Smart Money Smart Kids: Raising the Next Generation to Win With Money by Dave Ramsey

Author:Dave Ramsey
Language: eng
Format: mobi
Tags: Christian
ISBN: 9781937077631
Publisher: Lampo Press
Published: 2014-04-22T00:00:00+00:00

CHAPTER EIGHT

College

Don’t Graduate from I.O.U.

RACHEL: “That’s really what we want to do with our lives, Rachel. But we just can’t do it. Our student loan payments won’t allow it.”

That was the end of one of the saddest discussions I’ve ever had after an event. I’d just spoken to a group of about 3,000 college students at a private university, and a senior from the audience came up afterward to talk. He was engaged and planned to marry his fiancée that summer. He and his future wife had a heart for serving other people, and they both felt called to mission work overseas. As he told me about his fiancée and their passion for missions, I could tell he was really excited—for a minute.

He then sadly told me he had used student loans to pay his tuition all through school, and he’d be graduating with $80,000 in debt. Leaving college with a four-year degree and $80,000 in the hole seems like a nightmare for anyone, but especially for someone with aspirations for a less-than-lucrative career like foreign missions. And it got worse. He said that his fiancée also owed $80,000 in student loans. I could hardly believe it. That meant this amazing young couple with a heart for serving other people was about to start their married life together with $160,000 in debt—just in student loans. As you can guess, the math didn’t work for them to give their lives away serving others. They couldn’t give their lives away because someone else already owned them: Sallie Mae.

This may seem like an extreme example, but I’ve seen the same thing happen over and over again to lesser degrees, like with a friend of mine who was recently offered her dream job. She was so excited to actually get a job doing what she loved, until she started crunching the numbers and looking at her budget. The starting salary the company offered wasn’t enough to cover all her bills—which included tens of thousands of dollars in student loans. In the end, she had to turn down the job and take a slightly higher-paying job that she wasn’t nearly as happy about just to make her payments. That’s a really sad situation, and it’s something I want your child to avoid.

STUDENT LOANS: A ROADBLOCK TO THIS GENERATION

Student loans are a roadblock to this generation. Current college graduates are leaving school with an average student loan debt of $27,000—and obviously more for private, prestigious, or graduate schools.1 Altogether, there is roughly $1 trillion in total outstanding student loan debt in the United States today, and student loans have recently surpassed credit cards in total debt owed.2 Graduates will carry those loans around with them for years or even decades; they can’t even escape them through bankruptcy because federally backed student loans are not eliminated in a bankruptcy. The short-term gain of student loans doesn’t even compare to the long-term pain your student could end up with. There’s no doubt: This is a generational crisis, and, as a parent, you need to be ready.

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