Episode #68: Is College Still Worth It?

It’s no secret that the cost of college keeps rising. This has led many students (and parents) to ask the question: Is college still worth it? In this episode of Money Script Monday, Gabe reviews the financial implications of attending college and shows you how to make college more affordable.


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Video transcription

Hello. Welcome back to another episode of "Money Script Monday." My name is Gabe Lindemann, I'll be your presenter today.

Today we're going to be talking to something that's dear to my heart: Is college still worth it?

A couple of months ago on Fox News, Tucker Carlson did a great piece that did a six-week special just on this topic: Is college still worth it?

Before we get started, I know what you're going to say. "Well, you know, Fox News, Tucker Carlson...it probably has a little bit political spin on it."

It wasn't political at all.

It was the most unpolitical piece I've ever seen done on Fox News. It just went over raw data.

But one of the things that I really took away was these are legit problems that we're having: students going to college, families trying to pay for college, all these problems can be avoided if hiring a college planner.

So, as we go through this segment, I want to think about the problems, the issues, and how these can be relieved by hiring a college planner.

With that in mind, let's get started.

Cost of college

The cost of college. College is expensive. As I said before on some of my other episodes, college is a business. These universities make a lot of money by accepting criteria for different students. They have regimens, criteria, algorithms that say what kind of student they're looking for at any given year.

With that being said, it's very competitive.

Cost of college

Since 1971 to 2017 the cost of college to go to a public for a year, not a private school, we're not talking about Harvard or Yale or Pepperdine or USC, we're talking about a public four-year university, 209%.

That's from $10,832 to $33,479.

Nothing's changed. Same School, so basically, you're going to the same UCF state school, same education, same everything, it's gone up 209%.

Take that into consideration versus other things we have in life.

I'm blessed enough where I have an 18-month-old daughter. She drinks a lot of milk. We go through maybe a couple gallons a week. Now can you imagine if milk went up 209%? That's outrageous. I mean, can you imagine how much we'll be paying $20, $30 for a gallon of milk?

Now let's apply that to something else. What about gas? In California we talk about if gas prices go up a quarter, a nickel or a quarter, everyone gets outrageous. I mean, I get upset about that too, but can you take in consideration if it went up 209%? It'd be like driving in Europe. We wouldn't be using gallons, we'd be some liters. This makes it sound more affordable. A gallon of gas would be $15.

That's outrageous, but for some reason in the university level, that's okay. It's a common practice. Nobody raises an eye. It's what happens to society. It's not right, but we need to because even though it's not right, it's the world that we live in and it's what we have to address and overcome.

Student loans

The second point we wanted to address that Tucker made a big point is, student loans. Student loans are killing society.

This is the first time that students are graduating where when they get out, they have mortgage payments, like mortgage payment, like debt.

People actually have to consider, "Is my degree in my college worth it based on what I'm going to have to pay for the next 20 or 30 years?"

Student loans

Forty million students have student loans right now. That's outrageous. That in itself is scary.

In 1993 the average student loan was $9,300. That’s still a lot of money, near $10,000, which is a lot of money by any standards especially for a college student that's going to graduate, but still, that's somewhat doable. You can pay that off. Even if you get a job, first year after college making $50,000 to $75,000. You could pay it off in one or two years and still live comfortably.

Now let's apply that.

Today, the average student loan is $34,000. That's a game changer. That's the equivalent of people buying their first car, down payment for their first home and in some parts of the country you can get a nice condo for that kind of money.

That's incredible.

And again, if we review it, same college, same university, same education, same opportunities, but it's gone up 209%, but scarier is the debt, $34,000. It's crippling society.

Most Do Not Calculate Future Loan Payments

Students are graduating with this mortgage-like debt, and they don't know what to do with it. Most students don't calculate future loan payments. That's a big issue.

When you get student loans, a lot of times you're in college, you're a freshman, you're a sophomore and you just need more money, things got expensive, the books for a class could be a couple of thousand dollars. You don't have that.

You're even working part-time in college, so you have to finance it.

And what happens is, you go to the banks, you go to the school, you fill out the FAFSA forms, you go to the bank and you fill out student loan forms, they give you the money.

It's pretty easy for any college student to get money if they need it, but nobody tells you, "Okay, this is what your debt is going to be. We're going to throw in yet another $10,000, $15,000 for the semester, but we're going to charge you 20%."

That's huge. That's criminal. That's legal loan sharks right there that we're living with.

50% Do Not Think They Will Pay Back

Another point is 50% of students that have debt don't think they're going to pay it back. They don't know how.

They get out, they're going to be working a job, paying them $50,000, $60,000, $75,000 for a few years but they owe $34,000 and that's the average.

We're going to see people that owe $50,000 to $100,000 very easy.

