← Borrowed Future
Borrowed Future
Ep 3: What College Should You Go To? Avoiding the Traps of Higher Education
00:55:06
Are we lying to kids when we tell them they have to go to college to be successful? College is not for everyone and some people would be happier working jobs that don’t require a degree.
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- [00:00]
A
Back in 1980, my high school guidance counselor called me down to his office to discuss my future. Based on some test scores, Mr. Dunbar wanted me to apply to James Madison or Penn State. I told him that money was an issue and that the community college down the road seemed like a better option for me. Mr. Dunbar said a two year school was, quote, beneath my potential and gave me some information on student loans.
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That's Mike Rowe, writer, narrator, producer, actor and spokesman. You probably know him from the show's Dirty Jobs and returning the favor. Today he runs the Mike Rowe Works foundation, which awards scholarships to help students pursue careers in the skilled trades.
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A
He pointed to a poster that hung on his office wall. Which one of these guys would you like to be, Mike? The caption read, work smart, not hard. It still makes me angry when I think about it. Not just the stupidity of the advice, but the pressure to borrow money. I was 18 years old. I had no idea what I wanted to major in. I had no interest in borrowing money to find out. So I stuck to my plan. I spent the next two and a half years at Essex Community College. There I took dozens of completely unrelated courses and started to get a sense of what I was good at. At 26 bucks a credit, I could afford to experiment. So I did. Eventually, I earned an AA degree and started working. A year later, when I had saved some money, I transferred my credits to Towson University and with some help from my mom and dad, I got a bachelor's degree in communications. Total cost for all of it, less than 10 grand. Point is, I was able to start working full time as soon as I graduated in my chosen field, free from the crushing weight of a student loan. Now we have one and a half trillion dollars in outstanding student loans. Thousands of college graduates unable to find work in their chosen field, thousands more who dropped out before graduating, but still in debt, and millions of good jobs that nobody's trained to do or even excited about exploring. It's a disaster. I am concerned sincerely that we're pressuring teenagers to borrow vast sums of money in exchange for degrees that don't train them for jobs that with the potential to generate enough income to repay the loan. And that's what's happening every single day. We've given colleges and universities free reign to charge whatever they want. And so they have. The student loan crisis is exactly that. It's a crisis. And the cost of college is out of control. That image from Mr. Dunbar's wall, that image is alive and well in the minds of many parents anxious to make sure, their kids live up to their potential. Since I graduated, the cost of College has increased 1,120%. Nothing so important has ever gotten so expensive so quickly. Not food, not energy, not real estate, not even health care. The question is why? My liberal arts degree has served me really well, and I would never discourage anybody who wants one to go for it if they can afford it.
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From Ramsey Network, I'm George Camel and this is Borrowed Future, a podcast series exploring the $1.6 trillion student loan debt crisis and the impact it's having on real people. In this episode, we'll find out how we got here, the best college to attend, and the perceptions culture has created around higher education. In a world where going to college feels necessary to become a successful member of society, both parents and students alike think it's the next step, that it will give them a competitive advantage to get ahead. But if you take a step back, it makes you wonder where that mentality and perception actually comes from.
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So how did we even get here? I think that the explosion of colleges since the GI Bill, so it's been 80 years, has been about getting more and more people through the college system. And it is now a system. That's not what College was for 500 years, but it's what it became. It's easier to execute, it's easier to do at scale.
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That's Seth Godin. He's a best selling author, entrepreneur, and runs one of the most popular blogs in the world.
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So how did we end up with school being the way it is? Where did it come from? Well, it turns out it was invented between 1860 and 1900. People like Andrew Carnegie were partly behind it. It was stolen from the Prussian paramilitary system. We have data on all of how this happened. Why did we do it and why do we pay for it? We did it because factories didn't have enough compliant workers. It's really hard to get someone to give up the freedom of farming and get them to sit for 12 hours in a dark room putting widgets together really hard. So industrialists figured out that if they started training kids from a young age. Sit in straight rows, do what you're told, have, have tests, make sure you comply. Don't speak unless spoken to. Raise your hand before you. What is all that? That's factory behavior. That's why we invented it and it worked great. When we needed more factories, we had more factory workers. We don't need more factories, we don't need more factory workers. So why are we still making them? There is a Lot of blame to go around here. But not only is there blame within the family, it's way bigger than that. Because the real blame is we built a system and the system evolved because every piece in the system did what it was supposed to do. So, for example, college used to be cheaper than it is now. But some colleges figured out if they made their dorms nicer or their gyms fancier, more people would want to come. If more people wanted to come, they discovered that U.S. news and World Report would rank them higher. If U.S. news and World Report ranked them higher, more people wanted to come. If more people wanted to come, they could charge more because their piece of paper was worth more. Because fancy famous colleges are a signal to employers to pay those people more. And so the ratchet kept turning and it kept turning and it kept turning. And then well meaning people said we ought to give people who aren't in the upper middle class a chance to go have that experience. And instead of just funding the school straight out, we said to human beings, we will back your loan. But then we started rewarding people for being in the loan business. And so the ratchet turns and the ratchet turns. So we have an entire system. One of the saddest parts about the student debt crisis is that the people who least deserve it are the ones who are getting hurt the most. People who went into debt to enter the middle class, people who didn't have super rich parents, people who chose jobs that weren't on Wall street or in Hollywood, people who are everyday working folks who decided that they would put in the effort to do what the system told them to do, personally guarantee the debt so that the system would turn around and take care of them. And as always happens, the system takes advantage. Because if you are setting yourself up to be the victim, the compliant, obedient victim of the system, there are people who will figure out how to take advantage of that. I wish that didn't happen, but it does. At every step along the way, the admissions officer, the dean, the president, the person who's doing fundraising, and I know I rant about it all the time, but the football team, they're all part of a system to brainwash kids into thinking this is normal, this is safe, this is what you've been working for. Except it's not. And if someone had described what I just said about this system in 1930, no one in this country would have wanted it. No one. We backed into it one little tiny piece at a time. And the victims are 17 years old. So it's super tempting to take the easy way. All day we bump into people who take the easy way because there's a trap. And the trap is if you take the easy way long enough, then the system is going to own you forever. Whereas if you take the hard way at the beginning, you get on the other side of the system. The difference between going $1 in debt every day and getting $1 ahead every day is that a few years later, the people who went $1 in debt are really in debt because debt compounds. And the people who are $1 ahead every day get to make choices. So what this is really about is freedom. It's about earning the freedom to decide.
