The Real American Dream
Is college debt really worth it? The average college students graduates with about $30K of debt before they ever get a job. If they go on further in their education it averages around $80K of debt. The bigger problem right now is not the debt right out of college or post graduation, but the long term affect of the loan. The long term interest is right now is at an average of $208K over the life of the loan. All of this information according to Huffington Post.
This now long term loan looks more like a house loan. And in some cases has interest rates that are actually higher than home loans. After they get out of their education they are now trying to figure out a job in their career field. Most jobs right now are requiring a 4-6 year experience level for the candidate to even be considered. This is practically impossible for a now debt ridden college graduate.
The college graduate now turns to several different thoughts. They first entertain to go back and get higher education in the same field that they were looking to originally go into. Secondly, they look to get more education in a completely different field and then accumulate more debt. Thirdly, they may look to go into a entirely different field of which they do not have any education such as retail, sales, or restaurant. Finally, they look for internships that pay them little or nothing at all. The latter is obviously not helping them at all with their debt.
This way of thinking disrupts the "American Dream." I am not talking about the American Dream of owning a home. It seems like everyone can get a home these days. Although, the government is definitely making it harder and harder to get a home loan, it is definitely not the American Dream anymore. You might be asking what is the American Dream? After all considerations, I believe it is being debt free.
How then can a person live towards the dream of being debt free with an average of $30K debt with an undergraduate degree or an average of $80k debt with a post graduate degree, conquer that dream? The average college student also has an average of $600 credit card debt by the time he graduates from his undergrad.
And then real life hits! They go looking for that "career." But because of lack of education in handling finances, they accumulate more debt from credit cards, car loans, more student loans, interest rates, home loans, etc. And the American dream fades farther and farther away. It will take them years to get a handle on the debt that now they have accumulated. According to the University of Minnesota's website, "The average starting salary for a bachelor's degree graduate now stands at $44,259, according to the September 2012 issue of Salary Survey, published by the National Association of Colleges and Employers." This is should be a frightening number for college attendees and graduates. With their income ratio per month being at $3688 and the average credit card debt of a American household of $23,300 and $30,000 for a undergraduate at a average of 7.5 interest rate and by only making a $300 minimum payments it will take 960 more payments or 80.0 years to pay off the remaining balance. Interest will amount to $2,262,829.
So what about a non-college graduate, how would they fair? According to the National Center of Education Statistics, which is run by the government, they claim that a non-college graduate makes around $35,000 salary average. This is about a $10,000 difference between a college and a non-college graduate. The difference is that they have no debt from college and can begin a life being debt free. However, to make the situation a little more comparable we will throw the typical debt of the $23,300 per household into the situation. Although I think it is unrealistic to point to that because it is easier for a person not in debt to stay out of debt. At an 14.87% credit card interest rate by only making minimum payments of $300 it will take 267 more payments or 22.2 years to pay off the remaining balance. Interest will amount to $56,631. This is a much more realistic opportunity to create the American Dream. It will still be difficult, but at least there is an end in sight.
What we do know is that they will have a job in the career of their choosing. They will have the experience needed in their job, in the 4-6 years of an average college attender. They will have likely promoted at least once during that same time and have several pay raises.
To further validate college not necessarily being a good decision, is the fact that many millennial are looking to start business as opposed to going to college. Today's young people -- the millennials - are foregoing the 9-to-5 path and instead opting to build their own companies. According to a 2011 Kauffman Foundation survey, more than half of Millennials (54 percent) either want to start a business or have already started one. And at this moment in history, becoming a young entrepreneur might be as rational a decision as looking for a job.
To feed the fire with this I would also encourage you to look at this video, "Are You A Connector." You can find this at Youtube. It is the first video that shows up.
My point being that in this day in age of 2015, the best reality to hoping and dreaming again about owning a home, being debt free, and have a thriving life, is most likely not found in college at all. It is not found in a career, but found in .....business, small business, that could become a great business. There is something to say about the multiple billionaires who either did not go to college or dropped out of college, such as Mark Zuckerberg, founder of Facebook.
Are we just following the status quo? Are we following the path of going to school to go to a good college? So that in turn we can get a good career? Does this really make sense? Is this what America is really made from? Is this why many start up business and shows today are about new inventions. Multiple websites or tv shows are centered around building business not corporate America...and they are thriving. Shows like Shark Tank and many, many websites like, Quirky, Kickstarter, Indiegogo, etc. are all centered around one thing...entrepreneurship.
Entrepreneurship is the new black! And corporate America is fading...people are beginning to think for themselves. They are no longer being stuck in the world pin hole thinking. But becoming more of free thinkers like the explorers of the free world back at the founding of America.
Also consider reading the book Rich Dad, Poor Dad, by Robert Kyosaki
What do you think, is college and corporate America still right thinking? Or is it just safe thinking? I would love to hear from you, comment below!
Are You A Connector?