Written by: Mrs. Horizon
Dear American High School Senior,
I am not that far removed from where you are right now. I am guessing that you are feeling the stress of the constant question “So what are you going to do?”. Its unfair to ask a 17-18 year-old what they want to do for the rest of their life with little to no help in making such an important decision. I am also guessing that you are feeling obligated to answer with “Go to such-and-such college with this-or-that major.” But why do you feel so obligated to say this? Are your parents urging you to go to college? Are you feeling the peer pressure that you want to impress everyone with your future life plans? Is it because it is a new addition to the “American Dream”?
College is a massive decision and it is OPTIONAL.
There are so many good careers that can be achieved with less of a financial and time burden. Maybe a technical school will allow you to work on what you want to do. Blue collar jobs are booming, the unemployment is low, and pay is going up. The upfront financial commitment of a technical school is significantly lower than a traditional 4-year college degree. Welders, electricians, mechanics, plumbers, construction workers, EMTs, and truck drivers are all in high demand with good starting wages.
But maybe tech school isn’t for you. Are you more interested in technology and software? Maybe a 6-8 month coding bootcamp is more up your alley. In this amount of time and with a bit of potential relocation, you could be making nearly what an engineer makes but while only paying 10-15% of what an engineer payed for their degree.
Maybe you don’t know what you want to do. That is ok too. But doing nothing is not an option. Get a job in a factory and get some exposure to other jobs. After that you may find that you want to be an apprentice, or you want to pursue a college degree. Maybe after working in a restaurant you realize you want to go to culinary school. Or maybe the military may provide a good career for you. Not knowing what you want to do is ok but doing nothing is not. Please just realize that college is completely optional, and it may not be the best decision if you are not sure what you want to do.
If you do decide to go to college, you need to decide what you want to major in. Being undeclared is a hugely stressful delay. Essentially you are pushing off the decision you are struggling with now, but you are already potentially in student loan debt. Can you say stressful??? Decide on a direction that you want your life to go. Even if you completely change it you are still striving for something and working towards a goal.
Once you have decided on a major you need to look up the average entry level salary and current unemployment of that profession.
Do your research. If unemployment is low and salaries are high, then this career will probably be able to provide well for you. If the opposite is true, then maybe you should consider another path. Another question that needs to be answered is whether grad school/med school/ pharmacy school is necessary or not. If so, this is something to research as well. Would your pay be able to absorb the cost of this extra education?
After you find a major that has a good outlook, you are going to need to figure out how you are going to pay for it. Many young adults rely on their parents here. Although they are probably willing to help, this is YOUR degree and YOUR future, so YOU need to find a way to fund it. You are becoming an adult and maturely managing your finances is a huge step toward adulthood.
Investigate different ways to make college as affordable as possible.
This may be one of the hardest things to choose. You need to try and set aside your emotions and make some adult decisions. You may want to get out of the sleepy town that you live in and go to a big city. Or maybe you don’t even want to consider living with Mom and Dad for another year or two. Maybe your significant other is going to a school out of state and you want to go with them. Regardless of your emotions and outside influences, you need to think about your future after the next 4 years. College is a great experience and you learn tons, but it is a small chapter of your life. You don’t want to be paying for it well into your 30’s if not your 40’s. If you choose that route you will inevitably have to delay large life events such as getting married, buying a house, having kids, and even retirement. It is not exaggerating to say that this is the biggest financial decision of your life, please treat it as such.
Now with that forewarning, lets get to work! You need to consider ALL of your education options. Look at in state schools with that major or maybe there is a state that you have reciprocity with that you could look at? Maybe start at the local community college and transfer to a 4 year college to finish your degree? Will your parents allow you to live at home while you are working towards your degree? Are there any big scholarships or grants that you have been awarded? Lay out all of your options and calculate how much each option will cost you. Which one makes the most sense? Are you able to pay for it? Be brutally honest with yourself. Remember that this decision can change your financial outlook in 40 years. You need to be a mature and responsible adult while you make this life changing decision.
Another good question to ask is are you WILLING to pay for college at all? Maybe you know you want to get a degree, but you don’t know what exactly you want to go for yet. Have you considered joining a branch of the military? Committing 3-5 years to the military will give you time to learn what you want to do and then after you get out you can get a FREE college education! Maybe you know what you want to do but you don’t have a good means of paying for college, in this case ROTC may be a great option. After you complete your degree, paid for by the military, then you serve a set time with the military.