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What you're going to do next.
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The system seems stacked against students who dream of a bright future. Ken Coleman, career expert and host of the Ken Coleman show, shares his thoughts on how the system is setting up our students for failure.
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I think there's enough information in this world today that can tell you whether or not you truly need a four year degree. So it comes down to this. Does a degree absolutely have to happen for me to go into the field that I want to go into? That is the ultimate qualifying question.
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So if not everyone needs a college degree, what type of education do they need? Here's billionaire entrepreneur and investor Mark Cuban talking about his education experience.
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I mean, I'm in the technology industry now. I didn't do any technology when I was in high school or college and I just happened to get a job. And so I just took the time to use their computers to teach myself how to program. And that's how I learned everything. And I just dug in and said.
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This is it, it's make or break, right?
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I gotta learn where I'm a toast.
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If you're smart and you work hard because you know what? We live in an Internet age, right? You have access to everything you can take. If you want to know if you're MIT smart, you can go online and take an MIT class for free. Go prove you're smart. Walk into me when you're interviewing for a job and say, bam, look what I did with this class. I can only afford to go here. And I'm thinking, this person's smart and they're motivated and they're demonstrating to me that they know how to solve problems.
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As opposed to, I got all this.
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Debt and I saddled myself and now.
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I have no choices.
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I just have to take the job that pays me the most. You can go to college debt free.
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But you're going to have to do.
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The Work, you're going to have to get that job.
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You're going to have to go to.
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A college, may not look as cool.
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May not have won an SEC championship.
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You know, may not have won an NCAA basketball championship.
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But if you're motivated to learn, there's so many tools to learn that not only can you get the education the.
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School offers, but you can complement it with other resources to make yourself even smarter.
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There are many paths to get the education you need to get a great job, but you have to figure out the right path for you, whether that's work experience, a four year degree, or a trade school. Anthony o', Neill, author of the best selling book Debt Free Degree, talked about the opportunities available in the trades on his YouTube channel.
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I really do love trade schools. My barber is an amazing barber making six figures a year. And I had an opportunity to sit down and just talk to him about what was the process to be here. You know, when people look at barbers, they look at them like, oh, this is not a career. Well, actually it is. The man is making six figures with the potential of making high six figures because he could own a barbershop, he can come out with products, but right now he's just very well known in the city and he's cutting a lot of heads and he has a great clientele. I said, bro, what did it take? Did you have to go to a local state university? It was like, nope. What about a community college? Nope. I went to trade school. It cost me $16,000 and it took me nine months. So nine months of his time, $16,000 investment. His ROI is six figures a year now. Did he come out immediately making six figures? No, he had to work. He had to build his clientele up. He told me, honestly, Anthony, it took me maybe about a year and a half to get my clientele up. Now he's looking to open up a shop. Once he opens up that shop, he's going to have other barbers who also went to trade school, who also didn't rack up debt. Now he's going to get some of their fees, their chair fees, and now his six figures go to a little bit higher six figures. All because of a $16,000 investment in trade school and nine months of his time. Trade schools are not for everyone, but they are for a lot of people. You want to be a carpenter, go to trade school. If you want to be a welder, go to a trade school. If you want to get creative, do the research, there are a lot of trade school programs out there. That can teach you specifically for that field and get you equipped to go directly into that field as soon as you graduate. Now here's the thing. I tell this everyone. If you go to that trade school, make sure that is the career you want to focus on. Because if you do not do that, then you're not going to have the education that you may need for another career. Identify what you would love to do. Once you identify what you love to do, identify what is the best education process that can help you get there. And if trade school is on that list, I'm looking at a trade school way more than I am looking at a four year university.
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Going to a trade school or not going to college at all may feel like a non traditional path, but if the traditional status quo is what got us into this 1.6 trillion dollar mess, maybe it's better to go against the grain. Seth Godin explains if you have average.
