Debt is like jail- easy to get in, hard to get out. As an example consider the data recently published by The Federal Reserve:
- more than 2 million Americans 60 and older own a combined $43 billion in student loan debt
- the average debt among the 60 and older set is $19,000
- 115,000 of US seniors [are having their] Social Security garnished to pay old loans
Millionaires are different. From the national study of 944 millionaires in Stop Acting Rich, it was determined that only 1 in 9 had a negative net worth at time they graduated from college.
People often underestimate how difficult it is to repay student loans. No matter how well one may be compensated after completing college repaying educational loans that often reach into the six-figure category can be a major burden.
Along these lines consider some of the comments in an email I received from Al.
I am a married, 27-year old attorney. . . . . . . because my family did not have much money . . . I was relegated to taking out a substantial amount of student loans to cover the cost of my undergraduate, graduate, and law degree. If I could do it all over again, I would bust my butt to earn scholarships and work 40 hour weeks to pay for my college rather than crimp myself with student loans. . . . my wife and I are working hard to put every extra dollar to paying off debt so that one day we can be financially stable and hopefully be the next “Millionare Next Door!” . . . in the end it’s just hard work, discipline with money, and, in my case, a strong faith to succeed.
Many parents today do not have the financial resources to fund their children’s college education. If you’re in this situation, it is likely better to trade off the traditional college experience via credit by working your way through school. Some of these jobs may be less than ideal but, as another one of my readers commented,
When I graduated from high school, my parents wanted me to go straight to college. I decided to work instead. I was very fortunate to be hired by a convenient store [that] pays their managers exceptionally well. Every so often I get irate customers trying to get out of paying for something like a fax or coffee, and they will try to belittle my occupation by saying I should “go back to school” or say that I’m “just an idiot on minimum wage.” All I do is smile and go home knowing that I make 50k a year, have 30k in savings and stocks, and all the while still completing college one night class at a time. Not bad for a 21 year old ‘loser’ at a convenient store.
This fellow will probably complete his college degree by the time he is 25 or 26, have a net worth of $100,000 or more, and have considerable experience managing a business. And no debt to repay.
Often aspiring college students suffer from parochial thinking. To them college means the total experience: spending 4-5 years as a full time student on a beautiful campus with an active social life. But not every millionaire in the American population enjoyed this type of college experience. A growing number report that they worked part-time or even full time to support their college journey. From my national survey of millionaires I have found that 32% paid for 100% of all of their college fees and expenses; 56% paid 50% or more, and only 11% paid 0% [thanks to scholarships, family, etc.].