Grades and Girls: What Your Parents Never Told You About College Page 2

  Chapter 2: The College Debt Trap

  “We are lending money we don’t have to kids who can’t pay it back to train them for jobs that no longer exist.”- Mike Rowe, host of Dirty Jobs

  You’ve probably heard about America’s $20 trillion debt. But like all entities, the U.S. government has assets as well.

  In fact, the U.S. government has $3.2 trillion in assets. This includes cash, gold, buildings, land etc.

  Can you guess what the single largest asset of the U.S. government is?

  Student Loans!

  31% of US Government assets, or $1+ trillion, are federal student loans. The government will give nearly any student a loan to help make their dream of college a reality, and has made a pretty penny doing so.

  Now, could it be that the government has some financial interest in keeping this scheme of sending everyone to college going? I think it’s fair to say yes. And the government is not the only one:

  Student loans are big business. Therefore, the government pushes the idea that everyone needs to go to college.

  Despite tuition skyrocketing, young men and women will continue to enroll in college. Of course they don’t have the money, but the federal government is always there ready to give them a check for tuition, book and even living expenses.

  This is why tuition prices will continue to rise. They are not subject to standard market forces, because the government backs up all these loans.

  What this has done is that it has created an excess amount of students going to college. Much more than the market demands. This is why you hear about so many unemployed or underemployed college students.

  Again, the government does not care about this problem. They may pretend they do, but as long as student loans remain their cash cow they will continue to push kids into college, with more and more debt.

  It’s a vicious cycle, and one I want to make you aware of. It’s also a concept that can easily be explained to friends and family to red-pill (expose the truth) them.

  This idea that everyone should go to college to be successful is pushed from the top down. College is certainly not a bad decision, but the value of a college degree is becoming less and less. Especially considering the debt load.

  Decades ago college was just a fraction of what it is today:

  Many people, like my dad, could pay for much of their undergraduate tuition by just working a part-time or summer job like mowing lawns or waiting tables, because the price was so low. Today, for the aforementioned reasons, tuition has skyrocketed out of control. Few, if any, students can pay tuition working full-time alone, and if they could afford it I would question their motives to return to school.

  This has led to massive student loan debt among 43 million borrowers.

  The fact that students are allowed to take out all of this money for a degree is insanity. It should be criminal the way the government forces these loans on students:

  “Aaron Clarey said it already in his brilliant book Worthless, but it bears repeating: it’s absolutely insane that we allow 16 and 17-year-olds to make these kinds of decisions. We don’t let them smoke, vote, or drink, yet we allow them to shackle themselves in the chains of debt slavery by letting them major in useless subjects. And when they end up slinging lattes at Starbucks, we scratch our heads and wonder “Hurr durr, how did THIS happen?” [4]

  Today, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year.[5] This is disturbing. A six percent increase is massive! This is compared to around a 1% increase in consumer prices. Again, this is because people are being herded into college, and these universities are able to jack up prices as high as they want.

  And what about grad school?

  Going to med school or law school can have people in six figures of debt. I had a recent conversation with a friend from college. She told me that her ex-boyfriend is in around $225,000 of debt from law school, undergraduate and living expenses. That’s crazy! If he gets a good job as a lawyer, that will help, but it’s still a huge cloud over his head.

  Based on his LinkedIn page, he can’t be making more than $60-70,000 a year, if that. Not a bad starting salary, but when you’re paying at least $2,000 a month towards loans, it’s not that much.

  I also have a friend who’s in law school now. I know he has a ton of debt. He did a summer program with a top law firm and could be banking $160,000-180,000 his first year out of school. This is a great salary at first glance, but it really doesn’t go that long of a way.

  For one, his job would be in New York. In NYC, he is going to get killed on taxes. Post-tax and retirement contributions, he’ll probably be making about half his gross income, so maybe $7,000 a month. Then add on rent, which in NYC can be about $3,000, and then another $2,000 for student loans and you really don’t have a ton of money to work with.

  Is Debt Really a Problem? (A Contrarian Point of View)

  One of my favorite writers on personal finance is Financial Samurai. He wrote an article that suggest student loan debt is ‘No big deal.’[6] The idea behind this post is that most student loan debt is from grad students. Grad students are more likely to get good paying jobs, and therefore will not have to allocate a substantial portion of their income to this debt. Moreover, he suggests people refinance their loans with organizations like SoFi (which I agree with wholeheartedly).

  While Sam makes some valid points, he is wholly ignorant of the aforementioned amount of inflation on tuition prices. Students in the past didn’t have to deal with this type of debt—why should we now?

