This week producer Lynne and I talked about college expenses with David Briggs, head of the Stewardship ministry at Willow Creek Community Church in South Barrington. Dave is so knowledgeable. Before coming to Willow, he worked for 27 years at GE as an executive, and he often hired new college graduates for future management positions. Now he teaches about good money management through Willow Creek.
With 9 kids under the age of 15 between us, Lynne and I were all ears when it came to those college expenses. Guess what? Dave Briggs explains why we parents don’t have to use the words “college” and “panic” in the same sentence. We only got to a few great points in the interview, which you can listen to. But I promised to put more of Dave’s sound advice here on my blog, and here it is – thanks for listening and hey, I’d love to meet you June 9th at “Breakfast with Betsy.” The details are at the right – please come. . .
Myths and Mistakes in Preparing for College (thank you to David Briggs!)
Myths
The more prestigious the college, the greater the future career success.
There’s very little correlation between the level of college and success in life
In fact, in hiring situations, there is often an inverse relationship between the quality of the student as an employee and the reputation and expense of the college.
Myself as well as my three direct line GE bosses (some of the most successful people in the company) went to the following colleges … Hanover College, Iowa State University, Geneva College and Cleveland State University.
It is really not about the college … it is more about the preparation and character of the child.
It is my responsibility as a parent to pay for my child’s college education … even if I do not have the money.
This is a major shift in “parenting†that has accelerated over the last generation.
This puts too much of the unhealthy burden on the parents … and not enough of a healthy burden of helping to fund college on the kids!
This is in line with the harmful trends in parenting in general. Mom and Dad take on the task of “protecting†their kids from struggles and reality that are sending them into the world unprepared for life.
Borrowing money for college is “good debt†versus the “bad debt†you should avoid.o
Although you could argue that there is a higher purpose in borrowing money for a college education than to finance a shopping binge in your MasterCard … every single dollar of college debt must be paid off after graduation just like any other kind of debt!
A college graduate will have a large future salary to easily pay off college debt after graduation.
In the last five years, starting salaries for college graduates have declined from the previous year’s average!
The competition for high paying jobs is increasing.
Many college students find their true “calling†in college to ministry or service that is fulfilling, but often does not pay well. Excessive college debt often keeps graduates from following that calling while they labor at a job they do not like for years to pay off huge college loan obligations.
A recent survey found that, on average, teens (wrongly) believed they would earn in excess of $100,000 in their first job out of college!
Taking a less traditional route to obtain a college degree will hurt future career opportunities for my kids.o
In many respects, the opposite is true. Students who went to less costly and less “elite†schools and worked to pay a large portion of their college costs are often sought after by employers because of the character development involved in a less traditional means of earning a college degree.
For example, for someone who does not have the money to pay for college, one solution could be taking the first two years at a local community college, then taking the next year off to live at home and work to save enough money to pay for the last two years at a traditional, in-state, four year school. It might take a year or two longer to get the degree, but starting out in life free of college debt is a huge advantage that can represent one of the greatest “gifts†a parent can give a child.
Another approach would be to live at home and work for two years before starting college to save enough money to then go to the local community college and then to an in-state four year school to finish the degree.
Mistakes
•Allowing a 17 or 18 year old son or daughter to choose any college they want to attend
Few kids are mature enough or have the life experience to make this decision wisely on their own.
This must be a full partnership between parent and child … and the parents must BE the parents!
Any disagreement between parent and child must be settled by the parents as they should have final say on what college is in the child’s and the family’s best interest.
Cost and affordability must be key elements in the choosing the right college.
Choosing a college for the wrong reason.
Colleges should not be chosen based on the career aspirations of the child. They will most likely change a number of times before graduation anyway.
Colleges should not be chosen based on where their friends are going, which campus looks the most attractive, what other exciting things are near the campus or where relatives attended.
Allowing your child to borrow huge amounts of money to attend a college they cannot afford.
College debt can strap graduates for literally decades and severely limit career choices. Often graduates are forced to take on a higher paying job they do not like and pass over their “perfect†job, simply because the high loan repayments offer them no other choice.
Having huge college debt going into a marriage is a significant source of stress for many newlyweds.
This may also preclude a young mother from staying home to raise the kids since eliminating her salary is not possible under the pressure of significant student loans.
Parents borrowing huge sums of money to send kids to a college they cannot affordo
This can create severe financial stress later in life when parents have less time to recover from large amounts of debt
Debt taken out to fund schooling for an older sibling can have a crippling effect on the ability of younger siblings to fund their college.
This can hurt a parent’s retirement planning and ability to care for their older parent’s financial needs.
Not starting early and saving regularly for college
The time to start saving for college is when future college student is born! The longer time you have to save the greater the financial flexibility and the easier the monthly burden on the budget.
Save a regular amount every month and consistently.
Use tax-deferred accounts to allow money to grow faster.
Not having family budget and not making college a line item in the budgeto
A good working budget will eliminate waste and free up money to save for college.
Establish a separate account for college savings and fund it by making saving for college an iron-clad budget obligation just like the mortgage, car payment or electric bill.
