Tag Archives: education

High School Students Can’t Make Financial Decisions About College

At the beginning of my senior year of high school, we had to fill out a questionnaire for the college adviser. It asked if I wanted to stay close to home or if I wanted to move to the opposite coast, what my interests were, what strengths and weaknesses I had, and o yeah, if finances were going to factor into my decision about where to go to college.

Maryland Terrapin
University of Maryland by enygma

Like many high school seniors, I said that finances were not going to be a major part of the decision making process.

My College Decision Making Process

This is what my decision making process looked like while I was filling out that questionnaire:

  • My parents had provided for all my education expenses up until that point
  • I had some money saved up for college
  • It was more important to go to a good school than to worry about how much it would cost

I had no idea how much my parents had set aside for me, and I had absolutely no concept of money at the time. So why should I care how much college is going to cost?

The Problem With Letting High School Students Make Financial Decisions

At age 17, the difference between $25,000 in student loan debt and $100,000 in student loan debt is really small. Many teenagers look at the options like this:

  • In either case, it’s a lot of money that will get paid back eventually.
  • With a college education, it won’t take long after graduating to start paying it off.
  • Every else goes through the same thing, so I am not any different.

Why are these kids being put in charge of a potentially life-changing decision without being given all the tools to make the best choice?

How High School Students Decide Where To Go To College

Most high school students think more about the social and academic aspects of college than the financial aspects. Some schools are better when it comes to specific disciplines and for the most part, kids are looking at what their lives will be like during college instead of thinking about what their lives will be like after it.

I went off to the University of Maryland (Go Terps!), and at some point during my junior year, my father told me how much debt I was probably going to graduate with. OK, it was a fact of life that I was going to have to deal with. If he had said $70,000, my reaction would have been the same.

Parents Need To Help Make The Decisions

I’m glad my parents were looking out for me and didn’t allow me to take on more than a reasonable amount of student loan debt. I had absolutely no idea what I was doing, and if there hadn’t been any money set aside for my college education, I am confident that I still would have decided to go to the University of Maryland. I consider myself very fortunate that I had help during the entire process.

It’s not fair to make high school students decide between two enormous amount of debt. Parents need to be extremely involved and not only lay out the realities of what life after school will be like, but guide their children because they are much better suited to look at the whole picture.

How much student loan debt did you have when leaving college? As a high school senior, were you able to make an informed financial decision about where to go to school?

Welcome To The Real World – Brutally Honest Graduation Speech Ruffles Feathers

Do you remember the graduation speech from your high school commencement? What about your college graduation? Don’t feel bad if you don’t; I don’t have a real clear memory of either, even though neither is all that far in the rear view mirror. Just about all of these speeches is the same; a heartfelt walk down memory lane, designed to eloquently summarize a four-year period in ten minutes or less.

The speaker usually touches on the highs and lows of the high school or college experience: the lessons learned, the friends made, the opportunities savored. Your standard, run-of-the-mill graduation speech is part nostalgia, part inspiration, a touching farewell to childhood and an optimistic introduction to the real world.

Well, at least most of the time…

If I had to guess, I’d say the Wellesley (Massachusetts) High School class of 2012 won’t soon forget their graduation speech. David McCullough Jr., the son of famed historian (if there is such a thing) David McCullough, gave the keynote address to graduates earlier this month. In his speech, the history teacher admonished the so-called trophy generation, reminding them that when everyone gets a trophy (or an “A” in English class, or accepted into the same college or university, etc.), the value of that trophy is diminished. McCullough went on to tell them in no uncertain terms, “You are not special.”

It’s true that, as McCullough says, today’s trophy generation “pampered, cosseted, doted upon, helmeted, bubble-wrapped.” (To read a full transcript of McCullough’s speech, click here. Since the day they were born, these children have been told they are special – extraordinarily so – and have grown used to having things go their way. This is the generation whose moms and dads inspired the creation of the term “helicopter parents.” This is the generation that, as so many of my teacher-friends have told me, lacks the respect for authority and discipline their predecessors held dear. This is the generation whose childhood was framed by the attacks of 9/11 (the class of 2012 was just beginning the second grade when the towers fell), whose adolescence was defined by the Great Recession.

