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Read almost any news publication for a few weeks and you’re bound to come across an article related to the student debt crisis; read it online, and you’ll find comments just as discouraging as the information relayed in the original article. Sometimes I find myself speeding to these opinion mines to see what people more removed from the situation than I—a 22-year-old, recent college grad who blogs about this stuff—have to say about student debt. What do I find? Blanket solutions and disparaging of millennials. I don’t place blame on one institution for the student debt crisis and therefore don’t expect one person to take responsibility for solving it. However, I believe it's important to clear up some common misconceptions or "student debt urban myths" in order to create a foundation to build viable solutions.
Student Debt Myth I:
Exorbitant Student Loans are Due to a Lack of Parental Foresight or Student Responsibility
Take shelter! This is going to be a Chicken Little blog post. Are you the plan-ahead parent who has saved for your child’s education since they were named and footprinted? According to National Center for Education Statistics (NCES) data you should probably be saving much, much more than you already are. Based on the most recent NCES statistics on the cost of college (the average undergraduate tuition+fees+room & board for full-time students in the 12-13 school year), a year of college costs $20,234. This would require an extra $4,500 budgeted annually from birth until a child's 18th birthday to save enough for a four-year college education. An 18-year-old entering school in the 12-13 school year was born in 1993 or 1994. In the 93-94 school year, college only cost $12,549 (in 12-13 dollars) or $7,931 at the time. It's difficult to plan for such a steep increase when looking into your financial crystal ball.
Maybe you haven’t been able to set money aside because you’re living paycheck to paycheck like many Americans. Or you believe your kid should be the one with skin in the game; after all, it’s their education. Either way, they won’t be able to cut it
without financial aid. In 1993 and 1994, minimum wage was $4.25 and college cost an average $7,931 for the 93-94 school year. A college student could pay for college by manning the fryer. Working full-time at minimum wage for 47 weeks could cover college expenses. Today’s college student isn’t so lucky. With a $7.25 minimum wage and college costs of $20,234 in the 12-13 school year, they can’t pay for college as a full-time employee. It would take 1.34 years (70 40-hour work weeks) to pay for one year of school, and that’s before taking taxes out of their paychecks.
The disparity between the cost of college and the abilities of students and parents to pay for it is creating a dependence on financial aid. Financial aid is becoming a necessity for a college education. Everybody needs a scholarship but there isn’t one for everybody. When scholarships aren't there, grants aren't there, and savings aren't there, student loans are there—all leading to the creation of a more than 1 trillion dollar storm.
Statistics Used:
Average undergraduate tuition and fees and room and board rates charged for full-time students in degree-granting postsecondary institutions, by level and control of institution: 1963-64 through 2012-13
Historical Income Tables: Households
-Table H-3. Mean Household Income Received by Each Fifth and Top 5 Percent
Federal Minimum Wage Rates: 1955-2013
At least once a year, a video; song; meme; etc. seemingly comes from nowhere to reach elite Internet virality—remember Tebowing or Gangnam Style? It's nice to see the ALS (amyotrophic lateral sclerosis) Ice Bucket Challenge has successfully combined a phenomenon with increased awareness and donations for the ALS Association. If your crowdfunding campaign is collecting dust somewhere in the cobwebbed portion of the Internet, try using these Ice Bucket Challenge takeways to revive your fundraiser.
Attract Attention
Be original. Be funny. Tell a story. A potential supporter or backer needs to feel personally invested in order to donate to a crowdfunding campaign. Think about the reasons you watch a video or read an article and emulate the same qualities in your own campaign. Make sure the information you provide is purposeful. Every word, picture, or video should work to answer the question "Why should I donate?"
Awareness Precedes Donations
The odds are against your campaign being unearthed if it's currently dormant, and donations won't roll in if it isn't getting any hits. You're job isn't done when you create a profile—it's just starting. The Ice Bucket Challenge's success is perpetuated by its presence on every social media platform and news source. Devise a plan to get your campaign in front of as many eyes as possible. Use every social media profile and communication tool you have to promote your campaign.
Trends Are Fueled (and Sustained) Through Sharing
Sharing is caring, especially online. Think about the ALS Ice Bucket Challenge—the nomination component of the challenge is its lifeblood. You can similarly enlist your friends to spread your crowdfunding campaign's reach. Also think about ways you can make your campaign "share worthy" through the creativity of others. The simple premise of the Ice Bucket Challenge invites participants to create their own spin. The challenge wouldn't be as enthralling if all videos were cookie-cutter.
