I’m sure you’ve noticed this by now but family finance is a big thing in our lives. We’re still running on the high of recently becoming debt free. We’re working on building a generous emergency fund so that we can then build our wealth for the future and be able to GIVE LIKE CRAZY. We’ve also been hosting a Total Money Makeover study at our church. Watching the lives of the families participating change drastically is one of the coolest things I’ve ever been a part of.
Something that’s been on my mind a lot lately as we have worked through this program is student debt. My hubby and I were fortunate in that we both managed to get through school with very little debt thanks to the support of my awesome parents and a lot of hard work by my Hubby as he worked his way through after we were married. I know not every one is fortunate enough to have parents that help out, but seriously, education is one of the largest purchases that we make in our lives and at 18 we’re expected to be mature enough to make the decision to acquire a huge amount of debt with very little input from anyone else. What I am seeing more and more from my perspective now is that so many people at 18 traded the present for the future and now in their 30’s it’s costing their families big time.
I doubt that many 18 year old’s think about the long haul when they’re deciding to borrow huge amounts of money to go to school. On top of that student loans are made out to be SO easy, SO normal and everyone paints them like they’re an awesome idea. No one tells them how hard it will be 6 months out of school, with no job or not the dream job when those student loan bills start rolling in forcing them to take the first job that comes along to pay the bills even if it’s part time at Tim Hortons. No one warns them that the minimum payment alone will be enormous because the interest rates are some of the highest on the market. No one tells them that many couples still have their student loans hanging around well into their 30’s and depending on the size often into their 40’s. What I’m saying is that our society doesn’t do young families any favours by pushing student loans on young adults as the primary option for funding post secondary education. We make it so easy to go into debt to go to school that many students don’t even consider that there could be other options for financing their education. Consider the stats for a moment:
- The average student loan debt in Canada is $27000
- The average household finances at least 1 vehicle to the tune of about $19000 (also check out this interesting article about car loans)
- The average College Student has $3700 in Credit Card Debt
- The average Credit Card debt in a Canadian household is about $3600
- The average household also holds additional consumer debt of roughly $27000 on lines of credit or bank loans (Student loans and car loans are not typically considered consumer debt)
My point: Joe and Suzie meet in college, fall in love, and get married shortly there after. They were “normal” and each graduated with the “normal” amount of debt. WOW, this newly married couple just found themselves in $54000 worth of student debt, and $7400 in credit cards. Everyone they know tells them this is normal, so they don’t worry about it too much and they decide that they “need” a new car. Add another $19000, and now this young couple has $73000 in debt. They’re very normal so they eat out regularly, go on holidays, buy gifts, gas, groceries, and anything else you can think of on credit cards and within a couple of years they’ve wandered into another $3600 worth of Credit Card debt. Now if you’ve been doing the math with me here you realize that Joe and Suzie have $84000 in debt and they don’t even own a house yet. SCARY!
Life goes on, they buy that house, put some furniture in it (this is where that $27000 in consumer debt comes in) and all of a sudden they have extra space to fill so they start having babies. It’s around now that they start to realize they’ve gotten themselves in over their heads financially. They’ve been getting along just fine making minimum payments on everything but the debt seems to grow not shrink. Now they’re faced with a decreased income for a year while Suzie’s on mat leave and they’re not really sure how they’re going to make ends meet.
Suzie goes back to work, her income goes back up but now you’ve added the expense of daycare to their lives. She spends another six months or so at work and then she and Joe decide that baby #2 would be nice. They ride through maternity leave fairly well, and then realize that not only does Suzie NOT want to go back to work but it’s also not financially viable to pay for daycare for two kids. Hmm, what now. Joe and Suzie start crunching the numbers and realize that it is not financially viable for Suzie to stay home because of their debt load – which started at 18 with Student Loans.
This is the situation that I see far too many of our friends struggling with on a daily basis. Young families in their early-mid 30’s paying now for the financial decisions they made at 18. They started down the slippery slope of financing life at 18 when student loans were made out to look like free money that you never have to worry about and it just got worse from there.
I know nice story but what am I getting at? Education is important. I will never tell you otherwise but let’s get creative in funding it ourselves rather than borrowing away our futures. At 18, 20, 22 and even 25 I would have told you that I would never even consider staying home with my family. Things change when you have a baby and you find things that you never would have gravitated towards before becoming more appealing. Not having financial barriers in the way make it much easier to make the right decision for your family. For some that may include working but for a lot of others it may not.
I don’t have the answers to this problem but I do know a few things and because this is my space I’m going to share them with you. As someone that had a say in hiring at more than one of my former jobs I LIKED hiring people that worked while in school. It proves that you know how to manage your time well if you can get a degree and work at the same time. Truthfully I would rather see that you worked your way through school then that you got a bunch of academic awards. Furthermore about 1/3 of students that have worked through school have higher GPA’s (just sayn’ it’s worth thinking about). The typical degree is laid out as a 4 year plan but there is NOTHING wrong with taking a little longer than that (like 5 or 6 years) to complete your degree and be able to pay for it in cash. In the grand scheme of things delaying graduation from 22 to 24 or 26 is really nothing. From an employers point of view you are more mature, self disciplined, and have shown some tenacity in funding your education without debt. Oh and for the record my Hubby’s BA took about 8 years (including a few off in the middle) the last 3 of which he worked full time and went to school almost full time and graduated with a 3.6 GPA – considering that he had about 2.2 his first year this is AMAZING.
Another thing to consider is scholarships. There are tons of scholarships out there if you are willing to put a little effort into it. While you may look down your nose at the $50 scholarship from the rotary club, your church, or girl guides group if you can collect a BUNCH of those scholarships it does eventually add up. It is worth taking the time chasing down free money to fund your education. If you can get some larger dollar amount scholarships great. If not collect as many of the small scholarships as possible. Scholarships aren’t always based on academic achievements, sometimes it’s athletics, music, socioeconomic status, or any number of other non-academic things. So while good grades are important don’t discount scholarships because you aren’t an honor roll student, there are still lots of things available to you if you look for them.
So what am I getting at here. Well, through recent experience and watching friends struggle with these decisions my point is that our culture, the high school guidance counselor, and the university finance department, are not doing young adults any favours by portraying students loans as free easy money for school. This applies to any student as when you get married your finances are joined so it doesn’t matter whose student loans they were they are now your joint responsibility. You may not think that staying home with your kids is appealing to you, it wasn’t to me. Little people change things and those student loans that seemed like a good idea when you were starting out in school could the barrier that stands between you and your family later. So please if you’re planning on going to school take the time to find a way to fund it without debt. Your future family will thank you for it.