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Grades and no money saved for college, let's agree that you have average grades and no money saved for college. Don't pretend that those things aren't true. They are true. But what we also know is that most jobs, most good, useful, happy, important jobs, do not require you to have good grades nor to go to a famous college. So let's agree on that. You're not a failure. You're just different than the kid down the street who decided to expend their energy to do something other than what you did. So here's the question. Given that sunk cost, given that that's the way the world is, what are you going to be great at? What are you going to commit to? Where can you show up to do work that is truly difficult for you? If you could begin there, I'll give you a simple example. Can you decorate a cake? How long would it take you to learn to decorate a cake? Once you learned how to decorate a cake, do you think you could get a job as a cake decorator? And if you could, what would happen if you spent two extra hours a day becoming the best cake decorator in Newark, New Jersey, and then another hour a week getting even better than that? Do you think it would be hard for you to get a job after that? Would it be a good job? Well, not compared to being some fancy guy who gets to work on a blah blah, blah, blah, blah. For now. But what happens if you persist and then the next thing you know there's a TV show about the fact that you're the best cake decorator in the world and now there's a $15,000 wedding cake that needs to be made. Someone needs to make a $15,000 wedding cake. It might as well be you. There's nothing wrong with where you are wherever you are. The question is, what are you going to do with it?
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B
Now, if your plan includes going to college debt free, community college is a great option. Let me explain. The average cost of attending a four year public in State College is over $21,000 a year. The average cost of attending a four year private college is over $48,000 a year. Now let's compare that to the average cost of attending a community college and living at home. $3,660 a year. That means a community college costs 83% less than a public in state school and 93% less than a private school. So if college was breakfast cereal for a private name brand like Fruity Pebbles, you'd be paying the equivalent of 20 bucks a box instead of just $1.49 for Target's generic version. Far out fruities. Community college is far out fruity's. Why pay 93% more when they both accomplish the goal of a delicious sugary breakfast? If cereal isn't your thing, let's compare it to name brand prescription drugs versus their generic counterparts. They both work. Why pay more for a name? Many students don't even consider going to a community college because they believe it's a lesser education compared to that of a state school or private school. Dave Ramsey, host of the Dave Ramsey show, dispels that myth.
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Thirty years ago, the difference in cost of a community college, a state school and a private school was not a lot. And the difference in what you got 30 years ago in terms of the quality of education was a lot. So the difference from community college was a big jump up quality wise to state school, a big jump up to a private school. There was a big difference in the quality of education. The weird thing is, is that the quality of education has come up on the community college so much and on the state school so much that they're almost all three parallel now, depending on where you go in the nuanced field of study. And the weird thing is that the cost didn't stay parallel. The cost went dramatically different. So a community College might be 1/10 of a state school and it might be 1/10 of a private school. That wouldn't be unusual at all. And it's definitely not only 10% as good an education. So you're getting what you pay for at a community college. But here's the thing. A lot of people, get the basic knowledge of business, the basic knowledge of communications, the basic knowledge in IT field at a community college and get a really good career out of it. Where it used to be, it was more the substandard education level. The quality of the professor, the quality of the curriculum wasn't as high. Information is just much more accessible now than it was 30 years ago to the average person.
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If you need further proof that a community college isn't subpar compared to a state school, meet Laura Brown, a PhD student in biomedical sciences. Do you think community college held you back in any way going there for two years?
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I don't think that going to a community college hindered me in any way. I think that other people see it as a huge, huge hindrance.
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When I was working at the bank one time, someone asked me where I.
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Was taking classes and I told her the community college. And she said, I would rather not have my kids go to college than go to the community college. You must be so embarrassed. And I had no idea what to say to her. But no, it absolutely didn't hinder me. I found from the community college to the state university, it had roughly the same rigor in its classes. I think that it's just a misconception that the dollar amount that you pay for the education is directly proportional to the quality of education. I now teach at a community college while in grad school and those kids have to put up with the exact same things that I teach at the University of Kentucky. So from community college to a well known state college, they're the same classes. I teach both of them. You have the same quality. It's just a complete misconception. One's better than the other because people.
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Assume that the price tag has something.
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To do with the quality. I know, I've said that like three times now.
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No, this is so many mic drop moments here that are just. You're really shocking me. It's so great. The guys in the booth are going, they're going wild. They love this. This is, this is like what we've been craving is just for someone who has the actual experience to say the things that we think are true and think we know to be true. So that's awesome. So who said that to you about community college? Who was that?
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It was a lady that I worked with at the bank. I think her name was Beth, but.
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I don't really remember what her last name was. I know Beth's. If you're out there listening, Beth, oh please. We know you. We know the type the stigma around community college is alive and well thanks to people like Beth. But despite unsolicited opinions, community college is an increasingly attractive option for many students out there. Let's hear from Rachel Cruz, bestselling author and host of the Rachel Cruze Show.
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There is a stigma around community college.
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That because you go there, you couldn't.
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Get into a four year school or a better school. But starting off and getting your prereqs at a community college, which is your.
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English, your math, your history, I mean.
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Your sciences, all the classes that you're gonna have to take no matter what.
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School you go to as a freshman or sophomore.
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Yeah.
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Take those in an inexpensive community college and then transfer to a big four year university. And it's become a really wise option.
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For a lot of students.
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And I've heard so, so many business owners say actually someone applying for this job looks a whole lot smarter if.
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I know that they've gone to community.
