Should I Go To College? BankMobile's President Weighs In

by Warren Taylor, President, BankMobile

First, I believe one should never “should” on people.  “Should” infers that one is bad or wrong if they do not do what they “should”.  When it comes to college, one must really consider cost, time, and the return on the investment.

As President of BankMobile, I’m often asked what people “should” do when it comes to various financial decisions – and going to college is certainly a financial decision.  Here is my opinion:  investing in oneself is typically a great investment – and college is a large investment in oneself.  I believe increasing one’s knowledge is always a great idea.   So, in my opinion, for most people capable of handling a college curriculum, yes, go to college.  Having a college degree will open more doors for employment.  Having a college degree will give you more freedom to pursue your passion.  Having a college degree will give you more options.  But, if you are like my millennial son, you prefer facts over opinions, so let’s review some facts regarding the cost of college and paying back loans.

If you just had a baby, by the time that baby is ready to go to college, a great, private, four year undergraduate degree will cost between $400,000 and $600,000.  OUCH!  Today, that cost might be around $225,000.  Are your parents rich and will pay cash for your college?  Or, did they start saving for your college costs when you were born?  If the answer is no to these questions, you may need to take out loans in order to go to school.  Don’t worry, you don’t have to go to a private school.  There are many alternatives.

According to the College Board, the average cost for tuition and fees for 2014-15 school year was $31,231 for private colleges, $9,139 for state residents at public colleges, and $22,958 for out of state residents attending public colleges.  Two years at a community college, then two years at a private school (your diploma has the name of the private college on it even though you only went there for two years) will cost you about $19,000 a year on average.  Remember, you still have other costs like room and board, books, lab fees, etc.  As you can see, the options are many.  Plus you might get scholarships, you may want to explore benefits of joining the military, you may have a job where your employer pays for your college, the variables are too many to cover in this blog.  I believe if you want a college education, you can get one – money should not stop you.

I’ve had the pleasure of meeting many rich people in my 35 year banking career.  Of all these very wealthy people, I do not recall any of them having graduated from an Ivy League school.  I’m not knocking the Ivies, I’m just saying you can become wealthy without going to an Ivy school or even a private college.  For the most part, once you get your first job, your college and GPA are no longer that critical – what is critical is what you produce for the company you are working for.  The degree gets you the job, results gets you the promotion and the money.  I recommend going to the “best” school you can afford.

Let’s assume you are the average college graduate.  The WSJ stated, if you went to school in DC, you will owe $40,885, the highest in the USA;  N. Dakota was the lowest state with the average student debt at $22,379.  Let’s assume you owe $30,000 in student loans when you graduate.  According to the US News & World Report, the traditional repayment term of student loans is 10 years, however, it is possible to stretch that out more, but for these amounts, I do not suggest it for most people.  If you owe $30,000 and you have a 10 year loan at 6.5% interest, your monthly payment will be $340.64.  Let’s assume you earn $45,000 per year.

Can you afford to pay your student loan debt in the above example?  Yes, assuming you have no other debt!  Do you have a car loan?  Credit card debt?  A personal loan?  If you answer yes to these other loans, you will be challenged.  I suggest you read my other blog on budgeting, for now, just trust me on these numbers I will share.  By earning $45,000 a year, you should be able to afford $1,350 a month in recurring debt and housing expenses.  Here is the example:   $1,350 minus $341 (student loan payment), minus $42 (credit card minimum payment), minus $360 car payment, leaves you with $607 for rent.  If your income was $50,000, you could afford $757 for rent in this example.  According to CBS News, the 10 cheapest cities have an average rent cost for a one bedroom apartment of $623 to $730.  Living in those cities may mean you do not need a car.  Planning and trade-offs are all part of the decisions you make.  Don’t give up – you have options.  You can get one or two roommates to reduce your housing costs – many other college graduates are in the same boat.  You could get married (don’t marry for money unless it’s your second marriage – bad attempt at humor), you can rent a bedroom from a retiree who owns a house and might be a widow.  You can get a second job to earn enough to pay your student loan debt – perhaps 9 hours per weekend.  Again, you have options.  Never, never, give up.

There is an important premise here at work.  It is called planning.  These financial decisions are important to think about before you choose what school to go to.  Do you go to the school that offered a scholarship?  Do you get a part-time job when you are at college?  You are free to make any decision you want – but you are not free to escape the consequences (positive or negative) of your decisions.  We offer a personal financial planner here at BankMobile to help our customers figure out what financial decisions might be in their best interest.  Remember, hope is not a good strategy, plan your future, be your future.


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The views and opinions expressed by the author are not necessarily those of BankMobile. The blogs are intended as general financial knowledge that may or may not be applicable to your individual needs. Always contact your accountant for tax advice.

All company/product/service mentions in this post are not intended as an endorsement and the views of that company do not represent the views of BankMobile or Customers Bank.