Dodging College Debt
The underrepresented communities of Los Angeles do a disservice to its constituency when providing information on how students and their families can apply to college and what the college experience will be like. Strangely, in these kinds of communities most populated by people of color, they seem to encourage children to attend college and make it seem as if college is the end goal.
Most prominent while seeding from the ground was the inability of obtaining college resources from professionals and teachers. These barriers felt like falling down a rabbit hole of confusion because no one I knew or spoke with really went to college or a University. I was fortunate enough to attend a high school that valued it’s students, and the community had a foundation of people who encouraged children to attend college and it sought out reliable resources. Majority of the students in the area graduated high school with ease and I was fortunate to do so as well. It may have been the influence of the school or maybe it was my grit that allowed for me to pull myself out of a 1.8 GPA my sophomore year and graduate with my class in 2011.
Everyone I knew pretty much graduated, but not everyone was going to attend a University or even a State University. I was the lucky student who decided to forego his University dreams and attend community college. This was a disastrous decision because I was not educationally mature to discipline myself for a successful student life style. All I had on my mind was the party scene and making minimal monetary gains. Eventually, I dropped out in 2013, but it was a blessing in disguise because here I am in 2021 debt free with a bachelor’s degree in Political Science. Yes, I know Poli Sci, eyebrow raises on your side of the screen, but remember I want you to avoid debt. I attended Santa Monica College in 2016, transferred to Cal State Long Beach in 2019 and graduated in December of 2020.
This is my journey of accidently avoiding student debt and a guide for anyone who can be patient, examine a few steps from my experience, take advantage of their youth and immerse themselves in the idea of investing. Ask the important questions. What is the end goal? Make more money? Help others with your influence? Become more successful? Become a model citizen?
The Stigma of College
Every student in America probably has heard this from a family member or friend during their high school years, “Where are you going for college, have you applied yet, how was the SAT/ACT, do you have good grades…” You know the rest of these annoying and demanding questions. Let’s set some things straight before we dive into the specifics. Some of us have the means or do not have the means to pay for college out of pocket but it’s up to you to embrace your situation and roll with the punches. As we go through high school, we are peer pressured, no not to drink or do drugs but I understand this happens, by our friends and family to attend college immediately upon graduating high school and this is a lot of pressure for a 17- or 18-year-old student. We need to train ourselves to block those preconceived notions and examine the facts about the cost of college and how it continues to rise. According to the National Center for Education Statistics, “For the 2017 – 18 academic year, annual current dollar prices for undergraduate tuition, fees, room, and board were estimated to be $17,797 at public institutions, $46,014 at private nonprofit institutions, and $26,261 at private for-profit institutions.” On their webpage they provide a price breakdown of all, public and private institutions throughout the years.
With these tables a student can understand just how much college tuition costs, how much it has increased over the years and possibly make their decision to wait on attending college and explain to those around them they are going to work, travel, invest and save.
The Advantages of Youthfulness and Hard Work
As young adults we allegedly suffer from the Fear of Missing Out Syndrome which is detrimental to our development as functioning independent adults. From what I can tell you, the party never stops and when you get older it will never stop so you’ll have time to enjoy the party scene. Here are some tips. Keep the partying to a minimum if one must party. Don’t destroy yourself when you’re young with too many endless nights. The advantages of being young allows for you to work your tail off. Bypassing college for a few years gives a student the chance to become part of the work force and understand discipline, horrible bosses, subpar pay and inconsiderate individuals. This is the reality of working in any industry without a degree, you will become the scum underneath someone’s shoe. This experience will shape your character and provide insight on what kind of life you will strive for. The beauty, I know this outlet sounds bad, is you can have two of these jobs. Let’s say you work in a restaurant or in an office, the advantage is you can have both and make a decent living. Yes, you will be tired and will feel like a drained pipe without any water flowing out of it, trust me it’s worth the trouble.