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College for two years and maybe transferred to a four year school or maybe.
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They didn't versus someone who graduated from.
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An extremely prestigious private college, but they.
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Took out all loans to get there.
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All right, so this is the financial aid office. This is our student waiting area where students will wait to speak with one of our counselors or staff members.
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That's Brad Barnett, financial aid director at James Madison University, a public four year school in Virginia. He works with students every day who want to attend JMU and at times has to have some really hard conversations.
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This is my office where I sit.
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Down and see what we can do to help students come to jmu. We're very intentional about having those hard conversations with them. And it's hard. I mean, I've had students sit in this office and cry because they want to come to jmu, but we're just not the option for them. But again, we do talk about other options and we talk about where can you go and if you want to end up at jmu, where can you start that's more affordable? You know, can you go community college, can you go local, can you go in state, can you do these other things that'll get a lot of the basics out of the way and then can you come here for maybe the last couple of years? So I think community college is a great option for some people. And it's funny, it's one of these options that people sometimes think there's a stigma. Oh, I don't want to go to community college. Well, I don't know why there's a stigma. There's some Very successful people that I know personally who started off in community college and went to community college and ended up having wonderful lives, you don't get that traditional four year experience. And we're back to the long term goal. The long term goal, you know, what do you want to do, what do you want to be in 10, 20, 30, 40 years? And you know, when I teach my class, every student has to write a financial plan when they're done on what do you want life to look like in the future. Most of them have never really thought that far down the road. And your average 18 year old who's deciding between community college and a four year school hasn't thought that far down the road either. So somebody stepping up and saying, let's look at the long term implications of the decision you make, community college may be a great route. And here's the other thing that we tell people all the time and I think they just miss it is great. You want to graduate from a four year school, you can't afford the four year school, so you go to a community college first and then you move into the four year school. Nowhere on your diploma from that four year school does it say you went to a community college first, you still finished that four year school. You know, when you get a degree from James Madison University, it's just James Madison University, it's not James Madison University. Caveat I started at this two year school so none of that stuff matters in the scheme of things. When everything's all said and done, get your education, you find the track that gives you the programs that you can afford, you get out of school and you go on and you have that kind of life that you want. So I'm a big proponent of community college.
- [24:04]
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Brad's got a tough job of helping students navigate the right choice to make when it comes to college. For many students Brad talks to JMU is the right choice, but he doesn't want students to go into crippling debt just to go to his school.
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We're not shy about looking at a student or a parent and telling them that after we've looked at everything, we're just not an affordable option for you. And that's just reality. I mean, we all can't afford all the things we want to buy or do in life and it's hard. There's a certain level of irony to it when you're sitting with a student or parent who wants to come to your university and you tell them that unfortunately we just don't think you can afford to Be here when you do want them here for a whole lot of reasons. I mean, obviously you want students, you want to make your numbers, but we want the right students. It doesn't do that student any good if they come here and we load them up with $100,000 in loans and they're going to go out and be a teacher. There's no benefit to them in the long term, and there's no benefit to us in the long term. Then on the flip of that, it's amazing when you talk to a student or parent and all of a sudden they realize we are the right place. You know, we've got the programs they want, we're a good financial fit, and they walk out of here with like tears of joy. So it's good conversations, but then there's also a lot of hard conversations to have.
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Many students are a fit for a traditional four year school, but when it comes to choosing that school, a lot of college decisions are based on perceived prestige that comes with attending what Seth Godin calls a, quote, famous college.
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I feel really strongly about this. We should never use the phrase good college. You should never say get into a good college. Oh, you got into a great college. Because good and great imply that we have some understanding of the magic of this institution. We have none. All we know is they are famous. So let's call them that. They're famous colleges. Maybe they're famous because they're called Harvard. Maybe they're famous because they won the NCAA in gymnastics, I don't know. But they're famous. That doesn't mean they're good. That doesn't mean they're worth the money. So let's be really clear. You shouldn't go to a famous college. There's no reason. I hope you go to a great college, but I also know that some of the cheapest colleges in America could be great if you make them great. If you use your time there to have a series of experiences that change your life and other people's lives. Because that's what you get. You get four years of freedom and leverage. What are you going to do with it? Because if all you're doing is saying, I'm going to give up four years of my life and all my money for a piece of paper at the end. Famous colleges have plenty of anecdotes to tell us about how their alumni networks can help people get to certain places. For example, if you go to Harvard and work on the Harvard Lampoon, the chances that you will become a writer for Saturday Night Live Or Conan, go through the roof. And if you know at the age of 17 that that's the job you want, please go for it. If you want to work at Goldman or you want to work at Morgan Stanley, please go to Stanford Business School or Harvard Business School. But that's not usually what happens. Usually what happens is that person thinks they're going to end up at a famous job like that, but they can't get into the famous, famous school, so they go to the semi famous school, right? They go to the Fuqua School of Business, paying just as much, thinking it's just as much of a fast track. But that belies their entire argument, because either there's a fast track or there's not. What we do know is that the people who are changing our culture, the people that we admire, the people with fancy jobs, go look at where they actually went to college. And I don't think you can show me many institutions where it's as much of a fast track as you would have me believe, that there are plenty of people who go to a really, really good, totally unfamous college, end up at the top of their class by whatever measure matters, gaining all these experience, spending all the time to build a network, coming out at full speed, who leave the Harvard people in the dust. So, yeah, if it's free, go get the Princeton experience. I'm all for it, totally all for it. But that's not the answer for almost anybody, because it's probably not free and you probably can't have it anyway.
