Let’s look at college costs and student loan debt
In the last column I promised that we would take what I hoped would be an annual look at college costs and student loan debt, something that I have been writing and talking about for 30 years.
It started for me when Christine appeared in my court in 1994. She had $60,000 of student loan debt and $50,000 of credit card debt, and she was working at a $23,000-a-year job at a medical practice. The student loan debt was non-dischargeable, but she hoped to get some relief from the credit card debt. It was clear to me that, given her current employment, it would be almost impossible for her to pay off that student loan debt. Then, as I have too often said, I saw her in my court, in one form or another, every week after that.
What is really changing?
I hope that it is an annual review, because not much seems to be changing in the world of student loan debt and college costs, so that, unless some things really do change, it feels like beating a dead horse or hearing an echo.
Sure, there have been some changes that we hear and read about, like the administration’s 25 executive actions to address student loan relief and forgiveness, which can make a difference for many Americans, but don’t seem to be benefiting American taxpayers, as the national debt recently hit $34 trillion and is increasing.
In addition, some colleges and universities are working to lower tuition costs, at the same time that room and board costs are generally increasing in reaction to decreasing enrollments. Also, enrollments in career and technical education programs, online programs and apprenticeship programs are increasing, as more Americans realize that there are paths to success other than college for many young, and even older, people.
Is a college degree required?
Another possible encouraging change is what appears to be a partial push back to what I have referred to as an increasing “credential inflation” movement.
As I have said, do you really need to have a college degree to be a records clerk at Strong Memorial Hospital? Now, according to higheredive.com, “Forty-five percent of companies plan to eliminate bachelor’s degree requirements for some positions in 2024, according to a Nov. 29 report from Intelligent.com.
“In 2023, 55% of companies removed degree requirements, particularly for entry-level and mid-level roles, the survey shows. Employers said they dropped these requirements to create a more diverse workforce, increase the number of applicants for open positions and because there are other ways to gain skills. “In a survey of 800 U.S. employers, 80% said they were ‘very likely’ or ‘likely’ to favor work experience over education when assessing job candidate applications. In addition, 81% said it’s important for recent college graduates to have work experience.
“Among respondents who said they eliminated some degree requirements during the past year, the highest percentages tended to be in industries such as information services, software, construction and finance and insurance.
“At the same time, 95% of respondents said their companies require bachelor’s degrees for at least some roles. About 24% require a degree for three-quarters of their jobs, and 27% require a degree for half of their positions.”
Finally, according to the survey, which we have also discussed, “Alternative education and training programs appear to be valuable to employees, according to the survey. About 75% of respondents said their company values certificate programs, followed by 68% who said associate degrees have value, and 61% who said online degrees and apprenticeships have value.”
How to minimize college costs
When it comes to minimizing college costs and student loan debt, the principals are the same, while you are still getting that important, with a successful end-game, education. Look at 2+2 programs, ROTC programs, state vs. private schools, and living at home.
Also, look for and apply for as many scholarships as possible, and have good paying summer jobs and even jobs at school in order to, among other things, pay any accruing interest on loans, and/ or paying some of your living or tuition expenses. In addition, look at taking credit transferring courses in the summer, and make sure that you graduate on time for your program (according to Quora, “The official four-year graduation rate for students attending public colleges and universities is 33.3%. The six-year rate is 57.6%. At private colleges and universities, the four-year graduation rate is 52.8%, and 65.4% earn a degree in six years.”) so that you don’t spend or borrow more than necessary.
Also, don’t use student loan money for anything other than room, board and tuition, or the equivalent, and if you have student loan debt, don’t have card debt on top of it.
Finally, don’t borrow more than you can repay in a reasonable amount of time. Some say no more than your annual expected salary. I say your monthly student loan payment should not be more that 10% to 15% of your expected monthly salary, and research that expected salary.
See you next year unless something really changes.
Use your gift cards
On a final subject, now that we are into February, have you used those gift cards that you received over the holidays? According to a 2023 Bankrate survey, “Many Americans don’t use their cards. To that point, 47% of U.S. adults have at least one unused card. Nationwide, those unused balances are worth $23 billion, the report found. Their average value is $187 a person — a 61% increase from $116 in June 2021.”
Also in December, 2023, “Paytronix, which tracks restaurant gift card sales, said around 70% of gift cards are used within six months. But many cards — tens of billions of dollars’ worth — wind up forgotten or otherwise unused.”
This is a good part of the reason why I suggest giving people cash or even a check. I don’t think cash goes unused sitting in someone’s wallet or in their top drawer.
As for a check, even if it is just sitting in the recipient’s checking account, it should be earning interest, it will surely be used eventually, and it will not “expire.”