Investing, Traveling and Saving
While you’re working 2-3 jobs there is something everyone can do, it’s called INVEST. Invest in land and property, the stock market, open a Roth IRA or Traditional IRA account, and simply save to travel.
Many of us are hindered by our ill-educated minority communities because there isn’t dialogue regarding the economic freedom that comes with investing. While working those jobs one can save to buy a piece of land, a home, or even a condo. The idea is to create various streams of income, whether it be through multiple jobs or by purchasing land and property and eventually renting out that property for monetary gains. Another avenue to grow money or wealth is through investing in the stock market. We now have apps like Robinhood, WeBull, Acorns and Coinbase, but we also have well established companies who can invest your money for a small monthly fee and those include E-Trade and TD Ameritrade just to name a few.
The stock market is risky, but the big question is, would you rather take the chance of growing your money in the stock market or have tons of money in a bank where you’re not even given a high interest rate on your investment. Ultimately, it’s up to the person but investing in the stock market can allow for one to have economic freedom in their later years. When investing in the stock market there must be an exceptional amount of studying. You don’t necessarily want to invest in companies that may have horrendous track records, abuse their workers, lie to their investors, or are unethical.
If you are the type of person that doesn’t want to research the companies, you might want to open a Traditional or Roth IRA. Here is more detail on how they differ, https://www.investopedia.com/retirement/roth-vs-traditional-ira-which-is-right-for-you/. If you don’t want to invest in individual companies there are also ETF’s, which stands for exchange traded fund, and mutual funds. Here is more detail on how the two differ, https://www.investopedia.com/articles/exchangetradedfunds/08/etf-mutual-fund-difference.asp. With these various accounts you can set up a recurring amount that goes into them without you realizing it. Thus you can work and invest and not worry about your retirement or what’s going to happen to you in your 60’s. All of this will come full circle because while you have forfeited your ability to attend college you have now allowed yourself to save for the future and possibly the near future depending on what kind of investor you become.
One should save for a rainy day but do not place all your money in the bank. Some professionals have stated people should save money that can last them up to 6 months. I’ve even seen some say save money that can last you up to two years. Ultimately, it’s your choice. Invest, invest, invest, in whatever you can to grow your money.
Understanding Yourself and Your Habits
Most importantly, you must travel and treat yourself. Travel the world, see what you enjoy or do not enjoy. Discover yourself. In almost every part of the globe students take a gap year, they travel and meet new people. These students get a sense of who they are and take advantage of their youthful days, remember to harness the young days because they do not last forever. It’s fine to take a gap year, we Americans have stigmatized the gap year for some reason, and we don’t realize we are throwing our students into an ocean of responsibilities and debts they aren’t ready for. Anxiety and stress are serious issues students face in the United States, so just breathe, and enjoy the life that was given to you by accident or by a higher being or whatever makes you feel human and whole.
The Independency Threshold
These are literally the guidelines provided by Federal Student Aid about what justifies being an independent student in the eyes of the government.
This criterion may be your ticket to debt-free college, because it was my ticket out of debt and into economic freedom. I am not saying I’m making tons of money right now, but I do have various investments in the stock market and in a Roth IRA account. Those investments are my gains and as of right now I’m fluctuating between $10,000 – 15,000 of pure gains. I don’t have to worry about paying back loans and if it weren’t for COVID I would be working much more and investing tons. [JL1] The way I was able to achieve this feat was by waiting until I was 22 – 23 to return back to college and by this time I was more mature and fixated on being a student. I understand many of you reading are saying to yourselves, “Wow, four years of no college, by 22 -23 I would be done with a four-year degree”, you are all absolutely right. This is a guide to remind you that yes, you would be done with a four-year degree, but you may be in severe debt. If you don’t pay that debt the interest will add up and the amount may double or triple creating a sink whole of dollars you are throwing away.