McCullough’s unusual graduation speech has been both vilified and glorified in the social media universe. Many have chided him for his words, saying he failed to show respect for his students. Others praised him for telling these pampered students on the precipice of the real world where they really stand among their peers.

Where do I stand?

I agree with McCullough. When the vast majority of students graduate from high school, they are nothing special. So you were captain of your high school’s football team? So were more than 16,000 other student-athletes across the country. You graduated at valedictorian? So did the top student at each of the more than 18,000 high schools in America. Maybe
you scored a perfect 2400 on your SATs. Good for you… and the other 383 people who took the college entrance exam last year.

My point isn’t to diminish the accomplishments of a high school senior; my point is, simply, that there’s very little to differentiate one student from another at that stage of the game. At 18, you still have – relatively speaking – your whole life in front of you; who knows what you’ll become? At that age, I’m sure I thought I was something pretty special, but looking back on my 18-year-old self, I can now admit that I knew nothing, was nothing… at least, not yet.

Readers, do you agree with David McCullough Jr.’s graduation speech? What would YOU tell the graduating class of 2012?

Personal Finance 101

J Money at Budgets Are Sexy wrote yesterday about why schools teach about the stock market. It got me thinking about my personal finance education.

During my senior year of high school, one of the school administrators came into our class and began to talk about finances. I didn’t realize it at the time, but what she was really talking about was personal finance.

She spoke about balancing our checkbook, not going overboard with purchases, and using credit wisely. Most of the advice she gave was vague (what does using credit wisely mean? I didn’t even know what mistakes I COULD make!), and parts of it didn’t apply (What is a checkbook??).

Back then, I was interested in saving my money instead of wasting it, but I didn’t realize exactly what college would be like. I didn’t know that eating out can get expensive, that going out, new clothes, and video games would all be coming out of MY bank account. None of that applied to me in high school, and this lecture didn’t help get me on the right track.

In college, I took three economics classes, two accounting classes, and one finance class. I remember very little from those classes, although I do remember learning about supply and demand. What I didn’t learn was how much money I would need, where that would be coming from, and that credit could be your best friend or your worst nightmare.

I didn’t know anything about student loans. I didn’t know the first thing about retirement, and I had no clue why I would be doing any long-term investing. I was focused on making $2,000 in the summer so I could survive the year without running out. And for me, running out meant running out. I didn’t even know how to get a credit card, and I’m glad, because I definitely didn’t know what 19% APR meant.

If I could speak to the high school class of 2010, I would say:

1. If your parents are going to be paying for any portion of your college tuition, go home and thank them. They spent a lot of time working so you could live a great life, and you should appreciate that, even if you don’t understand that they gave up vacations, a nicer house, and a fancy car.

2. Learn about credit. Here is a nice first resource: Credit Series. Try and build your credit throughout college if you can. If you skip that reading, at least know that you will hurt yourself if you open a credit card at a football game in order to get a free t-shirt.

3. Set up a budget. Figure out what is most important to you and spend your money on things that make you happy. You will quickly realize that you don’t have enough money for anything, but you can stretch your dollar enough to have money for what you really want.

For those in the 2010 college class, I would give them this advice:

1. If you choose to start work now, work to get out of debt quickly. Compound interest will hurt in a few years. But if you get out now, it will be your best friend and retiring at 45 could be a real possibility. If you hate doing homework now, think about how nice it would be to be able to stop working 20 years before everyone else.

2. Build a Budget – Find out how much money you will need to pay for necessities. Sign up for Mint.com, keep track of your finances, and make a budget in a few months. Save 20% for long-term goals and spend 10% on whatever you want (travel, video games, going out).

3. Open a Roth IRA. Don’t worry about trying to time the market or earn 20% a year. Doing that is like playing poker online. You COULD do great, but you could also lose your money quickly. You don’t want to risk your money like that.

I think it’s a big problem that students are forced to learn hard lessons on their own. While it’s nice to learn technical skills, it wouldn’t be hard to create a class where students learn the upsides and downsides of money and the basics of budgeting, credit, retirement, interest rates, and mortgages.

I found my accounting class extremely boring. I KNOW students would rather learn about topics that apply to their lives. Believe it or not, college students like gaining knowledge, and if they are provided with classes that interest them, they will be much better off in the future.