Skip to content

When Is a Student Loan Worth It?

3 June 2010, 2:27 am

In today’s economy, is the cost of a degree from a four-year college always worth it? Or are there advantages in earning a certificate, perhaps in nursing or programming, from a career-oriented school?

Ron Lieber’s New York Times’ article, “Placing the Blame as Students Are Buried in Debt,” points out that today’s students may accumulate a huge student loan debt by the time they graduate. The students plan to pay back the loan from their earnings. But, because today’s corporations seem to be right sizing, downsizing, and capsizing, accumulating sizable debt upon graduation may start to look more like an anchor than a kite as these students enter the job market.

Lieber illustrated his article with the story of Cortney Munna who accumulated nearly $100,000 in debts in order to graduate from NYU. Lieber points out that Citibank gave Ms. Munna another $40,000 in loans even though she had already amassed debt “well into five figures.”

We must ask ourselves whether Ms. Munna could have gotten a $40,000 car loan at that time. What was used to measure her creditworthiness, or that of any other student who received a similar loan?

Coincidentally, I was rereading “The Millionaire Next Door” at the same time the NY Times article appeared. That book turned my thinking in a different direction, one that perhaps students, their families, and their banks should consider. I began to wonder what these millionaires would think about student loans.

For decades, high-school students have been urged toward getting accepted by the best four-year colleges and universities, using student loans to pay the way when family or personal income was not enough. This made good sense for many, particularly to those preparing to enter fields where there was a shortage of qualified applicants for jobs that existed.

Today, the situation has changed. As corporations pare down costs, the higher-paid specialists seem to be among the first to go. The cream of the corporate crop–data modelers, process designers, trainers, project managers, and business / financial analysts–are discovering the unthinkable: there are capable workers in China and India who can perform their tasks well enough to satisfy corporate budgets and at a fraction of the cost. One very senior project manager, a true workaholic, who had been earning around $180,000 annually was laid off and offered a similar position with another company as a consultant for $29 an hour ($60,000 annually), the rate that was paid to a worker in that position in India.

These types of key positions have been in high demand in the US since 1990 and justify the graduate degree required, even a $50,000 student loan if needed. Today?  Probably not. It seems no more practical for a college student than does their buying a new premium sedan with a loan for $50,000. The downsized corporate manager today might not even qualify for the car loan!

In “The Millionaire Next Door,” Thomas Stanley and William Danko report that the millionaires and decamillionaires (ten million or more) whom they interviewed were adamant about many things, including avoiding debt and being frugal so their money could work for them. According to Webster’s dictionary, frugal is “behavior characterized by or reflecting economy in the use of resources”. Do these millionaires live a lavish lifestyle, like those characterized by many millionaire professional athletes? No. They eat inexpensively, usually at home, live in working-class neighborhoods, and drive non-descript American cars that are a few years old. They conserve money and they invest.

Many of the millionaires interviewed are self-employed. If those interviewed were speaking as one, Stanley and Danko thought they might say, “Many of the types of businesses we are in might be classified as dull-normal.  We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.”* These are people who might excel at a trade. And, yes, two-thirds were self-employed.

Whereas some of them have likely learned their trade as apprentices, perhaps in family businesses, career-oriented schools today offer two-year degrees and certificates in careers where demand is going up. Good mechanics are always in demand, as are nurses and other healthcare workers. Plus, as changes in the field come about, additional certification classes are available.

According to the New York Times, Cortney Munna’s college loan balance is now $97,000. She earns $22 an hour, working outside her field of study, something that is becoming more and more common today. Her monthly payment on the loan is around $700. That payment is likely close to 40% of her take-home pay.

What does this mean to you if you require a loan to attend a four-year college? Unless you have pored over the United States Bureau of Labor Statistics’ “Occupational Outlook Handbook” and are positive the bachelor’s degree you seek will qualify you for a position predicted to grow, do yourself a favor and investigate entering a trade, earning a degree or certificate from a trade school. If you are intelligent, committed, frugal, and innovative, you might just become one of those millionaires.

And remember some of the most innovative self-employed millionaires did not finish college (Bill Gates and Paul Allen of Microsoft, Micky Arison of Carnival Cruises,  Shawn Fanning of Napster and numerous other web gurus)  or even high school (Johnny Depp, Quentin Tarantino, Dave Thomas of Wendy’s, Walt Disney). That costly degree is not a golden key today. Take the time to look over the alternatives. Then make a wiser decision.

*Stanley, Thomas J., and Danko, William D, “The Millionaire Next Door,” 1996, Pocket Books ed., p9.

