How to Avoid College Buyer's Remorse

Summary

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Podcast Summary: WSJ Your Money Briefing

Episode: How to Avoid College Buyer's Remorse
Date: August 20, 2019
Host: J.R. Whalen (The Wall Street Journal)
Guest: Brendan Coughlin (Head of Consumer Deposits and Lending, Citizens Bank)

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Overview

This episode addresses the escalating concerns around college costs and student debt, focusing on how families can avoid experiencing “buyer’s remorse” when it comes to higher education. Host J.R. Whalen speaks with Brendan Coughlin of Citizens Bank, who shares insights from a new national survey about changing attitudes among students and parents toward college debt, the importance of early financial planning, and the need for clearer information regarding financial aid options.

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Key Discussion Points & Insights

1. The Rising Prevalence of College Buyer's Remorse

[02:45-03:19]

• Survey finding: A significant percentage of Americans reported regretting their college decisions.
  • "66% of Americans actually wish they made a different decision before they went to school. About half of those wish they picked a different school. The other half actually wish they never went to school at all in that survey." — Brendan Coughlin [02:45]
• This regret is often linked to a perceived lack of value from their education and prompts a reevaluation of the college investment.

2. Positive Trend: Earlier Financial Conversations

[03:19-03:56]

• Families are beginning to discuss college financing earlier, sometimes before high school.
  • "More than half of Americans are now having conversations about how to pay for school before freshman year in high school. A positive development." — Brendan Coughlin [03:51]
• Early conversations are crucial for realistic planning.

3. The Savings Gap: Many Starting Early, Many Not at All

[03:56-04:42]

• Parents are divided: some start saving as early as eighth grade, while others haven’t saved at all.
  • This lag is sometimes due to financial constraints, but also to lack of prioritization or awareness.
  • "They've got other things to worry about...By the time they wake up and realize this is a big challenge for them, it tends to be a little too late." — Brendan Coughlin [04:17]

4. Increased Awareness, but Emotion Still Guides Decisions

[04:42-05:27]

• Students are more aware of the long-term implications of debt, largely due to media coverage.
• However, emotional factors — such as the allure of prestigious schools and the “American dream” — often outweigh strictly financial considerations.
  • "Although they're aware of the challenges, still what we see across the country is the emotion and the American dream rules the day...versus the facts and figures." — Brendan Coughlin [05:13]

5. The Overwhelming Complexity of Financial Aid

[05:27-06:27]

• The process of comparing student loan options is described as a “blizzard of information,” with families often left to piece together incomplete data from multiple sources.
  • Even official sources like financial aid offices may not provide comprehensive guidance.
  • "Even sometimes the information coming out of the school you’re going to is not fulsome and comprehensive. So we really encourage families to take a giant step back." — Brendan Coughlin [05:55]
• Doing your homework is essential — both in savings and in making smart financing choices.

6. Rethinking Federal vs. Private Student Loans

[06:27-07:33]

• Currently, 92% of student loans are federal, just 8% are bank (private).
• Coughlin argues that private loans can sometimes be more cost-effective, especially for qualified borrowers — more families should consider both options.
  • "If the American population was doing their homework in a comprehensive way, my belief is that 92 split to 8% would be a little bit closer to 50-50." — Brendan Coughlin [07:26]

7. Action Steps: Where to Start Your Research

[07:33-08:38]

• Start with your school’s financial aid office but don’t stop there; ask detailed questions.
• Be careful: loans, grants, and work-study are often mixed together in award letters.
• Use reputable online resources and, when appropriate, consult your bank for advice.
  • "Asking very, very good questions at your financial aid office is a place to start. Research online. There are any number of very unbiased non bank sources on the web to do some research and get some advice from experts in this space." — Brendan Coughlin [07:54]

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Notable Quotes & Memorable Moments

• "66% of Americans actually wish they made a different decision before they went to school." — Brendan Coughlin [02:45]
• "They feel that the value they extracted from the education just wasn't worth it in hindsight after they got through school." — Brendan Coughlin [03:19]
• "They've got other things to worry about...By the time they wake up and realize this is a big challenge for them, it tends to be a little too late." — Brendan Coughlin [04:17]
• "Although they're aware of the challenges, still what we see across the country is the emotion and the American dream rules the day in how they make decisions." — Brendan Coughlin [05:13]
• "It's very challenging. This is one of the most confusing times for a family in the country." — Brendan Coughlin [05:41]
• "If the American population was doing their homework in a comprehensive way, my belief is that 92 split to 8% would be a little bit closer to 50-50." — Brendan Coughlin [07:26]
• "Asking very, very good questions at your financial aid office is a place to start. Research online... But there's a broad, a broad source of resources around this question." — Brendan Coughlin [07:54]