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Seth just peeled back some serious layers of the famous college onion. For most people, it's just not worth the money, especially when debt gets involved. Seth wants to inspire students to think differently about their future.
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Most of the kids I've interacted with say, I want to go to the famous college, because that's what I look for when I look in the mirror. And I said, well, if you went to the state school and when you graduated, you got a new car, an apartment, and $50,000 to start your own gig, or you get the piece of paper from the famous school, which one do you want now? And they look at me like it never occurred to them that those were the two choices. But of course they're the two choices because they cost the same. Students need to begin by saying, I refuse to be brainwashed into believing that if I get into a good college, it means I'm better than if I don't. Maybe what you ought to do is realize, and they've done this study, that among people who got into Harvard and didn't go, and people who got into Harvard and did go 10 years later, there's no difference in their happiness or their income. Because here's what I know. If I sat down with the freshman at almost every famous college in America and I said, you have two choices. You can stay for four years and do all this stuff and end up with all this debt, or I'll give you your degree today and you can go spend two years anywhere you want and you're not in debt. They'd all take the second one because that's really what they're there for, isn't it? They don't want the classes, they want the paper. Well, it doesn't make sense to pay what you're currently paying for the paper. Go to a good college instead. Just figure out what that is.
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You don't want your college choice to be something you regret later in life. Ken Coleman frequently talks to callers on his show who wish they hadn't paid the extra money to get their degree from a famous college.
- [30:11]
A
So when we think about, do I need to go to the name brand school like an Ivy League school or the most premier school in my state because I gotta have the degree, is that the school I need to go to? And I think this is a really valuable question because I think the right place is different than the best place. And what I mean by that is everybody understands the value of a name brand. We just do. We look down on a brand that's not as well known, but the reality is it's the right place. And the right place could be your community college because it just gets you that basic foundation that you need and you can cash flow your way through it and then you can step up to the next place. So let's not be thinking that, well, if I go to an Ivy League school, that these are the best people there because this is the best name brand. That's not true. Again, I can't tell you how many practicing lawyers and doctors have gone to schools that you've never heard of. I talked to a lawyer who went to a name brand Ivy League school and got his law degree. And he told me if I had to do all over again, I would have gone to my state law school because of my test scores. They offered me a free ride. I could have gone to law school for free. But I didn't because I bought the myth that if I went to the Ivy League law school, I was going to get a job faster and I was going to make More money. The reality is a good lawyer has nothing to do with where the paper was printed from. So again, the right place isn't always the best place. The right place is can I learn what I need to learn so that I can do what I need to do? That's the only question. Who cares about the name brand? I don't. And I don't think any of your clients will either.
- [31:44]
B
As a practicing pediatrician for over 30 years, Dr. Magmeeker knows firsthand that at the end of the day, a name brand education doesn't really matter. My husband and I have never put up our diplomas anywhere. You know, we've been board certified American Board of Pediatrics for years and years and years and fellows in the American association of Pediatrics. None of that is around because patients don't care. Patients want to know, are you going to be here when I need? Are you going to make smart decisions on behalf of my child? And are you easy to get along with? You know, you can have the smartest physician. If they're a jerk, nobody's going to go to them. So parents really care more about your personality and your bedside manner and your fund of knowledge than they do about.
- [32:33]
C
Where you go to school.
- [32:34]
B
I don't even ask any of the doctors I go to see personally where.
- [32:38]
C
They went to school and.
- [32:39]
B
And I don't care. So when it comes to your doctor, you may not care where they went to school, but how much weight do employers put on degrees in name brand schools when it comes to hiring? Dave Ramsey has the answer.
- [32:52]
A
We currently have almost 1,000 people on our team and we have probably another 500 to 1,000 that have worked here at one time or another in the last 30 years. So that's a couple of thousand people we've gone through hiring. To my knowledge, I have never hired anyone ever, based on where they went to school, ever. Oh, well, that answers it. They went to such and such. That settles it. You know, now when we look at the overall person, you know, and you say someone has a degree, someone doesn't have a degree and it's in a specific field that they're going to be working in. Accounting, you know, they have an accounting degree. That does matter. But where you got the accounting degree, all we want to know is, do you know accounting? That's all we want to know. When we're hiring you for that.
- [33:37]
B
If it doesn't really matter where you go to college, why do we choose the colleges that we do? There's about 5,300 colleges and universities in the United States and those schools are competing for the same students. The way they stand out. A lot of it comes down to marketing.
- [33:54]
A
So many schools right now, they try to tempt you with gorgeous landscaping and really good cafeterias. And that's just not the most important thing.
- [34:05]
B
That's Michael Torpy, actor and host of Paid Off, a trivia style game show on TruTV that's trying to bring awareness to the student loan debt crisis.
- [34:15]
A
I would say like, make sure that you're going to school for the right reasons and have that be part of your conversation as you're looking at the different schools. Really be honest with you yourself about why do you want to go there. Because it can be tempting to choose the school that's got great weather and has a lazy river on campus, but that doesn't necessarily make the most sense for everybody. Just be honest with yourself about why you're going to school, what you want to get out of it.