Filed under Student Loans. Tagged ,
Comment

Read the Book, Follow the Steps, and Win a Scholarship or Two or Three or More

21 October 2009, 8:03 am

Scholarship books are definitely one of our most boring groups of publications. They read like research papers, listing page after page of available grants. Enough to put most clever applicants right to sleep.

Way, way outside the box is Ben Kaplan’s “How to Go to College Almost for Free,” published originally in 2002 and now out in a second edition. And what a fresh breath of air this book is!

What Makes this Book Outstanding?

Ben Kaplan was intent on getting a college education. The income level of his family plus a possible tennis scholarship would allow him to attend colleges he had no desire to attend. The top universities he had set his heart on were way, way out of his grasp. But Ben Kaplan is one inventive, ambitious young man! In his junior year in high school, he set out to learn the ins and outs of not only the availability of scholarships but also the ways to win as many of them as he could. With his love of investigative reporting, Ben not only talked to previous scholarship winners, whenever possible he read the parts of their applications that were available to the public.

And, after succeeding to win close to $90,000 in scholarships, Ben wrote what he learned and what worked in a book that should be read by any student looking for scholarship money for higher education. In my opinion, the sooner the student reads the book and starts applying the principles, the better. Middle school is a good time to start.

This Book is Comprehensive

The sections show how comprehensive the book is:

Part I: How the Game Is Played (includes not only solid information but also action steps)
Part II: Getting Ready to Play (scholarship searching, including action steps to find the right scholarships for you)
Part III: Strategies That Give You the Edge (finding your theme, strategizing for position and content)
Part IV: When the Whistle Blows (developing a game play, writing a winning essay, the secrets of good letters of recommendation, the paperwork, and the interview_
Part V: When the Buzzer Sounds (ways to cut costs and also to keep track of your earnings to make sure all disbursement and reporting rules are followed)

Review

Starting with his own frustration about the inadequate sources of information about scholarships, Ben Kaplan dug in. He used the web, scholarship winners, scholarship committees (when available), and, I would guess, “how to” job interview techniques, to flesh out the entire world of scholarships and financial aid. How much did grades count? What else was needed to win? Personal development? Extra-curricular activities? Personality? How to interact with the interview committee? Letters of recommendation?

Through trial and error and some investigative ingenuity, Ben Kaplan became the “scholarship guru” he was unable to find. After winning his first scholarship, he began refining, researching some more, applying again, revising his technique based on his results and those with other scholarship applicants and winners he interviewed.

This guy is without a doubt the go-to guy for information about the college money game. He even covers how to decide which scholarships are right for you, which extra-curricular activities will match the kind of scholarship wanted, and even how to dress for and act in an interview.

There is more detail in this book on writing a winning essay that some high school students will learn in four years of high-school English. The techniques are that good. And, if you think asking someone for a letter of recommendation is all it takes, guess again. Kaplan explains how to get the right wording from the right person to accompany multiple applications.

And he does not leave it at that. Once a winner (or still in the process), he explains how students can use the Advanced Placement (AP) Program’s annual exams annual tests to get credit for college courses while still in high school, By passing an equivalent exam in, say, Spanish, calculus, government and many more subjects, students can received a maximum of one year’s worth of college credit. That alone reduces the cost of college by 25%. Similarly, the College-Level Examination Program is available to students who have not taken Advance Placement or honors courses or whose expertise is not covered by the AP tests. CLEP is particularly relevant for home-schooled students and those who have learned college-course content outside the regular school system. Examples are introductory business law, accounting, and marketing.

The most telling example of how few students learn about and apply for scholarships might be that, as a book reviewer, I was one of the few who had checked this book out of my local community college library!

He appendices and index are also very well done so pay attention to them as well.

Filed under Uncategorized. Tagged , ,
2 Comments

Prepare Yourself for Flexibility in Your Career and Workplace

9 February 2009, 10:10 pm

Is it possible to limit your options? When you are selecting a college and college classes, it is easy to limit yourself to the minimum needed for an entry-level position. Many stop there while others continue taking classes either to acquire more skills, learn more tools, or even just to keep their minds active or because of personal interest.

Some learn a foreign language, get a teaching credential, become certified in a particular software, or get involved in community service. They never stop learning.

What does this have to do with job skills and employment? In challenging economic times, you will notice one thing—it appears that people with a wide selection of skills are more emploiyable. Similarly, if those with a wide set of skills lose their jobs, they seem to get back to work more quickly and some with a narrow range of speciallization.

