Apparently, this online discussion and response (link below) happened a few months ago, but I just received it this week. I’m glad someone sent it to me because it is the poster child for well-meaning, but possibly ruinous financial advice.
In a nutshell, the question was posed by a college student, we’ll call him Jonathan, who is worried that he doesn’t know what he wants to do in life and therefore, has no idea what major to choose in college. That’s not unusual for many 18 year olds. It was definitely true in my situation. I only knew what I didn’t want to do…no to medicine or dentistry as I didn’t want to touch cadavers, no to fine arts as I was terrible at all of them, no to archeology as I thought that was interesting, but hated my one and only geology class, etc.
In any case, the psychologist advised Jonathan to explore careers by taking a bunch of random classes in college each year until he finds one that ignites a passion.
That advice may initially assuage Jonathan’s emotional psyche, but it could be disastrous for his financial psyche, which is his wallet. The quaint, age-old view that college is a time when the average kid can leisurely discover himself is a costly notion now. That’s thanks to the explosive growth in the cost of a college degree, coupled with college students and families borrowing ever higher amounts to cover that cost.
· According to the National Center for Education Statistics, for the 1987-1988 academic year, tuition, fees, room and board averaged $9,400 annually for students attending public 4 year institutions, and $22,800 for students attending private institutions, inflation adjusted.
· The average cost had ballooned to over $20,000 annually for public institutions and over $40,000 annually for private ones, by the 2017-2018 academic year, the last year numbers are publicly available in the study.
· The Institute for College Access and Success points out that by 2017, almost 70% of American students borrowed debt to fund college.
· Additionally, these students were burdened with an average of $30,000 in student loan debt when they graduated. If the students attended a private university, or took longer than usual to graduate, their college debt could be 2x higher than that or more.
So let’s circle back to that well-meaning, but off-the-mark advice. Each major requires students to complete certain classes, sometimes in a certain order, so that they can graduate with a degree in that major. If Jonathan takes a bunch of random classes each semester, especially after his sophomore year, it will take him longer to complete the required courses and graduate and thus, could pile him deeper in debt. And if Jonathan determines that what he’s passionate about is not even offered by his university and he needs to transfer to a different university, oh boy! The debt starts piling up even more, again because it will usually take him longer to graduate. As the old adage says “time is money”. In this case, it’s the additional debt taken on for the extra years, PLUS income lost from delaying the start of his first career. If Jonathan graduates college burdened with astronomical debt, it can impede his future financial goals (say goodbye to being able to easily save for a house or to retire), impair his credit rating if he’s late with payments, and increase his stress levels, thus damaging Jonathan’s emotional psyche as well.
I’m not saying students shouldn’t explore new fields and try new things. But do so responsibly. Now I sound like an alcohol commercial, but it’s true!
Here are 3 options for the many Jonathans in the world:
1. While in high school, Jonathan should focus on identifying the intersection of what he’s passionate about with that at which he’s skilled or proficient. Then, find the best universities for him based on who offers programs within that intersection, plus what’s a match for his investment/savings accounts (or his parents’ accounts, if they are helping to fund it) and likely future income levels if he needs to borrow to fund his education.
2. For some Jonathans, they can’t find the perfect intersection between their passions and skills in high school. Instead, they graduate high school completely overwhelmed with trying to choose a college major or career path. If they want to go to college, community college could be the right place for them to start. Still offers the ability to explore courses and majors, but at a much lower price point, and thus less debt required.
3. For the Jonathans who are in college today on borrowed money trying to find themselves, the key is responsible exploration. Those Jonathans should work with their academic advisors to determine potential courses that could be fun for them to try without pushing that important graduation date too far into the future and ending up drowning in debt.
I will also remind Jonathans and their families that career exploration doesn’t stop in college. There are plenty of adults who find their perfect careers after graduating college and pursuing different career opportunities. There are French majors who became social media managers, anthropology majors who became pharmacists, philosophy majors who became brand managers, etc.
So in a nutshell, let’s encourage students to “find themselves” in a financially responsible manner that aligns their emotional psyches with their financial psyches and minimizes their debt burdens. Let’s keep them from drowning in debt. Their futures depend on it!
Cynthia Bush is a former Wall Street investment banker and Lecturer with the finance faculty at the University of North Carolina-Charlotte. She is the co-founder of College Counts America and is passionate about improving financial literacy and elevating her tennis game. #FinancalLiteracy #CollegePlanning #FinanceIsta