Featured image credit: www.fawlings.ca

As the mother of two teens, I am enraged at the sheer amount of propaganda sprayed across US news wires annually, the hysteria reaching a predictable crescendo every May. I am enraged that the US college price tag has inflated beyond all recognition and the admissions process has turned into the Collegiate Hunger Games. I’m enraged the product has so dramatically diminished that half the students who enter college drop out and too many graduates are unemployed or stuck in minimum wage jobs.

From my financial planning practice, I know the more a person pays for anything the higher esteem they hold for it, regardless of whether it’s even logical. Twenty years ago a quality US school cost US$5,000-10,000 a year and you were taught by tenured professors. Today for 3-4 times that price, whether public or private, your child will be far too often be taught by TAs and adjunct professors paid minimum wage, some of whom need welfare to survive. And everyone is profiting from your anxiety, from prep centers to collegiate book publishers and all the banks pushing debt. College is about as not for profit as the NFL. (Until 2016, the NFL was a not for profit organization).

All other developed nations have affordable and excellent colleges and well respected technical and trade schools, yet the US media soaks in the false superiority of the US four year system and perpetuates an elitist attitude towards anything less. And US business leaders have been so very slow to catch on to the fact that a four year degree does not translate into work ethic, intelligence or even basic writing skills.

To add insult to injury, May brings us financial pundits pushing questionable data and personal anecdotes, instructing parents to make their kids pay for college, so the student will be more successful in life. FACT: No study on earth can account for the variables that make any one person a success because we can’t even agree on what the word ‘success’ means any more.

These writers often posit behind a veil of moral correctness that, "the student only values the experience if they pay for it." This sophistry says all teens need to be set straight wielding a Puritanical remedy - a remedy which will ultimately be a predatory college debt system. I am a huge fan of part time jobs, but teens will need debt if they are stuck with even half their college bill because part time jobs won’t cover the cost. So this type of thinking is Shakespearian, and I’m not talking his comedies.

And here’s what financial prognosticators with one-size-fits-all opinions always fail to tell you. US college debt is non-dischargeable. This means once you take on student debt, you are stuck with that high yielding debt regardless of your ability to pay it off (unless you are completely disabled - signed into law two weeks ago..two weeks ago..!). So a Canadian student studying in the US can scurry back across the border, dodge debt repayments and live under the protection of a full Canadian social safety net, whereas a US student will have that debt hung around their young necks like a life long noose.

I have consulted to hundreds of families across the world facing the question of how to pay for college, many of whom have already danced with the College Financial Aid Extortionists. Therefore, I’m both weary and wary of anyone pontificating about college who draws convenient conclusions that fit eye-catching headlines. These opinions are speculative, myopic, dated and most authors - many of whom are child-less - don't have to live with the consequences of their own advice.

I am an advocate for some type of higher education beyond high school, but four years of college isn't for everyone at 18 years of age. I believe we can ask better questions of ourselves to understand the scope and payoff of this investment.

First, is college your dream or their dream?

If it’s yours, think about how you would feel if you had to go into non-dischargeable debt to live up to someone else’s dream. It’s not just bad parenting, it’s Medieval. Your child isn’t a serf.

If your teen is unsure about college, particularly if he/she is an academically distracted student to begin with, let them get a job, do volunteer work and take some community college or technical courses. If they are living at home, set boundaries ie 1) get a job or two, 2) you are a tenant, so live by my rules or look for your own place, 3) you have two years to figure college out or get a full time job that has some trajectory.

You also do not need a college degree to do the following jobs: Financial Writer, Real Estate Agent, Financial Advisor, Chef, Baker, Inventor, Contractor, Electrician, Plumber, Computer Programmer/Software Coder, Translator, Actor, etc. Half the jobs listed here will get you a passport to Canada, yes semi-skilled labor is all the rage in the developed world. And even if your child does go to college in the end, at least they will have an actual skill with which they can earn money.

Second, if college is their dream

…then they will make it happen eventually regardless of who is paying, so the question, “Should you pay for college” is a stupid one (there is no polite way to say that). Rather, the issue is either:

1. My teen is diligent and financially responsible, because we have put in the hard work to impart these fundamental values and life skills. So, how can they get the best value for the money I/we spend on college? How can they get the richest academic experience, develop meaningful friendships and extract purposeful internships, without being stuck eating cancer-causing ramen noodles every night and juggling so much that they leave college infinitely poorer and none the wiser?

OR

2. My teen is not particularly mature and/or responsible with money because I never taught them these skills or worse, I enabled them. I do not trust they will make the best use of their time in college. What can I do now to make sure college is not just another waste of time and money?

For the first issue, this is where public vs private, in-state vs out of state or possibly international college discussions need to take place. Draw up a budget together, explore scholarships, grants and work-study programs, and discuss your concerns if the cost imperils your own retirement. Pay what you can, maybe that's most, maybe it's half, perhaps they establish residency in the state their college is in. There’s more than one way to skin the collegiate cat. Talking and planning, then acting strategically will lead your family in the right direction.

The second case tells me that your family would benefit from self-reflection, some counselling and revisiting money basics: budgeting, forward planning, time value of money, debt and compounding etc. This can be taught and lived. Make your teen put together the costs and a budget and ask them to tell you how it will be paid for. Watch the movie Rudy ten times. Your teen may need work for a year or more and live on their own for a period of time. They might feel “left behind” with this delay, but a “time out” will be far more maturing than staring down a wall of student debt for four years.

This is how healthy, rational money talks happen. Which is the first lesson you teach your teen: no one gets everything they want and this is how we talk about money, using actual numbers and a calculator.

And if you are new to the US college system..

If you never attended college or are a first generation immigrant parent with an academically strong teen, then help your child make college happen - even if it means sending them back to the old country to do so. But if they stay, do not cheap out with emotional support, money if you can afford it and parental guidance, because no system is as convoluted or confusing as the US system. Financial aid for independent students does not come easily since students won't even be considered independent of their parents until age 26. Therefore, if you are not going to help financially, DO NOT PUT THEM AS A DEPENDENT ON YOUR TAX RETURN.

In conclusion..

Perseverance and grit does create character. But to presume the primary way to learn this is to be thrown into a financial deep end is a false narrative - like much that is played out on the internet. Character and “money awareness” come from a million experiences and all the money messaging our children hear growing up. Anyone who busted their butt through high school, was not popular, not stereotypical etc and/or deals with serious family issues has already developed quite a bit of character. They may well have been deprived of peer respect, meaningful friendships or adult guidance. Saddling them with a pile of debt and no money skills will create crippling anxiety. And in the end, years of financial floundering may or may not make them successful in any meaningful way.

No one should destroy their retirement to send their kids to college, particularly because college is a different value proposition then it was 20-30 years ago. In the same respect, I am absolutely sure that the last thing we need are more students taking out ever larger piles of student debt to fulfill some vague notion of education.

June: Part II – How to Measure the Investment that is College

Thanks to: Michelle Kairies Stenzel, Michelle Maneth, Leigh Talmage and Quentin L. Ledford for their input to this column.

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