Here are two examples. The first individual, Polly, is 62 and is an expert in accounts payable. She’s been with the same company nearly all her life. From the company’s original manual accounting system, Polly has adapted to using Excel to track suppliers, contracts, and payments due. Fine so far, but the company has now found it is much cheaper to outsource theses activities to India. Polly’s full-time job has turned into a 4 hour a week task, as liaison with the company in India. With three more years to go until retirement, Polly has the option of a a lateral transfer with her employer. Except there aren’t any jobs that require her skills. And she hasn’t taken classes or done anything else to learn new skills since her two-year community-college degree in bookkeeping more than 40 years ago. Since Polly enjoys reading and crossword puzzles in the evenings, she has few friends.

How employable do you think Polly is at this point? She is smart and easy to work with, but, at age 62, she needs to be retrained. Is this an option that looks profitable to her company?

Ron, her office mate who has handled the accounts receivable in much the same way, is facing the same dreary employment outlook. Except that Ron’s case is a bit different. He has studied Spanish in the evenings and can speak it fluently, he has traveled extensively in Central America, and he teaches English as a second language at the community outreach center. Ron also coaches the girls’ basketball team at the local middle school. He is well liked by the students and their parents.

Consider Ron’s options for employment. At a time when there are grants for increasing employability of immigrants and high-school graduates in low-income areas, Ron is in a position to teach bookkeeping skills to Spanish-speaking job seekers. If he lists coaching as a skill on his resume and points to teaching ESL classes, it is apparent that he has some experience in coaching and a potential for training, both in English and Spanish. Plus he can call the many, many parents whose children he has coached and ask them who they know who is hiring.

Continue learning. Today, with online education available worldwide and with community college classes offered in the evening and on weekends, it is a good idea to think about where you intend to be in ten years. Will you be like Polly, dependent on one set of career skills, or will you be more like Ron, with a solid network of people as well as a wider range of skills.

Think 20 years ahead. You (and no one else) really knows what the future holds. But it stands to reason that it holds the greater options for the individual who chooses to keep learning, continuously taking classes, developing skills skills, developing tools, and being the flexible candidate employers favor.

Filed under Careers. Tagged ,
Comment

2009 Career / Professional Resolutions for a Challenging Economy

9 February 2009, 7:44 pm

Your 2008 resolutions might have been about fitness, weight, entertainment, and vacations, but you are looking at a different world as the year ends.

A lot of students and career professionals find that today is the right day to make the resolutions that will lead to employment in 2009 and beyond. Faced with budget and staff cuts, managers are likely to look at each employee or candidate in terms of their credentials, degrees, certification, leadership, and flexibility.

This is the perfect storm to make yourself an indispensable asset to your employer or future employer. It takes planning and resolve but those who make the cut will look back on 2009 as the foundation for their success.

Take advantage of online education to go back to school. Today, you can easily find the online courses that will help you update your skills or develop those that make you more employable. A decade ago, you might have needed to quit work to attend school. Today you can study nearly any subject online with experts from around the world. In your pajamas, before or after a day of work, you have the option to get a degree, an advanced degree, or simply take the next classes that are values in your field.

Pursue that certification. Most industries offer a certification to those who follow a schedule of courses and then pass a qualifying exam. In others, experience alone may qualify you to take that exam. Once again, much of the study or even the exam can be done online. For those in the IT industry, Oracle, Microsoft, and other certification may give you needed flexibility. Talk with your manager to find out future needs, then pursue needed study and testing as quickly as possible.

If there are opportunities to give talks to other employees, perhaps as party of a professional group with the company, you may find that an organization such as Toastmasters will help you develop the speaking skills so that you are remembered not only for what you say but how you say it.

A programmer is wise to use this time to develop expertise in a language that is in demand. With online education, this has become easier and easier.

Another certification for those in or focused on management, becoming proficient in Microsoft Project and getting project manager certification is an asset. Another important area for managers may be to become certified in public relations. The Public Relations Society of America offers a program for certification that helps you develop skills and knowledge that will improve your ability to succeed. For more information, go to www.prsa.org.

Personal development and leadership development. It is surprising how many seminars by personal development experts such as Tony Robbins, Brian Tracy, Jack Canfield, Joe Vitale and others are offered free of charge to corporate employees. Many who attend sit in their chairs long enough to be counted as attendees, then slip out to the bar or golf course. Take advantage of any opportunity to attend and, afterwards, talk about it with your boss, emphasizing points that make it clear that you participate fully and developed skills you can use in your job.

