For generations past, college was a journey to intellectual growth and self-realization. It presented the opportunity to affordably explore one’s interests before deciding which path to take. Unfortunately, the student loan crisis has made this reality obsolete.
Today it is common for recent graduates to be burdened with six-figure debt. Times have changed, and families must adapt to make sure their children start out on the right foot as young adults.
It used to be assumed, even stereotypical, to think that the student alone should be solely in charge of their college major and overall experience. That was then. Over time this assumption became one of the factors that lead to the ballooning of student loan debt over the years.
Should parents be involved in choosing their child’s college major? Yes, parents should be involved in choosing their child’s college major. College has become too much of a business to allow young adults to take out all that student loan money and live with regret later. Of course, the student is the primary voice in the process, but the parent should be right there as a close second with a significant voice.
It’s important to remember that young adults going off to college today have the same dreams of generations past. They want to learn about the world and make decisions for themselves.
There is nothing wrong with that. It is natural. However, college interests have capitalized on this desire and found a way to monetize it. As a result of their efforts, many young people are financially hamstrung for at least the first decade after they get out of college.
The Science on Young Adulthood
Young people may not want to hear this, but they are not ready to make decisions that have significant long term consequences. The human brain does not fully develop until age 25. At the point a young adult enters college, their brains are only halfway through the final developmental stage, and it will take them 7 years to complete it.
Even the most mature young people will struggle to understand the long term implications of the decisions they make today. This is because they are still making decisions with the emotional part of their brain, the logical part is not fully developed.
Let’s think honestly about the college experience for a moment. How many students make not having an early class a priority? A lot right? How many students decorate their dorm room with less than tasteful decor? Too many.
I could go on, but the point is that the college campus is filled with young people making less than stellar decisions. I get that, it’s part of growing up. But it makes me want to ask, are they capable of making six-figure decisions? Should they be taking on the only kind of debt that won’t be forgiven in bankruptcy?
The brain science says no.
A Students Progress to Arrive At University
There are many paths that students take to get to university. Let’s start this discussion assuming the student is well above average, the stereotypical high achiever. They made good decisions in high school and have set themselves up well to start college on the right foot. They worked hard in class, played sports, had a part-time job, and volunteered when they could.
Is this the type of person that you would trust making a six-figure decision… for anything? Me neither. But, that’s exactly what parents empower kids to do when they send them off to college and allow them to choose all of their own classes.
That’s not to say that this student would not be prepared to make some decisions that an older person typically would. They certainly could make some. But this one is too far of a jump and sets them up for failure in the end.
They need guidance with large financial decisions, and the parent should be the first person there to help them choose a course of study that will provide them with a return on their investment.
This way of thinking requires a break from how things were done in the past. It wasn’t always this way. College used to be affordable enough that you could explore. Not anymore. Now, that idea is perhaps the biggest college major stereotype of them all.
Today a student wants to explore their intellectual interests they should take some free online classes at one of the many institutions that will allow them to do so.
After taking these classes, if the student decides they like the course of study they explored, they will be good at it, and it will lead to a good-paying job, then they can enroll in paid classes. If not, then they should explore this intellectual endeavor online in their free time without being stuck with an overpriced bill for their trouble. Here’s why…
Choosing a college major is directly tied to the value a student will extract from the money they spend. From young adulthood and beyond, most people have a broad range of interests that they would like to pursue. Not all of them yield value, but most lead to enrichment. That can be a good thing but does not justify a six-figure investment.
Many college students confuse enrichment with value and get stuck with a degree that doesn’t get them very far in the real world.
Most people would like to explore as many of their interests as they can. The reality is as adults they will only find time for some of them, and their choices will be based on their priorities. As each individual gets older, they will get better at prioritizing how they spend their time. But for the young adults starting out, this is a skill they have only begun to develop.
At this age most students are not taught about prioritization and efficiency, they are told to explore. Exploring was great two generations ago when you could pay off your college tuition with a part-time job during school and a full-time job over the summer. Those days are long gone.
The student arriving at university today is told to put everything on credit and worry about it later. This is horrible financial advice. What’s worse, it’s often being given by the institution benefiting from the loan. It’s the parent’s job to step in, be the voice of reason and push them towards a good-paying career. Ideally, this work begins early.
Starting Young
There are a number of things a parent can do to ensure their child finds their way through life’s learning challenges. If they take the time and energy to build a strong connection with their child from an early age, it will be more likely that they can influence their child when they are older and lead them in the right direction. Parents who did the following things will be better positioned:
- Encouraged their child to explore their interests
- Played games together
- Praised their child when they deserved it
- Read with them
- Learned new things together
See a theme here? Each item on this list is related to learning or expression. Choosing a college major is closely related to both, so if you have a good foundation in these areas you will be better positioned to serve as a trusted guide. We know that parental involvement is closely related to student achievement (source). We also know that the relationship built through this involvement has lifelong benefits.
If You Are Starting Now
If you weren’t able to check each item off the above list, that’s ok. You are still the person best positioned to advise your child. You know them better than anyone, and want what’s best for them. Now you need to help them decide what that is, and you should respect that they have significant power in the decision-making process.
On one hand, you don’t want them to come out of college with a degree that won’t get them a good-paying job. On the other hand, you want them to have a degree and a career that they can be satisfied with and will help them reach their goals.