- [34:42]
B
Like Michael said, colleges have gone to insane lengths to stay competitive in the marketplace. A few years back, Louisiana State University opened an 85 million dollar recreation center complete with a lazy river designed in the shape of the school's letters. Michigan Technological University has an on campus ski resort. And High Point University in North Carolina boasts its own fancy steakhouse which indulges students in weekly three course meals of filet mignon and roasted duck. You've got to be aware of this marketing when choosing a school. Seth, the executive director of the Student Borrower Protection center in Washington D.C. has a warning for students.
- [35:24]
D
So I think the number one advice I would give is just be careful. And this is just my consumer protection. Hat is there's a whole lot of people who have a big target on your back who view you and your ability to take on a ton of of debt as their chance to get rich. And I've worked now in my career on exceedingly large colleges and universities who have just preyed on students from coast to coast. And they're good at it, right? They have 100 years of marketing and American lore telling you to go to college. Colleges are the good guys and it's all going to work out. And we've seen time and again predatory schools load up tens of thousands, hundreds of thousands of students with tons of debt and just totally worthless degrees not written on their paper. This is probably one of, if not the most important financial decisions in your life. And my number one piece of advice is someone is pressuring you. If someone is promising you the moon, slow down, ask questions. Especially if you are going into a field like nursing or healthcare fields we've seen people just prey on, like, make sure you're actually able. If you finish that degree, can you actually sit for the licensing exam? Poke and prod and ask questions about the 100% job placement rate?
- [37:01]
A
Shop around.
- [37:02]
D
I know it's hard and I know I'm the first to recognize that the higher education marketplace is tough, but check out your community college. I think the number one advice I have is people view students as dollar sign on your backpack. And I know it's hard to hear, but this is big business for a lot of folks and you just, you need to be careful. You need to try to understand what you're getting.
- [37:27]
B
When you're a dollar sign on a backpack, schools will pull out all the stops to get you in the door. Brent Tenner, director of Vanderbilt's Student Financial Aid and Scholarships, describes how he's seen colleges use marketing to reel in potential students.
- [37:42]
A
Colleges have become great marketers, both from sending information to students and putting the college's name in front of students, providing good information about the school on websites. Most of us do great job with our visit programs and bringing people to campus and try to help students picture what it's like to be a student on that campus. But we've got great pictures of the snow when it snows here in Nashville once. But if a student picks it up, good man. I wonder if they have snow all the time. Well, you know, that snow lasted for about 30 minutes and then it's gone. But we're great about getting information and getting our story out in front of students. And most schools have ramped up what they do from a marketing perspective to get their information in front of students to hopefully, you know, move them up on the list when students are looking at colleges.
- [38:46]
E
My name is Marcus. I'm 23 years old. I guess I sort of got this feeling like you got to go to a big college to get the right education. And a lot of people, I feel like, end up sort of just kind of following the herd just because they hear that's what you're supposed to do. And then as that goes, you are already, you know, two and a half years deep into school and you've gotten all this debt before you figured out what you really wanted to do.
- [39:05]
B
Marcus is one of those students who fell for the marketing trap and believed he needed to attend a name brand school to be successful. Now he's paying the price.
- [39:14]
E
I slowly figured I could have easily just gone to a smaller college and paid less money and it wouldn't really have been that much different. I would definitely advise going to a smaller college and not going to a big college just because you think you're supposed to, because you end up getting education that's really not that much different and paying a lot more for it because that's really what's happening to me. Because now I'm in film school taking film classes, but once I'm finished with that, I'm going to be paying off student loans. So I'll be paying off about $23,000 of debt from mostly general education classes that I took at the university and roughly $23,000 of calculus class in US history and science and environment classes that for the most part I didn't want to take, but it was on the list so you have to take them to graduate. Now I'm taking my film classes and learning what I want to learn about. It feels a little bit like I'm putting money towards something I didn't really want to pay for in the end. So now I'm working in a restaurant, running food and doing that kind of thing just to make money. So in the end I can pay off in cash all these loans that I took out these past four years. That's how it is, man.
- [40:12]
D
I think we also see borrowers from low income communities just really struggle, right? So I think there are always situations where borrowers took on debt and were easily able to pay that back. But I think what we need to also compare is what is that borrower's life compared to their neighbor who didn't have to take on student debt.
- [40:35]
B
Seth Frotman has seen the way that taking on debt has impacted students everywhere. And it's not just their day to day lifestyle, it's their long term future too.
- [40:44]
D
So we've seen some analysis now that shows for the average family who takes on student loan debt, so it's like the husband and the wife each take out $26,000, which you know, isn't crazy. We need to stop thinking about that as just like 50 grand in debt. That family through like lost contributions to their retirement account, less money for a down payment for a house, will ultimately lose nearly a quarter of a million dollars in household wealth because of their student loan. Because we know we live in a society where you need to invest in the market to save for retirement. Like if you want to buy a house, you're going to get. If you are putting money towards a student loan, even if you're able to pay it back, Right. And you're putting that money not to your 401k or you're not able to get to 20% down payment and your interest rate's higher and you're paying mortgage insurance, you're just losing money. That's like the more holistic nature of this discussion we need to have, which is we just can't think about it as your student loan bill because it's so much more. That is this debt is impacting both borrowers, their communities and the larger country.