Perhaps only executives at your company are compensated for working with personal coaches, but anyone can read relevant books and create a Mastermind Group to help you develop your expertise and challenge yourself to come up with new approaches and ideas to the challenges in your field. One book is read by almost everyone who has a passion to succeed: Think and Grow Rich by Napoleon Hill (Think and Grow Rich: The Landmark Bestseller–Now Revised and Updated for the 21st Century). Another classic recording that urges you to think creatively is “Lead the Field” by Earle Nightingale, recently reissued (Lead The Field: 6 Audio Cassettes And 1 Paperback Workbook in Original Hard Plastic Case).

Network, network, network. The largest professional networking group in the world is Business Networking International, started by Dr. Ivan Misner. (Check out www.bni.com,) Whether participation is relevant for you or not, you will quickly learn on the website. What is relevant for almost everyone, however, is Dr. Misner’s most recent book, The 29% Solution: 52 Weekly Networking Success Strategies. Creating successful business relationships and fully understanding the value of networking is essential for those in sales and higher levels of management. As a member of a solid network, those who require information, skills, or people in a hurry will find that their network is the best resource.

The old saying is that, in hard times, those who are dependent build resumes while those who prize independence build networks. The dependent trade time for money while the independent leverage their networks. Which group do you want to belong to?

Two key traits for success are insistence and persistence. Excelling tomorrow is very, very likely to require more and different skills than today. Resolve to yourself that you will insist on making yourself indispensable and persist in developing the skills to make it true. By going back to school, pursuing self-development, networking, and focusing on success, you have an opportunity to develop the flexibility that is valued by managers. Here is to you in 2009 and beyond!

Filed under Careers. Tagged ,
1 Comment

Are Student Loans a Blessing or A Curse? Or Both?

8 February 2009, 10:26 pm

The Blessing
Once upon a time, possibly a long time ago, student loans were simple and their interest rates were lower than that of average loans. Banks and the Federal government worked together to give students a break. And, to qualify, a student needed a decent GPA and career outlook. Future teachers, for instance, found it easy to get loans. They were in demand and knew loan payback, although likely to take10 years, would eventually end. And that the interest rate would stay the same.

The Curse
Enter the loan dragon. Somebody figured out that some kinds of students, perhaps with lower GPAs or less optimistic job outlooks, were not qualifying for government loans. Some of these dragons could have been good hearted—“Let’s help those slightly below GPA students” while others may have thought, “Golly gee whiz, perhaps these kids will pay a lot for a loan because they don’t have any other way to finish school. And, if they don’t pay, we know where they live.” And, wow!, with all that interest to be earned, we can probably market these loans to investors!

This may sound a bit harsh, but we’ve all seen Enron and we’ve all seen the real estate market boom and bust. Why not the student loan business?

At rates somewhat below hard-to-get credit card rates, non-government loans became available. And somewhere along the line, the rates started to look like credit card games: 0% financing until 200X!” And then, boom, gotcha! 17% interest! In case your background isn’t in finance, 17% is a heck of a lot of payback for a student who, upon graduation, starts out near the bottom of the pay scale. Instead of 10 years to pay off, it’s looking like a chunk of one’s lifetime. Take a look at how student loans relate to the financial crisis in the US: washingtonpost.com – Student Loan Aid Is Test for Treasury.

So, when it is a right time to get a student loan that isn’t government supported? Harshly speaking, only when you use the loan $$ for school expenses. What never to pay with a student loan: car expenses, dinners out, beer nights with friends, weekends away, new electronic must-haves. Sorry to say, but these kinds of purchases are best made with money from a part-time job or other non-loan money source.

Once school costs get expanded to include lifestyle costs, doom and gloom are only a distance away. Do you really want to pay 300% more for that new cell phone just so you can have it this month? Because, 300% of purchase price is what is may cost you to pay off the loan amount you used to purchase it.

The Choice
Here are some questions you should ask yourself when thinking about a non-government student loan:

1. How much will it REALLY cost you to pay off this loan? How long will it take, given a realistic salary and job outlook? (Find a counselor or banker to help you with this one. Do NOT base your decision solely on what the loan agent is telling you.)
2. How bad do you need it? Is it realistic to consider taking fewer classes so that a part-time job works for you? Or even a full-time job combined with night classes?
3. Are there scholarships you can qualify for? Does the career you are planning for offer any financial aid?
4. Do you have friends or relatives who might combine money for a loan, as long as it is drawn up by an attorney and signed by all.

Whatever you do, research any loan carefully, get a second or third opinion, and think it over before you commit to such a loan. Worst-case scenario: Age 32, working second job to pay more on loan, up all night with sick young child.

Think it over.

