A few weeks ago, Co-Pastor Michael Rogers suggested that I write about the most ironic, yet timely, subject for my September column: funding college. As a recent college grad that is at the mercy of the federal government and banks because of the seemingly necessary evil we call “college loans,” I was not sure if I had anything short of a harangue to share about college expenses. Perhaps I’m still recovering from seeing my most recent loan repayment plan — I’m sure that no one can find it justifiable for any private institution to charge $50,000 a year, as it was for my Alma matter of the University of Rochester, especially for an education that all those who are qualified for should not be financially hammered for.
I was reminded of my debt obligation when a Rochester news reporter contacted me for a story he was working on. His article was a response to recent news that U.S. college loan debt have ballooned to $931 billion — for the first time eclipsing the estimated $798 billion in credit card debt. In the Western New York area alone, over 36,000 federal loans totaling $233 million were distributed during the last academic year. Some college financial assistance experts are even estimating that the total will mushroom over the once unthinkable $1 trillion mark by next year. It’s now becoming increasingly harder to imagine that the nation’s college debt was merely $72 billion 15 years ago.
The average student debt for a bachelor’s degree is currently at $34,400 — a total that is just $3,000 shy of the median $37,435 gross income for New York City residents. But the best way to psychologically cope with this reality is to look at a college education as an investment. On average, an individual with a bachelor’s degree can expect to make 75 percent more income over their lifetime than an individual with a high school diploma — that’s $2.37 million compared with $1.3 million.
But complaining won’t get us anywhere. There are some useful things that your family should do in advance to prepare for the financial shackles that educational institutions use to build statues of their funders on your campus (at the University of Rochester, Kodak founder George Eastman is virtually engraved, built and exalted with every inch of land that our University presidents could find).
If we think about college as an investment, then that means that we ought to start planning ahead. Consider buying Series EE Savings Bonds and Series I Savings Bonds, which offer special tax benefits when used for qualified education expenses. But don’t wait until your child is in high school — start when they are a little tot if you want to reap a big savings pot. EE Savings Bonds mature at 50 percent of face value, meaning that a $50 bond should yield $100 after 17 years when it reaches maturity.
When your child is in high school, make sure they exhaust all of their resources. Mentorship and career pipeline organizations are essential for educational and professional success. Ask their guidance counselor and do your homework about programs that will assist them during the application process. From my own experience with the Opportunity Network, I was given application fee waivers (at about $50 a pop, applying adds up), interview training, internship opportunities and relevant scholarship identification. If your child doesn’t sign up for one of these programs, then it will be up to you to assist them during the preliminary stages. Encourage them to search websites like FastWeb.com and trademark grant suppliers like the Gates Foundation, YMCA, Pepsi, Coca-Cola, etc., to find scholarships that they are most eligible for. From ethnicity to being left-handed, there’s a scholarship for everything.
Once you’ve survived your undergraduate years of all-nighters and coffee highs, there is also something you can do to slowly loosen the debt-noose. There are several public service careers that will reimburse as much as $1,000 or more for your federal loan expense after a year of service. If the organization you work for qualifies for President Obama’s Federal Public Service Loan Forgiveness Plan, then all of your debt may be forgiven after 10 consecutive years in the public service sector with organizations that annually reimburse a portion of your loans.
And of course, you can expect to be encouraged to join programs like Teach for America, City Year, Americorps and Peace Corps on a daily basis during your undergraduate years. All of these federally funded programs include loan deferment (that means that your interest will not accrue during your year(s) of service), priority for federal employment, a resume booster and, most importantly, self-fulfillment.
If you are thinking of grad school, remember that it is a completely different animal. There has always generally been less federal assistance for graduate and professional education. However, the recent debt wars on Capitol Hill have just made matters worse by entirely eliminating federally subsidized loans for graduate students who enroll in 2012. Thus, before you make the bold investment in your post-graduate studies, make sure that you’re 100 percent sure about your career expectations and how that extra notch will contribute to your overarching goals.
Unfortunately, government and banks aren’t like the king who forgave his servant of his debt, or the Son who died for our debts, or Canada, where the average tuition runs at about $5,000 for domestic students and $14,000 for international students. What is important is that you get your foot in the door with the most powerful piece of paper on earth and find your calling.
That leaves us with the most essential college planning tip: prayer.
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