- [41:54]
B
When it comes to people planning for the future, Chris Hogan wants to educate and empower people to take control and retire with dignity. He's the best selling author of Everyday Millionaires and host of the Chris Hogan Show.
- [42:07]
A
Well, having just done the largest study of millionaires that's ever been done, we talked to over 10,000 of them. There were a few stats as it related to college education that really stood out. Me, for example, seven out of the 10 millionaires never took on a penny of student loan debt. So what's that tell you? It tells you that you're understanding how money works and people put themselves on a path to be successful with money earlier. But also, there's a myth out there that if you're going to be successful, you have to go to a prestigious college. Here's the reality. 79% of the millionaires that I talked to did not go to a prestigious College. In fact, 62% of them went to a public state university. 8% went to community college. 9% didn't go to college at all. So what does that tell us? It doesn't matter where you go to school. It's more about you having a mindset of starting something and being able to finish it.
- [42:58]
B
As we learned in the last episode, the U.S. department of Education found that only 55% of students who go to college will graduate with a degree within six years. But even then, your degree and career don't always dictate your financial future.
- [43:14]
A
There were some popular professions. The top three, number one was engineer. Number two was accountant. Number three shocked me. Schoolteacher. And a lot of people shake their head and they kind of look at me kind of weird when they see that, but they go, schoolteacher. Are you kidding me? This is one of the most undervalued, underpaid professions out there. But it's not a matter of how much money you make. It's your mindset and your game plan with money. For example, these teachers understood the value of getting themselves out of debt, being able to save. So they could start to invest for the long haul.
- [43:49]
B
Where you go to college doesn't define the next 20 years of your life. But taking out student loans to go to a school you can't afford will. According to experts like Mark Cuban and Anthony o', Neill, having a plan is the best way to avoid student loan debt and set yourself up for, for a successful future.
- [44:07]
C
If you don't plan in advance, then you know you're going to be stuck.
- [44:12]
A
And that's not unusual.
- [44:13]
C
Look, when you know, like my parents.
- [44:15]
A
Didn'T go to college. So it was all about uncertainty.
- [44:19]
C
I had to figure it out.
- [44:21]
A
And you know, it wasn't easy.
- [44:22]
C
And you don't really understand the concept.
- [44:24]
A
Of money and how much things cost.
- [44:26]
C
You know, I had jobs and I.
- [44:28]
A
Made enough money to save a little.
- [44:30]
C
Bit, but it was a crapshoot, you know, figuring out how I was going.
- [44:35]
A
To pay for school. But every family is different.
- [44:37]
C
You just have to now especially you have to do your homework, go to.
- [44:41]
A
A school you can afford.
- [44:43]
B
Regardless of what you want to be great at. You need a plan for how you're going to learn those skills, get the experience and pay for it. Here's Anthony o'.
- [44:51]
A
Neill.
- [44:52]
E
You know, my father taught me something that he learned from the marines called the six Ps. Proper Prior planning prevents poor performances. And when I look at things now, the reason why I made so many bad decisions back in those young days is because I didn't take the time to step back into properly priorly plan. This is one thing I talk about in my book is actually the introduction to my book, Proper prior planning. If you really want to be successful, you need to sit down and properly and priorly plan how you're going to get into college 100% debt free. And while you're properly and priorly planning, you may realize that you know what, I need to go off to a community college because I can't afford to go to this school right here. You know what? Actually, as a matter of fact, I don't need a four year community college. I don't even need to go to a community college. I need to go to a trade school. You see, when we can sit down and properly priorly plan, we are literally laying out the vision and we're taking the vision and we're breaking those down into systems, into steps of what it takes to get there.
- [45:54]
B
Meet Dylan. We heard from his mother, Kat in the last episode. He's living proof that planning with the future in mind and making wise decisions will not only set you up for success, but freedom too. So how'd you pay for all of your other expenses after that year and a half?
- [46:11]
G
Living expenses. I worked a couple jobs in college. I had one. I made signs at a big sign factory warehouse. I actually got promoted to the incident accountant there after a little while. So that was supporting me pretty well. I drove for a delivery place at the same time. It's like an Uber Eats. So I would, I drove that on the side. I currently work at the Alabama Gulf Coast Zoo right now. And the first semester of senior year I started working there weekends. So senior year was no free time. I would work the sign place five days a week, I'd work deliveries at nights and I'd work at the zoo on the weekend. So senior year was a full workload. You know, now we're at a little non profit zoo not making a lot of money, but because we don't have debt, it's way less stressful. I know a lot of friends who are in college right now that I work with or out of college that have those debts and are making the same amount as me. And I'm not sure how they are surviving. Zookeepers don't make a lot of money, but it's not for the money that we're in the profession. So it helps us have a little more flexibility with what we can and can't do. I don't feel pressured to find a job that I can pay off, you know, hundreds of thousand dollars of student loan. We can sit at a job and kind of work our way up and take the bruises now, but it'll pay off later.
- [47:23]
B
That's awesome. So it sounds like you get to do what you want to do instead of what you have to do.
- [47:29]
G
Yeah.