They don't think they're going to pay that back. They figured they're just going to keep it for the rest of his life.

What's scary about that is that student loan debt is one of the few debts that, bankruptcy, you can't even get rid of.

So, you're going to have that debt forever. You're going to have it while you're a grandparent possibly, you know those possibilities.

1/3 Drop Out, Impossible to Pay Back

Now, one-third of dropouts, one-third of students that are in college that have those high debts drop out. It's nearly impossible to pay off that student loan debt. Think about it.

If you get a job and you can make $50,000, $75,000, it's going to take time. You can do it over a long haul. But if you drop out and you can't get those good jobs and you're only making a minimum wage, $25,000, $30,000 and you owe $50,000 of student debt, it's impossible, statistically impossible to pay off those debts. Your children will inherit those debts eventually.

There was no way to get rid of it.

You're going to be owing debt for the rest of your life and what's that going to do?

It's going to prevent you from doing achievements. It's going to prevent you from buying your first home. It's going to prevent you from buying your first car. Your credit's going to be really bad.

That's going to prevent you from possible jobs in the future because everyone looks at credit. It's so important.

40% of Graduates Are Working a Job Where They Do Not Need a Degree

40% of graduates are working a job where they do not need a degree. That's incredible.

You graduate from college. You have maybe a political science degree, a liberal arts degree, and then you need to get a job. You can't get a job in the profession you studied for, so you just get a job because you need to pay the bills and pay off those student loan debts, but you didn't really need a college degree.

And so, you spend all that money on your work in a field that doesn't require a college degree.

That's kind of a waste of money and a waste of time because you didn't need to take on that debt to be in that job.

Again, this isn't really the student's problem or the parent's fault.

It's because they weren't educated.

If they would have had a college planner to guide them along the way, it would have helped them.

College Planner

This takes me to our last most important point. That's why you want to work with a certified college planner. You want to make college affordable.

College planner

(1) Make College Affordable

A college planner is going to sit there and say, "You know what? You want to be an educator. You want to be a college professor, you want to be an elementary school teacher." Those are noble, great professions, great professions.

Honestly, they are one of the most important professions in our society, but they don't get paid that much.

They don't get paid $100,000, $200,000. They should, they deserve too, but they don't.

That being said, do you really need to have a student go to Harvard to become a professor that's only going to be making $50,000, $60,000 or a second-grade elementary school teacher making $40,000 to $50,000?

Meanwhile, you have a $100,000 in debt.

Or you go to a good state school, get done in four or five years, graduate, start making it and have a third less college debt.

You don't know this until you're working with a college planner or it's beneficial to find out which schools cater towards a liberal arts degree, so that way you can specialize in that field and become a better teacher.

You don't know this until working with a college planner. This is one of the benefits.

(2) Decide Future Loan Payments

The college planner is going to work with you to find out what you can afford today, what you can afford in the future, and how are you going to pay it back.

Everyone wants to be optimistic and they can pay everything back.

It's almost impossible if you're making $40,000, $50,000 to pay off a student loan that you have $100,000, $200,000. It doesn't make sense.

You need to work with a college planner to make sure that you can afford it, give you a timeline, how you're going to pay it off, and more importantly, give you a blueprint, an idea how you're going to do it and actually hold you accountable to doing it.

(3) Assess Best Schools for Specialty

And lastly, most importantly, assess best schools for the specialty.

Not every student needs to go to the top tier school for their profession.

There are great schools out there. There are a lot of great private schools, four-year schools that offer a great education. They offer much better scholarship, much better financial aid packages.

Maybe they're not the big names of Pepperdine and USC or Harvard, Yale but they offer great opportunities.

Working with a college planner, you're going to say, "Hey, you can go to Harvard and pay $200,000, or you can go to Chapman and pay $50,000. Here's the good news. We're can get you a 90% financial aid package over there. The school's going to be darn near free."

That's wonderful. And again, you don't know this until you're working with a college planner to go over the pros and cons on every situation.

As we discussed before, we talked about the problem, the cost of college. It's very expensive, 209%, it's very scary.

Next, we talked about because of the increase in cost, students have more debt than they ever had before and its ruining futures for these students because they're not going to be able to buy cars, they're not going to be able to buy their first homes and it could possibly hurt them trying to apply for jobs if they have bad credit.

And lastly, the solution is all the problems can be elevated or relieved from working with a certified college planner.

With that in mind, if you have any questions, please contact a certified college planner to prevent your family from being a statistic. Thank you very much.

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About Gabe Lindemann

Gabe Lindemann is the Director of College Planning and Senior Field Support Representative at LifePro. He coaches hundreds of financial professionals on how to build effective financial strategies that achieve their clients' long term goals and helps them stay educated on the latest industry trends.