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Sunday, July 11, 2010

College Debt and College Prestige: From a Student/Entrepeneur

Dear Readers: I have been on the road. For today's post, I am stealing a comment left by Logan Leger, a fellow I met (in real life) a while back. He wrote in response to one of my no doubt tiresome ruminations on college debt. Anyway, here is a rumination from an actual student. One not related to me.

I've been meaning to respond to this article for a while. I don't have any advice for the reader, but I would like to talk about my situation.

After high school, I had a lot of choices, including some big scholarships at some great schools. Unfortunately, my family also falls in that doughnut and couldn't afford to cover the remaining expenses. Moreover, my parents were adamant about not taking any loans and graduating debt free. This left me only one choice: state school, where nearly 100% of expenses were covered.

Now, I'm in the position of graduating in three years with an engineering degree from a school that has a national name, and debt free to boot. At first I was angry my parents wouldn't cosign a loan and felt trapped. Now, however, I realize how good of a decision it was. Not having any debt and having financial freedom really opens me up for a lot of opportunities.

This brings me to my final point. I was born an engineer, but I was born an entrepreneur first. Being at a state school opens my schedule up to pursue many ventures. Had I gone to a more prestigious school, I would never have had the time. And, after I graduate I won't have to work in the system because after three years of hard startup work, one of my startups will reach profitability, enough to sustain me because I have no debt.

I have a great degree I can use to make good money in my life. But because I ended up at the state school, I can pursue my dream.

July 5, 2010 3:58 PM

A very impressive fellow, don't you think?


Duchesse said...

Logan sounds like he'd wind up a winner no matter what! I do think entrepreneurs are born.

The sentence that really made me think was, "At first I was angry my parents wouldn't cosign a loan..."

The economy is still volatile and will likely continue that way. Loans are a potential disaster not only for students, but for their (cosigning) parents.

metscan said...

Ages ago, when my hb and I studied, we took loans and paid them back after graduating. Everyone took loans that time. When my daughter studied ( still is working on her PhD , along with her work ), she did not have to loan a cent. University studying is less expensive here, but most students have to enjoy a normal life of a young person. Yes, we have supported our daughter´s living expenses for many years ( we paid her rent ), occasionally I have transferred money on her bank account. We also have sponsored her horse business, but had to zip our wallets in the end, as it all became too expensive. Those, who compete in dressage, or in any other athlete, need sponsors, and well, we just did not have the money and time for it. I hope my daughter some day understands this. She has been working part/ full time, but doing work which has supported her studies. Our daughter did inherit money after her grandmother´s death, but had to take a small loan to buy herself an apartment from just the very center of Helsinki, which was her dream. The paying back of the loan per month equals about if being on rent, so this is a great solution.

JasonBirk佳琪 said...
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Duchesse said...

I've been mulling this post. I sense an undercurrent of suspicion for prestige universities- at the least, "Is it worth it?"

I'd like to see the data re average income for grads from various schools 5 years after graduation.

In my experience (strictly anecdotal) grads from prestige schools usually think the expense was worth it- just like parents think having children was.

Frugal Scholar said...

@Duchesse--Logan is a year older than my son--or the same age--they started college the year BEFORE the economic meltdown.

@metscan--I think Europeans have no idea about the extent of debt that American students take on. I have two colleagues--mid 40s and 50--who will be paying student loans TILL RETIREMENT.

@Duchesse--Believe me, if I were well-off, I'd probably have defaulted to the prestige education for my kids. FOR US, the cost would have limited future choices. Prestige private colleges (the smaller ones, that is) provide a lot of hand holding and nurturing for the students. Interestingly, my children are proud of taking the harder path.

Most people think past purchases were "worth it"--people don't like experiencing cognitive dissonance! Problem with studies is that you would need identical twins--one at Harvard, one at STATE U, to compare/contrast. As far as I know, most studies don't show a difference after the first job or two.

@Metscan--Another thought--very impressive that your daughter bought that beautiful apartment with her inheritance. Luckily for us--no one in our family has an expensive hobby (like dressage). We're all readers and writers.

metscan said...

FS: You are totally right. I have no idea how expensive education can be in US. Over here we pay very high taxes, which help ( amongst many other things ) to lower the costs of education. The more you earn, the more you are taxed, naturally. Living costs are terribly high, as are apartments in southern Finland, and especially in Helsinki. Like everywhere else, there are areas in the Helsinki City that are priced by their reputation.
You are right about the expensiveness of the horse hobby. The only relief I find in it, is that it takes all your spare time and money, so you don´t have to worry about those things anymore.

Shelley said...

Ages ago I read an article that compared average salaries of graduates from prestigious universities with those of state university graduates. They concluded that it didn't so much matter WHERE a person went to school as how well they did at their chosen university. That may be outdated information, but if so, I think it's a sad comment. It would imply that it's not how smart you are but who you know.

Budgeting in the Fun Stuff said...

I have to agree that state schools offer awesome opportunities. I received scholarships that paid more than 60% of my bills, but after the first year, I was left to cover the rest. If I had been at Rice, I wouldn't have been able to work 3 part-time jobs and pull off school at the same time.

A prestigious school's degree may look better on a resume, but all the jobs I've ever gotten were because of networking and my one has looked at my state school degree and turned up their noses yet. :-)

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