- [47:29]
B
So just walk me through the basic steps that you took to graduate college debt free.
- [47:36]
G
Choosing the right school is a big, I think the biggest thing of getting out debt free, even if it's not a big flashy school. You know, I graduated with a biology degree and I don't think that biology degree is any different than a Auburn grad or a Yale grad or a. You know, it may look a little different, but I'm still, I have a bachelor's in biology just like the next bachelor in biology out of Harvard or wherever.
- [48:00]
B
So what encouragement would you give to a high schooler out there who is where you are at? They're deciding do I go to the expensive dream school or do I kind of accept the fact that I should just go somewhere close to me in state that's reasonable that I can go.
- [48:16]
G
To potentially for free with scholarships, that it'll pay off in the long run. Because it does. Coming out of college debt free means you can explore, you can go travel, you can get a job that may not pay as well, but it's a lot more fun than getting that office job that's going to pay better because you have student debt to pay off. You know, I could sit in an office all day and I would have to be sitting in an office all day. If I, if I had student loan, I would be in a lab or an office somewhere. And you know, it's, it is the less glamorous choice, but it's the smarter choice. It's the, it's the choice that makes a big difference in the long run. I'm just recently married, I'm living, you know, in a nice little two story apartment and I'm a lot happier than I would be if I had come out with all that debt. I'm a lot happier, a lot more stress free now than I think I would be coming out. So it's, it's a dirty decision, a not fun, not glamorous decision you have to make, but it's, it's the right decision and it works itself out in the end way, way, way, way more than you could see in the moment when you're deciding between the big pretty school that you've always wanted to go to and the school that you're going to get out free because it makes a huge difference and it's a really amazing difference.
- [49:34]
B
So just as we end here, I just want you to kind of vision cast your future. You don't have student loans, your wife doesn't have student loans, you've been married a few months now. What does the future look like without debt for you guys?
- [49:47]
G
A lot less stressful. A lot more money to save up for things that we want. We have the freedom to look for different jobs. We can move to different cities if we wanted to. There doesn't feel as much stress on having kids. A lot of people have to wait, you know, until they're 28, 30, 32 to start having kids because they have all this debt. Being debt free. It's a lot, a lot more flexibility, a lot more options coming out with no debt. There's a lot of different paths we can take from here that I don't think would be open if we both would have came out with student debt.
- [50:26]
B
We need more. Dylan's in this world, students who are willing to sacrifice now in order to live their life later on. Anthony o' Neill thinks we need more of that too.
- [50:36]
E
So the average student is going to graduate with $35,000 in student loan debt. Now this is just the average. There are thousands of students who are graduating with 100,000, $200,000 in student loan debt and they're only getting a career that's going to maybe pay them 40, 50, $60,000 a year. What could this do for you? If you work hard before you go to college, if you get the scholarships, if you get the grants, if you avoid the debt, you can graduate college debt free. The average person is taking about in between 10 to 20, even up to 30 and 40 years to pay it back. You don't want to spend four years working your behind off to spend the next 40 years paying for those four years. I want you to graduate debt free. So when you graduate, you can walk into your future and you're not worrying about your past. You can build your career, you can build your lifestyle, you can build your family. You can go after your dreams. And not just go after your dreams. You can crush your dreams because you don't have nothing to do pulling you back. But everything is pushing you forward because of the good decisions you made before going into college. You avoided that. You avoided being normal. And people saying you're weird, but you're weird will become the new normal to your friends, to your peers, to your loved ones. Let's identify what is a dream school. Because my definition of a dream school is not ucla, Harvard, or any prestigious school. And nothing against those schools, I think those are great schools. But my definition of a dream school is a school that I can afford. Is a school that I can pay cash for. Is a school that I can graduate from debt free. Go work harder than that person who went to their dream school. Go show the world that you don't have to be from this particular school to be a successful person. Go show the world. But 70% of our self made millionaires are showing the world that hard work and character helps us become successful.
- [52:40]
B
Sadly, for many students, what they viewed as the next step didn't actually set them up for what they really wanted to do. They borrowed against their future in the form of loans to get a piece of paper that they thought was going to get them ahead. The path to success can be a winding road. One that could involve trade schools, community colleges in state public schools, and a whole lot of sacrifice. The question is, are you willing to do the hard work to avoid starting your life in the hole in the next episode, we'll dive into the burden people face because of their student loan debt. The stories you're going to hear will shock you and hopefully help every past, present and future borrower out there say no to student loan debt forever.
- [53:26]
A
It was almost like they were just baiting us into these subprime loans. You know you're only going to have to pay $100 a month starting out and then it'll gradually increase except for the interest kept compounding and compounding and compounding where you never catch up.
- [53:41]
B
Join me. You've been listening to Borrowed Future. If you like what you've heard, do us a favor and rate and review us on Apple Podcasts. It helps. You can find more information about this and other Ramsey network podcasts@borrowedfuture.com or on your favorite podcast app. Our show is produced by Chris Wright, Eric Cieslevich, Eva Daniel and Kevin Weimer. Music has been curated by James Childs. Will Rutter is our engineer. Our editor is Tim Ho. Blake Thompson is our Executive Producer. Producer, I'm George Camel. And remember, if you wouldn't pay 93% more for a name brand breakfast cereal, why do it for a college degree?