Practical Dad

Debt-Free U

I typically keep about four books going simultaneously and shift back and forth depending up my mood on any particular late night.  But I've put them aside as I work through Debt-Free U by Zac Bissonnette.  The author, who is actually only about 21 years of age and working his way through the University of Massachusetts, writes knowingly of what he's learned about the college financing game and pushes the philosophy that what matters is the degree instead of the institution.

Bissonnette is a youth from a financially struggling family who decided to take his financial future into his own hands.  He's had hard lessons that many young people haven't encountered and has developed a hard-won ability to think critically, especially examining a higher education system that encourages debt assumption by youth and families who can't absorb that debtload.  Early in the book, he discusses the frequent practice of including with the college's financial aid package letter a suggestion that the student's parents can easily cover the funding shortfall by taking on additional debt for that amount.  The problem is that the letter is to the youth and leaves the parent in the position of being the bad guy.  As Bissonnette writes:

Who wants to be that guy?  No one, and the financial aid office knows that.  So they send a letter to the student suggesting that his parents borrow $24,000 with no collateral.  In 2004, the parents of 15.3 percent of graduating college seniors took out federal PLUS loans, carrying an average debt load of $17,709.

Of all the dirty tricks that financial aid offices play, this one irks me more than just about any other.  If you are going to suggest that someone borrow $24,000 per year for four years, you should send a letter to that person.  It is sneaky and unethical to send someone a letter suggesting that she try to convince another person to borrow up to $24,000 per year for four years.

The author writes with an easy authority that belies his youth and a viewpoint that many of my middle-aged peers lack.  But instead of simply bemoaning how terrible things are, he lays out straightforward financial illustrations that bolster his contention that the key to a successful future isn't an Ivy League degree but rather, a fresh start with a new degree and the freedom of no debt.  It challenges long-held assumptions about the value of public versus private institutions as well as the myths of community colleges - which will certainly be winners under the recently passed changes in the Federal Student Loan Program.  It also demonstrates a grasp of practical economic principles such as "opportunity costs", which consider how resources can alternatively be used; the accumulated debt after college could instead be used for travel, a new car, a more satisfactory albeit lower-paying job.  Above all, it demands that parents look honestly at the situation and share reality with their kids, for whom they desperately want to provide and still shelter from the realities of adulthood.

I've spoken at length with my oldest child about the need for higher education as well as the cost that it will bear.  As she's looked at the amount in her 529 plan and compared that to the cost of the institutions already soliciting her attendance, the financial discrepancy has dawned and she's become aware of the financing aspects.  She still has her dream school and truthfully, she's enough of a rocket scientist - like her mother - to potentially pull one of the dozen full scholarships that that institution offers.  But while that might be the dream course, I've already told her that she'll read Bissonnette's book so that we can develop plans B, C and D.

Bissonnette's book is truly worth the money spent and if you and your child make any changes in your plans, it will be a huge and lifetime return on the education investment.

 

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