A few weeks ago, I had lunch with a college freshman attending my alma mater. The meeting made me think, “What would I tell those gearing up to start the journey I just finished?” It doesn’t take much scouring of the Internet to find tips for incoming college freshmen, so I decided to pen a letter in lieu of a Buzzfeed-esque list. In the midst of move-in day and starting classes, I hope my guidance helps you get your bearings.
College Freshmen of the World,
We pass the torch to you. We leave our alma maters to your capable minds and zealous hearts. Our “masterpiece” is your doodle pad. You must have seen something special in our school when you chose to apply and attend it. Preserve the strides of those who came before you but don’t let the accomplishments of your school's titans intimidate your own experiments and creations.
College is your oyster—craft your own undergraduate experience. Take interest-piquing classes, join organizations, learn a new language, use the services available to you, make friends in a variety of social settings, explore the town or city surrounding your school, or study in a country you’ve never been. Don't buy into the portrayals of college you've seen. Mean Girls and Ferris Bueller's Day Off didn't reflect your high school experience, and your college experience won't adhere to the movies you've seen or stories you've heard. Be the person you want to be.
Look beyond the classroom for learning experiences. You'll learn what you value in your living environment from your good and bad roommates; your conflicting social, school, and career interests will force you to evaluate your priorities; and new friendships will be nurtured while older ones may wither. I thought I knew who I was before I went off to college, but I now realize my sense of self was interrelated with the context of my childhood: the house I grew up in, my family and friends, etc. I developed a more nuclear understanding of myself during college. Your college years will be transformative ones as well.
The campus before you is the product of generations of students, faculty, administrators, and staff—never forget you’re both fulfilling a legacy and creating your own.
Paige Witthar
Class of 2014
Student loans are viewed as the universal solution to disparities in college expenses and student finances, but as one of my marketing professors used to say, “One size fits all fits no one well.” Alarming student debt statistics and news stories have shown student loans to be as much of a problem as they are a solution. I recently read a MSN Money article by Maryalene LaPonsie highlighting options for those overwhelmed by student loan payments. While the article is a good resource for current repayers, current or soon-to-be college students can benefit from researching the alternatives available to them now rather than the options available once weighted down with student debt.
There are only two ways to combat the student debt crisis: make college less expensive or create alternatives to student loans. The cost of education will continue to rise unless there is an overhaul of the system—that will take time. However, innovators are creating new options for financing higher education expenses. Crowdfunding is no longer just for the arts and inventions—it’s for college students too through SuccessFunding. SuccessFunding acts as a preventive measure against student debt. Students create a profile on SuccessFunding and leverage their network to crowdfund higher education expenses. Donors on the site can be assured that all funds raised go to the student's 529 account, a savings plan designated for higher education. SuccessFunding goes beyond paying for tuition. Students can raise funds for study abroad, books, on-campus housing, etc.
The traditional criticism of student borrowers is they're pursuing an education they know they can't afford. This argument downplays the role of the incremental and unexpected costs of getting a degree. When you're offered a financial aid package as a high school senior you're given one year of financial information on which to make a four-year financial decision. The most disheartening surprise I had in college was the growing gap between the tuition & fees and my financial aid package every year. I retained my scholarships throughout college but tuition, fees, and room & board increased annually. Meanwhile, my grants were cut and there were few school scholarships open to application. Most scholarship money was appropriated to students based on their admission materials and renewed every year. Federal loans, which conveniently increased in amount each year, seemed to be the only option for mending the gap. Student loans are no longer the sole option for students. Student loans offer a temporary solution with a looming consequence. SuccessFunding provides a real answer.
by: Paige Witthar
If you graduated in May or June, you’re likely like me—one of the 7 in 10 students in the Class of 2014 with student loans—and you may be equally celebrating your completion of college and dreading paying back your student loans. Graduation day may have been the best day of your life so far but the repayment countdown clock began the minute you received your diploma. Never fear recent grads, I’ve investigated paying back Federal student loans. Here are steps we can take to prepare for the day the grace period ends:
Develop a Personal Finance Style
Graduating changes your financial circumstances. If you’re starting your first salaried position, you’re likely dealing with new financial variables. No matter where you fell on the frugality scale in the past, this is a good time to reevaluate your relationship with money and start setting goals. There is no lack of advice on personal finance—follow columns, read blogs, and buy or check out books. If you have a financial adviser or trust someone's financial advice, develop a game plan with their help. There’s no perfect method for handling your personal finances—the right way is being cognizant and in control of your money.
Your Education Continues
“It’s 10 pm. Do you know where your children are?” The public service announcement you may really need is, “It’s less than six months before your student loan payments start. Do you know who your loan servicer(s) is?” It’s been years since you’ve signed some of your promissory notes and you may not remember the terms and conditions associated with each loan. Channel the skills college helped you develop by educating yourself on what you signed. If you haven’t completed exit counseling yet do it ASAP; it will give you much of the information you need. Additionally, Project On Student Loan Debt's Top 10 Student Loan Tips for Recent Graduates is a great starting point for sorting out your student loan situation.
