“Come and Take It” Flag from Revolutionary War
I can sympathize with the students involved in the Million Student March. College costs are very high. Students are leaving college with huge amounts of student debt that can take years to pay off. I can’t imagine leaving college with more than a hundred thousand dollars in debt, but some students do.
Still, the demands of the group: Free college, forgiveness of all student loans, and a$15 minimum wage for university employees, are just not economically possible, at least in the way they would like them to be. Even if you took all of the money the 1% have, it would not pay for even the student loans outstanding. Plus, the top 0.3% are very mobile people, many of whom already have homes in other countries. Raise taxes on them enough and they would simply leave. What you would end up with is higher taxes on the middle class to pay for that free college and to repay those student loans. This means you and your parents would be paying for it for all of your lives – kind of like a student loan payment that never goes away.
And as for the $15 for hour minimum wage, you would just see student jobs eliminated entirely, along with many other jobs. You would be doing self-serve at the dining hall (if it didn’t close down entirely) and cleaning your own dorm rooms and community shower. Or that cost would also be added to the taxes that you and your parents, and your children and grandchildren, would be paying for the rest of your lives.
The issues are that college costs too much and that your lifestyle is part of your student loans. What you really need to do is bring down costs, and that is something that you can do, but it will take sacrifice. Remember that you get what you pay for and there is no way to get something really nice for free. You just need to figure out what you’re willing to give up to save money and reduce the amount you owe when you leave college.
College costs are way too high and they could be brought down. If you think about it, all you really need for college is a classroom, a book, and a professor. With video lectures, you could even cut the number of professors. You could get rid of the lavish grounds (you wouldn’t believe how much the landscaping costs are at many colleges), cut the number of professors and administrative staff (personnel and benefits are also a significant cost), cut back on student athletic teams (everything but football typically loses money), cut back internet bandwidth and only use the internet for academic reasons (no more Netflix streaming in the dorm rooms, you’ll have time to watch movies later, since IT costs are also huge), and get rid of things like the student workout centers. This would cut costs dramatically, and you could probably get tuitions to under $5000 per year by doing this. That would be about the cost of a car payment, or just $20,000 in loans for a four-year degree.
Would this be a big change from what college offer today? Certainly. There would be no lavish workout facilities. No huge game rooms. Internet availability in the dorms would be very limited, so playing online games would be out. But we’re talking about graduating without huge amounts of college loan debt, and you get what you pay for. You have your whole life to pay World of Warcraft.
The other issue is that people use student loans to pay for a lifestyle they certainly cannot afford, then complain when the bill comes due. Instead of getting three of four roommates to keep rent down to $200 per month – or less – people get their own place with a pool and workout room for $1000 per month, paid for with student loans. They also use student loan money for drinks (how many college students can really afford to pay the cost of drinks in bars?), music festivals (I can’t see how so many young people can pay for all of the high costs at Bonnaroo unless they are using student loans), and other entertainment expenses. Also, people take minimum loads in school (or less) and simply stay at school to avoid needing to complete college and go out and find a job, cutting off the student loan gravy train.
If you minimize expenses and get out of college in four years or less, I’ll bet you could keep costs down to $40,000 or less, or $10,000 per year. Some of this could be paid for by parents and through side jobs, especially during the summer. In fact, paying for your own living expenses is something you’re going to need to do for all of your own life, so the sooner you learn how to settle for what you can afford and make it work, the better. You can also cut living expenses back by going to community college for classes that they offer. You could even choose a university that would allow you to stay at home since most places have a good university within an hour drive or less.
Is this the “full college experience?” Probably not. But we’re talking about people who can’t afford the full college experience. If they could, they wouldn’t need to get student loans. Of course, maybe the full college experience now is enjoying life on your expected future earnings for six to eight years, then spending the rest of your life trying to pay the loans off for the lifestyle you lived but couldn’t afford. If this is the case, then quit protesting and get back to class.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.