Filed under Student Loans. Tagged ,
1 Comment

U.S. Poet Laureate Consultant in Poetry (and community college teacher), Kay Ryan: Interview

8 February 2009, 10:17 pm

What validation for community colleges! When my catalog arrived for College of Marin, the cover photo announced a prestigious award for a long-time faculty member. Okay, okay, here’s the first paragraph of the article: “On July 17, 2008, Librarian of Congress James H. Billington announced the appointment of Kay Ryan as the 16th U.S. Poet Laureate Consultant in Poetry. She joins a distinguished roster of poet laureates, including Robert Penn Warren, Richard Wilbur, Louise Gluck, and Robert Pinsky among others.”

At first, I thought, “How fabulous it was to have someone in Marin County, CA, named as U.S. Poet Laureate”. But where the community college bit comes in is that she not only teaches at a community college, she also graduated from one! That shocked me a bit: Kay Ryan is not some lofty college professor with a degree from an Ivy-league school, steeped in decades of university glamour. Instead, she teaches at College of Marin, an excellent community college, and she graduated from Antelope Valley on California’s Mojave Desert!

Her poetry is unique, simple, and compelling. One poem read, I searched for another. And another. How could I have attended that college and not come across this woman? Probably because she teaches English to a particular student population. In her words, “As a teacher at a community college for over thirty years, I have taken particular pleasure in working with the kind of students who come to community colleges — people who are hungry for education and are willing to sacrifice to get it. It means something, to see night students arrive in their work uniforms from hospitals, construction sites, restaurants. I admire my students for their courage to start over in life, often having taken some knocks and having had the guts to think how to make things better for themselves and their families by coming back to school.”

Is this a wake-up call to all those who say community colleges are best avoided for those who want to succeed in their careers? That community college students will have to settle for less? The interview with Kay Ryan says otherwise. That got me thinking: Which is the better choice: (a) To do whatever it takes to attend a four-year school (perhaps including a student loan) or (b) To stay close to home and take advantage of an excellent community college and faculty? While circumstances vary from school to school and student to student, this interview is very validating for community colleges, faculties, and students.

I had occasionally felt a little embarrassed because I had received my AA degree before going on to graduate from a California state college. The interview with Kay Ryan points out that I am not alone. Some of the others who have done so and gone on to succeed include: “Tom Hanks, actor; Arnold Schwarzenegger, California Governor; Eileen Collins, National Aeronautics and Space Administration (NASA) astronaut; George Lucas, film maker; Joyce Luther Kennard, California Supreme Court justice; Jim Sinegal, Costco Wholesale Corporation CEO; Annette Bening, actor…”

The story / interview is short and includes one of Kay Ryan’s poems:
http://www.poetryfoundation.org/archive/poet.html?id=80608

Filed under Community Colleges. Tagged , ,
9 Comments

Deciding on a Career

8 February 2009, 3:16 pm

In the 20th century, men and women often made a career decision only once. They tended to
stay with the same type of work for all of their lives and often remained with one company. Besides, there are standard ways to enter a career and they are also smart and smarter ways. Take the time to learn the difference.

Today, in the dawning of the 21st century, most will change the company they work for and embrace the opportunity to change careers many times during their working lives. Changing business climates, corporate ups and downs, the worldwide web, greater mobility, and more attention to personal growth and development are some of the reasons.

Is Career Choice One Big Decision?

Not really. It is more often a series of smaller decisions about personal aptitude, likes and dislikes, preparation required (college, university, career school, and / or on-the-job training), geographic location, and requirements for making a good living as well as being promoted. Today, one important consideration is acquiring skills and knowledge that can be applied in several related fields. For instance, expertise in team management and goal achievement can be used in many kinds of business.

Although you may not keep the same career or job for life, you still need to take the time to understand your career options entirely. Make you are clear about your goals and understand all of the ins and outs of potential careers so that there are no unpleasant surprises and you can enjoy your career.

Make Yourself a Candidate for Promotion

One important area to pay attention to is the skill sets required. Let’s say you want to be a fireman. In many areas of the country, there are community college or trade schools that offer the required education and training. For many, that is enough. But you may be the person who would make an excellent battalion chief or trainer or even a fire chief. For that kind of advancement, a business or management degree Consider all the different job options in your career field; what would you like to specialize in. Say if you where going to study to be a doctor what would you want to do: be a surgeon, cardiologist and internal medicine, etc. Learn what experience you need for the particular field you are interested in and find an advisor who can help you make a high-quality decision.

Know your goals and stay positive. Make a decision and work toward your goals.

Other Resources:
CareerPath.com
JobStar.org
CollegeNET
Insjobs.com

Filed under Careers. Tagged ,
Comment