After 2 – 2 ½ years of college I transferred to a state university at around the age of 25 years old helping my situation of achieving independency. Two things must work in your favor if you are going to borrow my method of debt-free college. The first is you must meet the age requirement provided by Federal Student Aid, and the second part is very important, you must obtain good grades and aim to be the most studious and outstanding student you can possibly be. When I was at community college for two and a half years, my classes were paid for by the BOG fee waiver (another advantage of attending community college), I did not receive any excess money which was fine because I was working. Once I transferred to Cal State Long Beach I was given a few grants and scholarships because I was of age to be independent and most importantly I transferred with a 3.4 GPA. Lastly, you must stay below the level of making too much money, this here is going to be difficult, especially if you’re working multiple jobs. It isn’t impossible, but it is going to take some patience. You have to be able to show the government you make enough to survive, but not enough to pay for college. It’s going to take a calculated approach and discipline, but this is the way I was able to dodge debt.
I understand not everyone’s circumstance is the same but my circumstance may not be any different than yours. I was living at home paying my dad $200 a month for rent, I would work at a restaurant on the weekends and would save my money. Little did I know if I had been investing my money in the stock market, I possibly would have more now and in the case of an emergency I could have withdrew some gains. You live and you learn, but this is why I wrote this piece to show people what I experienced accidently. This is how I got through my college life and avoided the death grips of college debt.
The Alternative
I am not oblivious to the fact that my approach of avoiding student debt is unorthodox. Remember this approach is for those who can manage the stress of living a certain way of life. When being a student and a citizen in society one must understand the principle of sacrificing various aspects of life to achieve educational goals. Especially since our student debt is now at an all-time high of $1.7 Trillion. Zack Friedman reports from Forbes, “The latest student loan debt statistics for 2021 show that there are 45 million borrowers who collectively owe nearly $1.7 trillion in student loan debt in the U.S.”
I have provided an Alternative and it consists of going to community college, but it has a twist. Everyone nowadays knows or has heard of attending community college to avoid massive amounts of student loan debt and they are correct. Get the 2 year degree and transfer to a 4 year University and only pay the debt of the 2 years you attend that University.
Trade School is another alternative path. Some great paying careers include electricians, plumbers, information technology technicians or engineers, mechanics, and welders.
Full-Circle
What we must implement when attending a community college and eventually transferring is the way to become economically independent by investing in stocks, bonds, mutual funds, ETF’s, Traditional and Roth IRA accounts. The reason investing is stressed so much is because if you begin to invest when you’re 18 years old, you attend community college, and eventually transfer in two years the money you have invested from working and going to school might double or triple. The importance of your money doubling or tripling is it will allow for you to have a safety net once you need to transfer to a university. Let’s imagine you eventually transfer and get accepted to a four-year university, but because you’re not considered “independent” school is going to cost 15,000 a year. The upside is you’ll only be there for two years and will have $30,000 dollars in debt. Let’s also create the scenario of you investing $500 a month for two years while you were in community college which amounts to $6,000 a year and a total of $12,000 in two years when you transfer. I must say I am not a financial advisor, and all my predictions are based solely on my own ideas and calculations. The scenario now becomes that due to your investments you made $3,000 on a $12,000 investment which equals to your total net worth of about $15,000. As an investor and student, you can make the decision to pay off your first year of university debt or you can leave your money in there and see if it can grow more and continue to invest the same amount every month.
I indicated above that your money may double or triple, the scenario is your initial investment is $12,000 over two years and if it doubles it equates to $24,000. This means when you transfer and only need to complete two years of a four year degree you will have $30,000 of debt but your investments equal to $24,000. With $24,000 as your net worth and $30,000 of debt you can bring your debt down to $6,000.
It comes full circle because by investing your money you can now pay off your debt or some of it in the future if you need to or want to. Again, investing in the stock market is risky, but it’s worth the risk, especially if you’re a person who knows how to save and wants to grow their wealth. I must say this before the article ends, I am not a financial advisor and I am just providing my insight about investing based off of my experiences. Ultimately, it’s going to be up to the student on how they want to spend and invest their money. Hopefully, I was able to provide some insight on how to dodge the student-debt crisis.