Although you may not have done all the things on the list above, that doesn’t mean you can’t do age-appropriate versions of them now. Taking time to build a connection (without forcing it) can do a lot of good as you set out to guide your child through college. In addition to each of the items above, help them find opportunities to:
- Think Long-Term
- Set Priorities
- Make Financially Prudent Decisions
The major that your child chooses will determine if they ever see a financial return on their investment. Although their interests should come into play, they should not be the only consideration.
The three items above are some of the most important skills any person should have before making a significant financial decision. The brain of the student entering college is not developed enough to fully understand the ramifications of this decision, and they do not have enough life experience to execute each of the three items listed effectively.
Before letting your child select a college major I recommend a few exercises that should help them see the big picture just a little better.
First, ask them where they want to live when they are ready to settle down. Just a general idea is fine. Think of it as role-playing, living as the older version of themselves.
Have them go on realtor.com and find 5 realistic homes they would like to live in. Give them a healthy range for their budget. Use a mortgage calculator to determine the monthly payment. Track this information in a spreadsheet.
Then, go online and have them find a car. Let them figure out what that will cost them per month.
From there, go through every item that would be on the budget of someone just starting out and have them account for each expense – including student loans and spending money. Include a savings rate of 20%-30% of gross income. Have them add it all up. The final number will be the monthly household income they will need to live a good life.
Now have them go the Bureau of Labor Statistics and figure out what people with their major make as a salary 5 years after graduating. If their major doesn’t directly link to a profession, that’s unacceptable. Have them pick a new one.
College costs too much money to be messing around with studies that don’t increase salary. They can pursue other intellectual interests online for free without working hard for a degree that is not worth the money they spend on it.
Next, have them consider how they can reduce the cost of their loans, preferably before they even take them out. Do they need a really nice apartment? Do they need brand new books? Can they serve as a resident advisor?
Anything they do to reduce the costs of their student loans today will pay dividends in the future.
These steps should get them on the path to thinking long-term, setting priorities, and making financially prudent decisions.
College Loan Debt – The Stakes Are High
In 2019, Americans owe $1.5 trillion in student loan debt.
The average student loan debt amount is $37,172 and the average student loan payment is $393 per month. Since 2004, the percentage of student loan debt to other non-housing debt has increased by an unsustainable 50%.
The average cost of tuition, room and, board at a private non-profit university is now $50k per year. At a public university, it is $20k per year. Even when accounting for inflation, this number has more than doubled since 1971.
With so many degrees not leading to jobs that enable the borrower to pay off their loans and live the life they imagined, a plan must be put in place before a new student enters college to face this reality.
Associate Degrees – Breaking the Stereotype
I have talked at length about carefully selecting a major and making sure it leads directly to a career, so I won’t go into that part of planning anymore. There is another less discussed solution that can be very effective. Community College.
I enjoy speaking about this topic because I graduated from a community college. I think they offer great value and can give students who don’t want to be burdened with debt the chance to get a good education without the unrealistic price tag.
Again, the key here is choosing a degree that will lead to a career. Community college suffers from the stereotype that their majors don’t lead directly to careers. That’s simply not true.
There are many two years programs that can lead to good-paying jobs, including; nursing, sonographer, dental hygienist, air traffic controller, web developer, computer network specialist, mortician, and more. Each of these careers pays better than what most make with a bachelor’s degree that did not have a specific focus.
The Role of the University – Beyond the Helpful Stereotype
Most young students go into school trusting their advisors and other university employees who give them advice. They should take their input with a grain of salt.
No employee is going to risk their job to tell a student about all the ways their employer may or may not leave them in long term debt. They don’t assume any responsibility for any of the financial decisions students made by the student.
The role of the university is to provide the education that the student signs up for. The role of the parent is to provide guidance to the student so they make a prudent and responsible decision.
In the business world, there are consumer financial protections put in place so businesses can’t take advantage of consumers. No such regulations exist for higher education institutions.
Students are reliant on the benevolence of the institution. I don’t want my child’s future to be dependent on whether another person chooses to do the right thing with a five or six-figure payment on the line.
Staying Focused
The college experience can bring a student in many different directions. It’s natural to want to explore your intellectual interests. In fact, I wrote an article on the topic to help this process along.
It’s best for them to do most of their exploring outside of college for best results. If your child is college age and they need to explore their academic interests, let them do it at a prestigious university online for free.
It’s important to remember that the modern college system is about much more than exploring your interests and finding yourself. It’s about money. Lot’s of money.
It is the role of the parent to protect the college student from a system designed to extract as much money from them as possible before they have the chance to develop the skills to manage the money they are borrowing. In no other area of life do we give people so young so much financial power.
Closing Thoughts
To a certain extent, the situation will be out of your control. At the end of the day, your child is now an adult and they can go enroll in the classes they choose, taking out loans for the bill in the process.
That’s why influence and relationship are so important here. Your role is more in the background now. Your whispers will guide, and your voice will reverberate in their thoughts when you are not together.
Take the time to make the case for long-term thinking, setting priorities, and making financially prudent decisions. Make sure they are interested in the college major they choose, they show aptitude to be good at it, and it will lead directly to a well-paying career.
Most young people won’t understand all the factors and possibilities involved. But if they trust you enough to guide them, they might stick by your side long enough to stay out of the financial trouble that can be caused by student loans.