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Timestamps: Important Segments

• 02:45 — Survey findings: College buyer’s remorse prevalence
• 03:51 — Earlier financial conversations happening
• 04:08 — The savings gap: Some save early, many do not
• 05:13 — Emotional decision-making outweighs financial sense
• 05:41 — The complexity of financial aid information
• 06:32 — Comparing federal and private student loans
• 07:42 — How and where to research financial aid and loans

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This episode provides critical context and actionable advice for families facing the daunting process of college financing, advocating for early conversations, thorough research, and weighing all options to avoid future regret.

Transcript

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[Charlie Turner]

With your money briefing. I'm Charlie Turner in New York for the Wall Street Journal. In a moment, J.R. whalen will talk with Citizens Bank's Brendan Coughlin about mistakes college students and their parents make when it comes to financial aid. First, here are some money headlines. In a major shift, the leaders of some of America's biggest companies are chipping away at the long held notion that corporate decision making should revolve around what's best for shareholders. The Business Roundtable said Monday it's changing its statement of the purpose of a corporation. No longer should decisions be based solely on whether they will yield higher profits for shareholders. Rather, corporate leaders should take into account all stakeholders I.e. employees, customers and society overall. The group, led by JPMorgan Chase CEO Jamie Dimon, is a powerful voice in Washington for US business interests. The change formalizes a stance taken by a number of executives in recent years. Mr. Dimon, for example, has challenged the shareholder profit focus as too narrow and an impediment to executives ability to focus on long term goals. President Trump Monday called for the Federal Reserve to cut its benchmark interest rate by 1 percentage point, a move that would typically be considered only when the US economy is on the brink of a recession. And Mr. Trump again criticized his own central bank chairman for, quote, a horrendous lack of vision in a pair of tweets Monday morning, the latest in a series of attacks Mr. Trump has levied against Fed Chairman Jerome Powell. The president said a combination of reduced interest rates and a resumption of the Fed's crisis era bond buying stimulus was would improve the economy Both in the US and globally. Good for everyone, Mr. Trump tweeted. Mr. Powell led his colleagues to cut short term interest rates last month and is navigating the Fed toward more rate cuts. On Friday, he's scheduled to speak at the annual Central bank conference in Jackson Hole, Wyoming.

[J.R. Whalen]

It seems like summer just began, but students are gearing up to go back to school. And for college students, that means conversations about student debt. Brendan Coughlin is head of consumer deposits and Lending at Citizen bank, and he's here with the results of a new survey that shows the mindset of parents and students has changed significantly regarding college debt. So Brendan, something that jumped out at me is that parents are having conversations about debt with students earlier and earlier in their education years.

[Brendan Coughlin]

Yeah, it's a fascinating new stat that we see in the survey that we just released. We in fact did a very similar survey at the same time last year. So this, the results we released today is the series. A second in our series. The first time we did this survey, the most interesting stat from my perspective was around buyer's remorse around higher education. And 66% of Americans actually wish they made a different decision before they went to school. About half of those wish they picked a different school. The other half actually wish they never went to school at all in that survey.

[J.R. Whalen]

Not went to school at all.

[Brendan Coughlin]

Not went to school at all. Very, very interesting. They feel that the value they extracted from the education just wasn't worth it in hindsight after they got through school. What was alarming in that survey more than a year ago was that this conversation around how to pay for school, how to get prepared, really wasn't happening as early as you would like. It was happening last minute, right before you went to school. So the survey that we released today, actually building from the one last year, shows a real positive movement there across the country, where more than half of Americans are now having conversations about how to pay for school before freshman year in high school. A positive development.

[J.R. Whalen]

It was a good news, bad news element from the survey results that some parents are having conversations and they're putting money away for college as early as eighth grade before the freshman year, as you said. But some said they hadn't put money away at all.