  Student loan debt is undoubtedly a problem. And not just for individuals, but for the country as a whole.

  Figure Out Your Potential Debt Load

  Before choosing what university you will attend, you should figure out how much you will be paying. Look for these numbers:

  ● Cost of university tuition (and other fees) over 4 years.

  ● Find the average salary upon graduation for university (specifically your program, if applicable)

  What you want to do is to calculate your debt to income ratio. The simplest formula is to borrow less money than you plan to make for a starting salary.

  If you plan on making $50,000 out of school, you should take no more than $50,000 in loans. This is a liberal estimate.

  In fact, you should be much more conservative with your borrowing. Taking into consideration taxes and interest rates, a better rule of thumb would be to borrow no more than 60% of your expected income (See this calculator for more details).

  So, if you plan on making $50,000 a year, you should borrow no more than $30,000. Borrowing only $30,000 for four years of tuition may seem like a low number—and it is. But, if you follow my advice, such as staying in state, going to community college, and starting a side hustle, you can easily cut costs of tuition. Moreover, if you increase your odds of getting a high-paying job out of college, you can borrow more (though this is not ideal).

  The ideal university is one that adds a substantial amount of income to what you would expect to earn, but also minimizes debt load. Wall Street Playboys explain[7]:

  “If your additional net income from year one post-graduation is equal to your debt load then it is likely a positive. This means your degree must add $X and that amount cannot exceed your total debt upon graduation of $Y.

  Additional income from education in year one = Total Debt (ideally better)”

  Chapter 3: Weighing the Pros and Cons of College

  “If you want to get laid, go to college. If you want an education, go to the library.” -Frank Zappa

  As with any major decision in life, you should weigh the pros and cons of going to college. Here is some food for thought:

  You Will Learn Little

  Outside of the STEM field, you’re going to learn virtually nothing practical. This does not only go for the arts and sciences, but for many business students as well.

  I studied history in undergrad. I have only a few nuggets of knowledg
e that I retained from those courses. I studied Russian too, but I could have learned it far faster on my own had I really worked on it, especially if I spent more time abroad.

  In grad school, the content was much more valuable. I took classes that were practical and exposed me to new ideas, but still I could have likely learned more on my own.

  I am a huge fan of books. I even started my own books blog: Masculine Books. Whether it’s history or accounting, you can learn it from a book.

  College Won’t Make You Rich

  The saddest part about college today is that it is supposed to prepare students to enter the workforce. That sucks.

  Do you really want to spend the next 50 years of your life sitting in an office working a job? I sure don’t. In fact, I don’t plan on working for than a couple years before I travel around the world living off of my businesses.

  To be successful and wealthy in life, you need to own your own business or assets of some sort. You won’t get there earning $50,000 a year with a 401k.

  Business classes don’t teach you this. Nor do ‘Entrepreneurship’ classes.

  If you want to be good at business, start a business. You don’t have to wait until graduation, let alone until you’re 40.

  You’re Going to Rely on a Paycheck

  Even if you do land a job you like, it’s going to get old. Hitting at alarm clock for decades to sit in traffic, then at your desk is going to wear on you. It turns “doing what you love” into “God, 5 o’clock can’t come soon enough.”

  Moreover, the days of job security are over. We’re moving towards a workforce that are hired as freelancers and work remotely under contract. Oftentimes, these gigs will get outsourced abroad to cheap labor.[8]

  Don’t wait until it’s too late! Start your own business and you’ll never have to rely on a paycheck from someone else.

  What Is College Good For?

  I intentionally spent much of the beginning of this book as a polemic against college. If you plan on enrolling in school, or are already there, it’s important you are aware of all the drawbacks of college. That said, I still think the pros outweigh the cons of attending university.

  Since college won’t make you wealthy or teach you much, what are the benefits of college?

  There are plenty. From networking to building social skills to finding your talents in life, college will open a ton of doors.

  Perhaps the most advantageous factor is time.

  College is a period of 4 years in which you have little responsibility. In high school, you had to spend 30-40 hours a week in school. Plus homework. For a job, you’ll also need to work 40+ hours a week.

  Most students will be class no more than 15-20 hours a week in college. And assuming your parents are paying for school, food, housing etc. you’ll have so much free time to do what you please.

  Whether this is going out and getting drunk or hunkering down in the library reading and staring a business is up to you. I, of course, recommend the latter.

  If you do college right, you will have come a long way in four years. It’s a profound opportunity for self-development that you shouldn’t let pass you by. You can start a business or a website, get jacked, learn a language, get laid and make great friendships.

  You should not let this opportunity pass you by. And you won’t because you bought this book.

