Picture of Financial Graph. From Goumbik on Pixbay.com

From Goumbik on Pixbay.com

Every year adults in America make big financial decisions.

But one of them is unique in that it is often the biggest financial decision of their life — and it’s usually done early in adulthood and under very bad guidance.

Yes, going to college is a huge decision, with huge implications, and it’s often done with the wrong mindset.

We are now facing a student loan crisis, crushing the lives of many students, and inflating an economic bubble which may pop and bring all of us down with it.

It’s time we think differently about student loans.

Let’s jump into it – and what we should be encouraging. The good news is just a few of us getting more involved could start a change in our culture and mindset that helps thousands – then millions – of students.

#1 – College Is An Investment

You’ll hear a lot of folks tell you that “college is an investment.” And I say absolutely right!

Dictionary.com tells us an investment is “the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.”

Putting something in – getting something out.  Pretty simple, eh?

The issue is there is a lot of confusion on this “investment.” Yes, college graduates make more than high school graduates.

But I’ve also sat in workshops with business owners who have lamented that college graduates can’t think. We simply are, in many cases, pushing students through the college system forcing many to get advanced degrees to show they have really accomplished something to set them apart.

And while it’s not always the case some high school graduates make more money than many college graduates.

But back to the heart of it – college is an investment. Students put in 4 years, and often a lot of money, to gain a college degree.

This investment mindset should be there.

#2 – College Needs To Be Treated Like An Investment

Many college graduates have found their student loan debts to be crushing.

Debt can be a very good thing. I’ve borrowed for school and for a house in my life (among other things). Each time the debt has allowed me to acquire, use, and build on things I would have had to defer a long time.

Could you imagine having to save up the full value of a house?

And for many students borrowing to go to college makes great economic sense. Get the degree and use the earnings from the degree to pay back the debt.

It’s almost a no brainer.

Except it isn’t. Like any investment going to college has its risks too. What if the job market changes? What if you get sick? What if your grades aren’t as good as you thought they would be and you now can’t get the job you thought you would?

Like any investment the inspiring student should be looking at inputs – time, money, missed opportunities – and the outputs of college.

I see very little talk of high school guidance counselors sitting down and building spreadsheets of costs and probably outcomes with students. I don’t even hear of them discussing these concepts.

Mainly the refrain is “go to college, it’ll pay off.” Not so in all cases.

In her article on her career journey journalist Katherine Timpf discusses how she had to make the hard decision to turn down more education because the expense wasn’t worth it in light of the potential rewards. (I found Katherine’s post off a link from Mike Rowe of Dirty Jobs fame.)

More young adults (all adults, really – it’s just young adults get this decision more often) should be looking at college as an investment.

#3 – Our Young Adults Need To Understand Investments

And this is where today’s system seems to break down.

You young adults are rarely trained on financial management and investment in high school.

Yet before they even finish high school they are on the path of determining if they’ll go to college and where. This is a decision with potentially hundreds of thousands of dollars of consequence that can impact decades of their lives. All being made by sophomores and juniors in high school that are 15, 16 and maybe 17 years old.

Is it fair to ask such a young person to make such a big decision without the right framework?

We need to teach kids how to build those financial spreadsheets that help them determine the financial ups and downs of college.

Only with this investment eye – and the ability to understand what they are reading – will we see this needle start to move.

#4 – We Need To End One-Side Fits All

Along with this investment mentality needs to be the end of “one size fits all.” For decades now it seems everyone says every child should go to college.

I see politicians running on the concept. “Let’s get every student a college education.”

That sounds great. Especially with the stats showing that college grads make more money.

But some college grads come up with a mountain of debt and struggle for their entire lives to pay it.

I’ve heard of people planning to retire with student loan debt!

So clearly college isn’t a great investment for everyone.

A case-by-case analysis needs to be done for each potential college student to determine if college makes sense for them. And which college too. Changing colleges can change costs dramatically and might change the go or not go decision.

#5 – We Need To Examine The System

The broader point here is the harder point.

We need to examine our systems. Incentives teach us a lot. I am all for aligning what goes into the system and what comes out.

And for colleges there are a lot of incentives for getting students into the system. That allows bigger budgets, better facilities and the recruitment of higher prestige faculty.

We get why college administrators are incentivized to get more students and grow the college.

But do those incentives pass to benefits to the college student making the go to college or not go to college decision?

In many cases, no.

So we need to look at why our systems are working the way they are. Of course if we just get students making true investment decisions on college a lot would change.

But ask yourself this: what college administrator wants to have a real return on investment discussion with students and be held to that extra accountability when the current system pads their pockets?

NOTE: If you are such an administrator or know of one please call me so I can interview you/them.

What To Do Now

It’s time to talk about this major issue.

It’s time to have this discussion with our teenagers as they prepare for this major decision.

Just getting a few students thinking like this could set-off a positive ripple effect.

Isn’t society worth it?

LET’S DO MORE: If you are a business owner or leader let’s be in touch more. I’d love for you to read my online work and give me your honest feedback: join my mailing list, follow me on LinkedIn and jump into my Facebook Group.

NOTE: This article is a piece develop a small portion of the content of the book tentatively called The Journey: Finding Your Place From Entrepreneur to CEO being co-authored by The Our Shawn McBride and Ann Gatty. If you want updates on the book including the possibility of joining our release team or getting one of the first copies please join our mailing list here.

DISCLAIMER: This article talks about legal issues. I am a lawyer licensed in multiple US jurisdictions, but I am not your lawyer unless we have signed an engagement agreement. Please view this material as educational and general in nature (as it is). Consult counsel you have retained for advice on your specific facts and circumstances and applicable laws. Do not rely on the statements in this article as legal advice.

By: The Our Shawn McBride, is the business nerd and long-time business attorney that focuses on changes of ownership in businesses. He works with business owners that know their business is about more than themselves to get ready for their future through keynotes, training and personalized solutions. In furtherance of this he hosts The Future Done Right(TM) Show where he collects, digests and gives lessons and insights on The Future of Business. If you want regular content on the future of business subscribe to get new blog posts from us here.

You’ll quickly notice his unusual suits which he uses open the conversation of how businesses should Do Business Differently™.

The Our Shawn is based in DeLand, Florida (between Orlando, Florida and Daytona Beach, Florida) and Dallas, Texas where he keeps offices. You can also find Shawn on webinars or traveling nationally or internationally for speaking engagements.

Check me out at: www.planningdoneright.com

NOTE: This article contains links to sites where I may be paid a small commission on your purchase.

Do you really want to make plans that work?

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