Take your time with this step. You need to fully understand what you are getting into. Take emotions out of the equation. How are you going to manage this financial decision?
After you make the best decision you will need to calculate how much debt you will have when you graduate.
Make sure when you calculate this number that you add a buffer in there. Use your best reasoning and work with someone on this to make sure that your numbers aren’t too out of line. As an example, let’s use $35,000 of student debt which is just below the national average. Now using that information, you previously looked up about your chosen major’s entry level salary you need to make a budget. This may seem insane. You are making a fake budget using assumed numbers for 4 years from now??? The simple answer is yes. This will show you if can afford this debt that you are taking on.
First, calculate your potential take home pay and make some assumptions about rent, utilities, food, and transportation. Ask someone else who is actively paying these kinds of bills if these number make sense. Let’s pretend that the average entry level salary for your chosen profession is $45,000. After a quick Google search, you find that the take home pay after taxes will be around $36,500. Then we will estimate $2000 a month for living expenses. So far, your budget looks like this:
Gross Salary: $45,000
Net Salary: $36,500
Living Expenses: $2000 × 12= $24,000
Now after you subtract out your living expenses, pretend that all the rest goes to your student loans on a monthly basis.
Net Salary: $36,500
- Living Expenses: $24,000
What you can pay toward Student Loans: $12,500
What you can pay toward Student Loans per Month: $12,500/12= $1041.67
Using a student loan calculator and using the average 10-year term with a high interest rate of 8%, find out how much the minimum monthly payment on your student loan is.
Starting Student Loan: $35,000
Minimum Monthly Payment (from online calculator): $424.65
Now the number from your fake budget minus the minimum payment should be added to this payment and you can find a calculator that will tell you how long it will take to pay the loan off. Remember that this is ‘X’ years from when you graduate at 22-23 years old.
What you can pay toward Student Loans per Month: $1041.67
- Minimum Monthly Payment (from online calculator): $424.65
Extra Money put toward Loan Principal: $617.02
From Online Loan Repayment Calculator: it would take about 3 years and 3 months to pay for it along with $4,761 in interest. This may not seem terrible but remember that this is best case scenario and don’t forget the other non-monetary consequences. You will not be able to eat out, go on a vacation, buy a new car, buy a house, get married (unless it is a courthouse wedding), or do much else until you turn about 27. Just imagine if this example person had $100,000 in student loans because they had to go to grad school!
After completing this thought experiment for yourself answer this very simple question; is it worth it?
Maybe you need to go back and change your college path and recalculate. Or maybe you need change your potential major and make an adjustment. Keep repeating these steps until you find a major, college path, and debt load that you are comfortable with and can realistically manage. Be honest with yourself through this process and get input with people who have your best interest in mind. This is a huge decision, but you can work though it and make the best decision for your life.
Once you have made your best decision, that is not the last step. The last thing that you need to realize is that during school and until your debt is completely paid, there is no job beneath you.
Work excessively hard.
Work in a restaurant, take a work study job, be a TA, babysit, Uber, whatever you have to do to make money to reduce your debt as much as possible. Don’t let your grades slide but rather than binging Netflix get a job waitressing, and rather than partying be a teacher’s assistant, and instead of wasting money in bars be the bartender. If there is a way to make or save money from it, you need to be pursuing it. This will pay ENORMOUS dividends later in your life and I am not just talking financial ones. When you are working and studying this hard you have very little time and people that have very little time know the immense value of it. This will help in your career and your personal life. Time is the most non-renewable resource and you don’t want to be wasting a minute of it. Will you miss insane drunken nights out with your friends? Yes. Will you miss the raging frat party? Yes. But if you keep this mindset through your whole life you will be retiring before any one who was at that party even begins to think about saving for retirement. If you live like no one else does now, you will live like no one else can later.
American High School Senior, you have all the opportunities of the world at your feet, but the pitfalls are just as big. Be honest with yourself, be humble, be a hard worker, stay disciplined, and don’t believe the status quo. You can do more, be better, and live an amazing life! Best of luck to you on this journey!