  Chapter 4: Applying to Schools

  “Although it’s romantic to think of college as a time of exploration and growth where you can learn about 15th century French literature, the reality is that with the cost of college as high as it is today it’s only practical to factor career and income into the choice of a college.” –Financial Samurai

  If you follow the rule of staying in state, you have no need to apply to many different schools. You should likely be familiar with your state’s flagship school and have no need to waste time visiting.

  That said I would not just apply to 1-2 schools. 5 is a good number. Applying to 5 schools will give you plenty of options to choose from.

  Your strategy should look something like this:

  ● 1-2 reach or “dream” school

  ● 2-3 solid state schools

  ● 1 “safety” school

  A safety school is a school that you’re pretty much guaranteed to get into. If you only get into your safety school, which is rare, than you may even want to consider attending community college first. But we’ll talk about that more later.

  What you’re really looking for out of these multiple applications is a scholarship. If a school gives you a scholarship you now have some factors to consider. It doesn’t necessarily mean you should automatically attend though. Look at the prospective future employment prospects as that is more important than saving money on tuition in the long-run.

  In terms of completing the actual application, I don’t personally have any additional advice. It’s pretty straightforward. Others, however, have some more ‘questionable’ advice. Some people suggest applying to unpopular majors and choosing a minority group on your application to gain admission.[9] Personally, I have never done this, but it is not a bad idea.

  There’s also no need to go to some fancy pants school that charges $50,000+ a year, especially because most degrees they’re giving out are liberal arts which will not compensate you much, making paying tuition that much harder.

  If you have a dream school that you got into and couldn’t imagine life without going there, tough. In the first version of this book, I encouraged you to go, but looking back its often not worth it. For example, I know family friends or relatives (ones my age or younger) who attended schools like Tufts or George Washington. Both of these are expensive, private schools, that while good academically are not top-tier. And guess what happened? They both transferred out after one year because they didn’t fit in!

  Choosing a school, or a major for that matter, on emotion is always a bad idea. If you fall in love with a school just by looking at the website or brochure, there’s a good chance you’ll fall out of love, or will have set your expectations too high. You need to learn from a young age to make decisions based on logic and reason, not emotion.

  Most people are happy where they go to school. There are a few common reasons why people do transfer schools though:

  a. Too big: Going to a massive school can be overwhelming for some. My Freshman roommate at one of the biggest schools in the country transferred to some tiny ass college in Rhode Island I’ve never heard of. This school just wasn’t for him, plus it was close to his home.

  b. Too small: Some people go to schools that aren’t much bigger than their high school for reasons that are beyond me. They then transfer to bigger schools so that they can enjoy life.

  c. Far from home: Many people get homesick their Freshman year of school and opt to move closer to home. If they took this into account in the first place, they would’ve never went to a school so far away.

  d. Change programs: When people go to a school because of a particular program, when they end up changing majors there is no point attending that school any longer if it offers nothing else of value. This is why I recommend choosing a school not based on a particular program.

  Here’s how to pick a school:

  1.) Ask yourself what you want to get out of college: The two most common answers are fun and a good job like I’ve been saying. I have no idea how you did on your standardized tests, what your GPA was, and what clubs you were in. If you fucked around in high school and your application is shit, then you’re shit out of luck. On the other hand if you killed your high school classes and the SAT’s/ACT’s then you have your pick of the litter.

  2.) Check tuition prices: If the difference between two schools’ academic programs are negligible, than choose the school that will save you more money. If tuition is not an issue than Pass Go and Collect $200 (the rich truly do get richer) and move on to Step 3.

  3.) Apply: Pick 5 schools that stand out to you as places you may enjoy. Apply as early as possi
ble as it will give you more time to make a decision. You should get into most of your choices if you were smart about where you applied. Now it’s time to really whittle down your choices. I would start by going over costs again. Then look at these schools by the strength of their programs. If you want to study Finance, you should give preference to a school with a good Business school. Location is also important for a subject like business as you will have more access to internship and job opportunities.

  4.) Visit: If you’re from Florida and apply to university of Wisconsin, know that snow is real and isn’t just something that exists on TV. It also sucks, except when looking out your window. Climate is a big factor, but isn’t usually a big deal unless you must live in a particular climate (e.g. Warm and Sunny). Also, some campuses are not aesthetically pleasing and gloomy. While this isn’t a huge factor, being surrounded by ugliness can cause unhappiness (that’s why we date hot chicks). I’d wait until you get accepted to visit a school’s campus. No point in spending a few hundred dollars on a visit when you may not even get accepted.