

Many students shackle themselves to monstrous debt which seems to stand in opposition to the Bible’s teaching on money and debt.  There is a huge need to take the warning of Proverbs 22:7 which says,

“Just as the rich rule the poor, so the borrower is servant to the lender.”

Whether or not the bubble bursts, following this college advice is bound to pay off for your future.

 

 

Don’t Do the Math.

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DontDoTheMath[1]I hated math all through school.  I remember pounding through assignments day after day.  Being a perfectionist, I always had to first do the problems, and then go back and check them again.  I wasn’t bad at math, I just didn’t like it.  To all of you who for whatever reason are looking for a reason NOT to do the math, Continue reading →