I get it. Opinions and pie-holes, everyone has one. However, bad advice is dangerous. Really! This may be why the bible suggests we seek a multitude of counselors. Bounce that advice off a few (sane) people and ideally cooler heads will prevail.
What’s nipping at my hemline? This weekend, I was up do-ta-do’in as would be normal on any given Saturday. While CNN kept me company, I heard more than one financial expert dish on my favorite topic…paying off student loans. Yes!
If we have learned NOTHING from this economic climate, one thing should be exceptionally clear. Debt is to be avoided, minimized, and looked on with disdain, fear and trembling (okay, not so much the disdain). After working our way through $100K in consumer debt, I have nothing nice to say on the subject. So what do the talking heads prescribe…a new formula for estimating how much student loan debt to acquire. Nooooooooooooooo!
For the sake of argument, let’s repeat the horrible advice here:
Borrow no more than 30% of the salary you intend to make once you graduate.
Here’s why this advice sucks! (Nothing personal. I’m sure they meant well.)
- The combined unemployment/underemployment rate for 25 year-olds in 2010 was 50%. Who knows what it will be in 4 – 5 years when you graduate. It’s a tad difficult to repay a loan of any percentage when you have no income.
- People change careers 5 – 7 times in a lifetime. Saddling yourself with student loan debt may limit your ability to be flexible and follow your passion when you decide basket weaving may not be your shtick.
- Only 62% of college students actually graduate. What’s worse than student loan debt? I can imagine student loan debt with no degree would be worse.
- 60% of graduates pursue advance degrees. You may want or need additional schooling to advance in your career. Undergraduate student loan baggage compounds your repayment responsibilities; especially in the case of medical or law school where 6-figure student loan debt is not uncommon.
- Life stagnates rather than begins post undergrad. You may want to save for a house, car, travel, retirement or other big ticket items. Any plans to marry and have bambinos? Given the average salary is $50,000, 5-10 years of student loan repayment takes a bite out of your wealth building ability.
We’ve been hoodwinked, bamboozled, led astray! Don’t buy into the student loan myth. Debt Free U, by Zac Bissonnette, is a great resource with ideas on pursuing a great education without playing Russian Roulette with your financial future.