Spend Time Considering the Best Repayment Plan for You
Federal Student Aid lists the details and eligibility for each repayment plan. If at all possible, choose the plan with the least interest accrued over the course of ten or twenty-five years. It may not seem like the salary accompanying your entry level career will go far, but you don’t want your student loans to compete with the increased financial responsibilities you’ll likely incur in your personal life while advancing in your career, not to mention inflation. Pay more principal now and save yourself interest in the long run.
Start "Employing" Your Money
During my junior and senior year, I was responsible for paying the apartment-related expenses my roommates and I split. I opened a separate checking account dedicated to depositing my roommates’ share of the expenses and paying the bills. I’m now using the same account to build a nest egg to pay for my student debt. Giving your money a job description by budgeting it. Budgeting for your student loan payments will ensure you have more funds to dedicate to your financial responsibilities.
Find New Ways to Chip Away
You can use innovative or not-so-creative ways to supplement your income and pay down your debt faster. Here are a few ideas:
I remember digging into my change to pay for a sandwich about a year ago when a customer behind me commented it was cool to see someone actually use change. I didn’t realize it was passé. Money seems to spend itself faster in the form of plastic rather than paper. Another benefit of "going green" is the change. Collecting coins in a spare change jar can add up—in fact, I went to the bank with $115 worth of change last week. I also get a weird rush out of selling “stuff”. I’ve bought and sold books on Ebay’s Half.com for years. I also use Craigslist (carefully) and Facebook Buy and Sell groups to sell furniture and household items I don’t need. My newest financial find is Ibotta, a phone app where you can earn rebates for buying everything from groceries to clothes and movie tickets. Once you reach a $5 credit you can cash out by transferring the funds to your PayPal account.
by: Paige Witthar
Is your summer going to have more homework than pool time? The school year may normally fall between August and May but there are advantages to taking classes during your summer months. Here are four reasons you made a good decision by spending your summer studying:
Your Plans are Made Possible
Do you need to get in a nearly impossible combination of classes to finish your collection of degrees, majors, and minors? Summer sessions and intersessions enable you to achieve your educational goals. Summer classes also relieve pressure from your fall and spring semesters—you have more room than eight semesters to fit in your needed classes.
New Experiences
Sometimes summer terms offer you opportunities you don’t have during the fall or spring. Two years ago, I spent June at the SMU-in-Taos campus. Both courses I took—Aquatic Biology and a management course—were taught by professors who don't normally teach undergraduate classes at SMU. My management professor only teaches MBA students during the school year and my biology professor teaches at a university in South Carolina. Both classes took advantage of our campus's location. My management class took a field trip to Taos Pueblo, and we waded in streams to collect and study fly larvae in Aquatic Biology.
I was also a marketing intern for the Town of Taos during the term. In my internship, I promoted tourism to the town through a Facebook contest for a customized Taos vacation. I also forged friendships with other students I would have likely never met on SMU's main campus during the school year. Looking back, my month in Taos was my favorite undergraduate experience.
Complete a Semester in a Month
Have you ever been burnt out by a semester shortly after midterms? Month-long summer terms are a quarter of the length of normal semesters and intersessions in May and August are even shorter. Though your classes meet longer, their pace ensures the semester doesn't drag on. Furthermore, summer classes can save you money since they are often less expensive than the same credit hours taken during the spring or fall.
Graduate Sooner Rather than Later
This point feeds off of "It Makes Your Plans Possible"—taking classes over the summer can make it possible to graduate a semester or whole year early, allowing you to save money and start your career or postgraduate plans sooner. Similarly, if you won't be able to finish your credits to graduate in May, summer courses allow you to graduate in August instead of December or the following May.
by: Paige Witthar
Graduation season is upon us. During May and early June, families flock to stadiums and auditoriums to witness the turning of tassels and the disbursement of hard-earned, expensive pieces of paper. One of the most anticipated traditions of a college graduation is the speech given by the commencement speaker. As a spectator of several speeches at my own graduation festivities earlier this month, I know graduation speeches can foster curiosity and provide a moment of introspection.
Just like a good Chicken Soup for the Soul story or an intriguing TED talk, a graduation speech can provide needed inspiration. NPR has collected and classified over 300 commencement speeches, many of which include videos. So take a few minutes and listen to the advice of your favorite comedian, politician, author, or business leader.
Here's one of my favorites, Conan O’Brien’s speech at Dartmouth's 2011 Commencement:
by: Paige Witthar
