Ted Rall: Think Twice Before Taking Out That College Loan

Posted By Ted Rall in Commentary, Culture, Lifehacks, Lifestyle

BreakingModern — Thinking of going to college? Don’t take out a student loan unless you’re sure you can graduate. Here’s Ted Rall with more.

Two stories.

Story one:

The first day of freshman orientation, Columbia University School of Engineering and Applied Science in New York City. After welcoming the Class of 1985 (more accurately, the wannabe class), the dean of the school asked us to look to our left, then our right, in front and behind.

“See those four people?” he asked. “Three of them won’t be at your graduation.” Point was, Columbia’s combined dropout and expulsion rate for undergraduates was 75 percent. Roughly the same odds as a tadpole surviving.

The idea, apparently, was to encourage us all to work hard so that we individually would make it to the end of what was sure to be a challenging academic journey. (For a school where they taught science, of course, this was prima facie illogical; if the school kicks out 75 percent of its students no matter what, it doesn’t matter how hard they work in the aggregate … only relative to one another. But whatever.)

Anyway, I remember looking around and thinking to myself: “Well, odds are, I’ll be one of those three.” Which, of course, I was. (An optimist would probably say that my negative attitude doomed me, which may be true.)

And now, story two.

I came to Columbia with a full scholarship. Not only did the school cover tuition and fees, but housing and meals were part of the package. I even scored a high-paying teacher-assistant gig in the math department, so I had extra spending money. A few months into my freshman year, however, America’s new president, Ronald Reagan, imposed draconian budget cuts in higher education. My financial aid officer informed me that, effective sophomore year, I’d have to take out big student loans and work long hours if I wanted to stay in school. Oh, and tuition would be increasing as well.

That December, I watched scores of my classmates, including close friends, drag their luggage out of the dorm, going who knows where — back home to their parents’ house, jobs, community college, in at least one case the military. I stayed. I’d decided to suck up the loan debt and the extra work.

You can probably guess what happened next. You know those kids who work 60-hour weeks and still kick ass in college? I was not one of those miracle students. I came back from my jobs — math TA, taxi driver, tutor, longshoreman — so dead tired that all I could think about was sleep. First I skipped studying. Then I skipped classes. At the end of junior year, helped along by a bizarre medical fiasco (nearly killed by a wart), I had failed out. Expelled.

Three out of four, as predicted.

If there’s anything worse than getting thrown out of college, it’s leaving with tens of thousands of dollars in debt without a degree to show for it. Looking back now, it’s clear that I made the wrong call. I shouldn’t have tried to stick it out. I should have followed my friends’ Reagan-inspired exodus and dropped out rather than borrow all that money. “I can’t afford to stay,” my friend David had told me. Neither could I.

You’ve read those news articles about how college graduates earn hundreds of thousands of dollars more over the course of a lifetime than people who just have a high school diploma. What no one talks about, however, are people like me — kids who leave university with tons of debt, yet uncredentialed.

“Millions of millennials are in the same boat,” reports NPR. “More than 40 percent of households headed by young adults with some college are dealing with student loans. And without the increased earnings that usually come with a college degree, managing even just a few thousand dollars in loans can be a huge challenge.”

Some kids take out loans in fits and starts, dropping out to work until their debt-to-date gets paid off, then going back for a short time, then repeating the pattern. That, experts say, is a bad idea:

NPR again: “Richard Fry of Pew [Research] says it’s a good idea for students not to drag out attaining a degree for too long. ‘Most people who are going to finish bachelor’s degrees, they’ve got ‘em by age 30. Ultimately, though, how long it takes you to finish matters less than whether you do. For a bachelor’s degree, you’re looking at at least an extra $600,000, $800,000 over a working life, compared to if you’d stopped your education at high school,’ Fry says. ‘College is expensive, but it’s a good investment.'”

If you’re 16 or 17 and thinking about college, however, you need to carefully consider — with the help of your parents or other responsible, experienced adults — how realistic it is for you to make it all the way through, whether it’s both years of an associates degree or all four years for a BA or BS. If you need to borrow a boatload of cash, it’s not going to be worth it.

Better options include:

• If you get along with mom and dad, live at home. Dorm life is fun but pricey.
• Attend a community college or an institution with low tuition for two years, then transfer to the expensive name school that issues your diploma. That’s what my fellow Columbian Barack Obama did; he went to Occidental College for two years before transferring to CU.
• Pay in-state tuition at a public university. Most are heavily subsidized by taxpayers, so you get a significant break on tuition.
• Choose the college that cuts you the best financial deal. Yes, you can negotiate — or let mom or dad do it. (By the way, the best deal isn’t the lowest tuition — it’s the lowest net payment ­— so you may want to choose the pricier school.)
• If your college pulls the bait-and-switch routine (great deal freshman year, less so sophomore year), seriously consider dropping out or transferring. It sucks, but you’ll be happy in nine years, when you’re not still shelling out $800 a month you don’t have for nothing. But ask the financial aid office for help — and tell them in no uncertain terms that you will drop out if they don’t … and you’ll tweet about your experience.
• Joining the military can defray some college expenses, but the money isn’t really all that awesome. Also, I can’t recommend any course of action in which you may wind up dead or disabled.

If none of the above options work for you, if going to college would mean incurring huge debt burdens that the shitty job market won’t allow you to pay off, there’s a simple, radical solution: don’t. Opt out on principle: If kids stop borrowing and borrowing to pay escalating tuition at well-heeled universities, class prices will come back to earth someday.

Most of all, opt out of college for the most-practical reason of all: not having $30,000 in student loan debt, repayable in multiples due to compound interest, gives you a leg up in life.

Hell, you could always start a business with the money you save.

For BMod, I’m Ted Rall.

Cover image: Line outside a Chicago, Depression-era soup kitchen by Unknown (U.S. National Archives and Records Administration) [Public domain], via Wikimedia Commons