[Brendan Coughlin]

It's a positive development because many families are saving earlier, but in fact a lot of them haven't saved at all. That's typically driven by ability to save in some cases where their economic situation doesn't even allow them, even if they would like to be more prepared. But I think a good chunk of that remaining segment actually has the means to save and plan, and they're just not getting around to this conversation and recognizing it early enough. They've got other things to worry about. They've got young kids, they're trying to buy their first home. By the time they wake up and realize this is a big challenge for them, it tends to be a little too late.

[J.R. Whalen]

And students in the survey say that they are much more mindful of the long term impact of debt than they have been in the past, which is

[Brendan Coughlin]

also a very positive thing. Obviously, the media attention around the student loan challenge that many Americans are having are putting this front in mind with students now. What I would say is folks are more aware of it. We have not seen a dramatic change in better decision making yet. Across the country. So the friction between a financially based return on investment decision and the emotional American dream I want to go to the best college can sometime be in conflict. And so although they're aware of the challenges, still what we see across the country is the emotion. And the American dream rules the day and how they make decisions versus the facts and figures.

[J.R. Whalen]

Gauging the long term effects of debt is a product of understanding the issue. But in your survey, many students and parents say that doing all the research and comparisons to select the best loan is still a blizzard of information and difficult to follow.

[Brendan Coughlin]

It's very challenging. This is one of the most confusing times for a family in the country. And they get lots of sources of information and it's usually not a fulsome source of information. You've got to sort of put the pieces together yourself. And in fact, places that you'd expect to have unbiased comprehensive guidance like a financial aid office, even sometimes the information coming out of the school you're going to is not fulsome and comprehensive. So we really encourage families to take a giant step back. And it is hard. There's not a single place to get all this information. Do your homework, understand your options. Step one is saving. But when you find yourself that you do need to finance your education, making sure that you get the most affordable solution is critically important. You're going to be living or your child will be living with this decision for quite some time.

[J.R. Whalen]

And Citizens bank recommends that families research private student loans as a way to save on interest.

[Brendan Coughlin]

Yeah, this is a very complex and fascinating conversation. So today, when a student will get a loan to pay for their tuition, about 92% of the time that's from the federal government. 8% of the time it's from a bank. That's not always the best decision for a family. The role of the government really ought to be to provide access to higher education for true families of need. The federal programs include that, but it's much broader than that. You could go to Harvard to get a graduate degree or Stanford for your law degree and the government will fuel that investment for you just the same. Many times those folks are very credit worthy and you can get a significantly cheaper rate from a bank. And so doing your homework and really understanding all those options, there's not a clear cut answer to that. It's very personal to you and your family and it's situational based on your credit and your income. But if the American population was doing their homework in a comprehensive way, my belief is that 92 split to 8% would be a little bit closer to 50 50.

[J.R. Whalen]

So where can people start to do their homework to begin to understand the framework and to understand the requirements and the information they need to really conquer this process?

[Brendan Coughlin]

Typically, despite my comments around, sometimes the financial aid office or your guidance counselor won't have all the information. That's a good place to start. Just don't start and finish there. So, and you got to ask good questions. What are my options? Is what you, you're presenting to me my only choices. Typically they'll package up in a letter, your award letter, a combination of grants, aid and sometimes work program on campus and then also loans. And it's not often clear what's what. And sometimes your loan may actually read like a grant and you gotta really understand that that's a loan. So asking very, very good questions at your financial aid office is a place to start. Research online. There are any number of very unbiased non bank sources on the web to do some research and get some advice from experts in this space. Of course you know, going in and talking to, you know, your bank is another place that you could, you could get some advice. But there's a broad, a broad source of resources around this question.

[J.R. Whalen]

All right, so good information online to go and find out more details about what you should know about the financial aid process and sending your child to college. That's Brendan Coughlin, head of consumer deposits and lending at Citizen Bank. Brendan, thanks for coming on the show.

[Brendan Coughlin]

Thanks for having me.

[J.R. Whalen]

And that's your Monday briefing. I'm J.R. whalen in New York for the Wall Street Journal.

[Deal Advertiser]

Deal replaces fragmented Payroll vendors with one global system. No third parties. Hire, manage and pay teams in 150 plus countries. Operate like a local everywhere. Visit d e l.com WSJ.