Borrowed Future - Episode 3 - 56:11
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“A community college is beneath your potential.”
Mike Rowe heard those words in high school—from his guidance counselor, of all people.
You probably know Mike Rowe from the TV shows Dirty Jobs and Returning the Favor. He’s a TV host, writer, narrator, producer, actor and spokesman. He also runs the mikeroweWORKS Foundation, which awards scholarships to help students pursue careers in the skilled trades.
Thankfully, Mike ignored that comment from his guidance counselor. He also ignored that counselor’s advice to take out student loans so he could live up to his “potential” and go to a four-year university instead of a community college. Mike wasn’t having it. He decided to go with his gut and attend a community college for two years before transferring to a four-year college—and he turned out okay!
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“It still makes me angry when I think about it,” Mike told us. “Not just the stupidity of the advice, but the pressure to borrow money. Since I graduated, the cost of college has increased 1,120%. Nothing so important has ever gotten so expensive so quickly. Not food, not energy, not real estate, not even healthcare. The question is: why?”
The Ugly Truth Behind Why College Was Invented
Seth Godin is a bestselling author and entrepreneur. He also runs one of the most popular blogs in the world. He broke down the history behind how we got into this giant hole to begin with:
“[The college system] was invented between 1860 and 1900. It was stolen from the Prussian paramilitary system. Why did we do it? We did it because factories didn't have enough compliant workers. It's really hard to get someone to give up the freedom of farming and get them to sit for 12 hours in a dark room putting widgets together.
“So, industrialists figured out that if they started training kids from a young age: ‘Sit in straight rows, do what you're told, have tests, make sure you comply, don't speak unless spoken to, raise your hand …’ What is all that? That's factory behavior. That's why we invented it. And it worked great. When we needed more factories, we had more factory workers. [But] we [no longer] need more factories. We don't need more factory workers. So why are we still making them?
“If someone had described what I just said about the system in 1930, no one in this country would have wanted it. No one. We backed into it one little tiny piece at a time. And the victims are 17 years old.”
Seth Godin is right. Today, the system feels stacked against students who dream of a bright future—one where they can pursue what they’re truly passionate about because they’re not weighed down by student loans. So, how can we avoid this broken system and get an education without debt?
Alternatives to Traditional Universities
Attending an expensive, four-year university is not the only way to get a job after college. There are plenty of great alternatives that will save you money and set you up for a successful future.
Two options that are often overlooked are trade schools and community colleges. They’re great alternatives to overpriced, four-year universities. But so many people don’t even consider these options because of the myth that trade schools and community colleges aren’t going to give you the same level of quality education that a four-year college will.
That’s simply not true—and just another way for “famous” colleges to get you to sign for those student loans. Let’s address the real truth.
Trade schools give you a hyper-focused education.
Anthony ONeal, author of the bestselling book Debt-Free Degree, loves trade schools. On this episode of the Borrowed Future podcast, he shared the story of his barber who went to a trade school for $16,000 and finished his coursework—and was in the workforce—within nine months. It took him a year and a half to build up his clientele, and today, he’s making six figures and working on opening his own barber shop!
Do you want to be a carpenter? Go to trade school. Do you want to be a welder? Go to a trade school. Get creative and do your research! There are a lot of trade school programs out there that can teach you exactly what you need to learn in order to work in the field you’re interested in. And the best part is, a trade school will get you into the workforce a lot more quickly than four years.
Anthony did call out one thing: If you choose to go to a trade school, make sure you’re certain it’s the career you want to pursue. Because if it’s not, you may not have transferrable skills for another career.
So, identify what you would love to do and the best educational route to help you get there. And if trade school makes that list, give it more weight than a four-year university—it’s quicker, cheaper and you’ll get to skip all those classes four-year colleges require that you’ll never use.
Community colleges provide the same quality-level education as four-year colleges.
The average cost of attending a four-year, public, in-state college is over $25,000 a year.1 The average cost of attending a four-year, private college is over $53,000 a year.2 Now let's compare that to the average cost of attending a community college and living at home:
$3,340 a year.3
That means a community college costs 87% less than a public, in-state school and 94% less than a private school.
Let’s look at this another way: If college were a breakfast cereal, for a private name brand like Fruity Pebbles, you'd be paying the equivalent of $20 a box instead of just $1.49 for Target’s generic version, Far Out Fruities.
Community college is Far Out Fruities! Why pay 93% more when they both accomplish the same goal of providing a delicious, sugary breakfast?
I’ll tell you why: Because our culture believes the lie that community college is a lesser education compared to that of a state school or private school. Dave Ramsey, host of The Dave Ramsey Show dispels this myth:
“Thirty years ago, the difference in cost of a community college, a state school and a private school was not a lot. And the difference in what you got in terms of the quality of education was a lot. There was a big difference in the quality of education. The weird thing is that the quality of education has come up on community college so much, and on the state school so much, that they're almost all three parallel now—depending on where you go in the nuanced field of study. And the weird thing is that the cost didn't stay parallel. The cost is now dramatically different.”
If you need further proof that a community college isn't subpar compared to a state school, meet Laura Brown, a PhD student in biomedical sciences. We asked her if she thought attending a community college held her back in any way.
Laura told us, “I don't think that going to community college hindered me in any way. I think that other people see it as a huge hindrance. I found from the community college to the state university that it had roughly the same rigor in its classes. I think that is just a misconception that the dollar amount you pay for the education is directly proportional to the quality of education.
“I now teach at a community college while in a grad school, and those kids have to put up with the exact same things that I teach at the University of Kentucky. So from community college to a well-known state college, they're the same classes. I teach both of them. It's just a complete misconception that one's better than the other . . . ”
Going to a trade school or a community college may feel like a nontraditional path. But if the traditional status quo is what got us into this $1.6 trillion mess, maybe it's better to go against the grain.
Fancy Universities Don’t Impact Your Future as Much as You Think
Don’t be fooled—a college degree from a “fancy” or “famous” college isn’t going to open more opportunities than first attending a community college for two years.
Seth Godin advises students to, “Begin by saying, ‘I refuse to be brainwashed into believing that if I get into a good college, that means I'm better than if I don't.’ Maybe what you ought to do is realize (and they've done this study) that among people who got into Harvard and didn't go, and people who got into Harvard and did go, 10 years later there's no difference in their happiness or their income.”
Even doctors agree. As a practicing pediatrician for more than 30 years, Dr. Meg Meeker knows firsthand that at the end of the day, a name brand education doesn't really matter.
She told us, “My husband and I have never put up our diplomas anywhere. We've been board certified [by the] American Board of Pediatrics for years and fellows of the American Association of Pediatrics. None of that is around because patients don't care. Patients want to know: Are you going to be here when I need you? Are you going to make smart decisions on behalf of my child? And are you easy to get along with?
“You can have the smartest physician. If they're a jerk, nobody's going to go to them. So, parents really care more about your personality, your bedside manner and your fund of knowledge than they do about where you go to school. I don't even ask any of the doctors I go to see personally where they went to school—and I don't care.”
So when it comes to your doctor, you may not care where they went to school. But how much weight do employers put on degrees and name-brand schools when it comes to hiring? Dave Ramsey has the answer:
“We currently have almost 1,000 people on our team, and we've had probably another 500 to 1,000 who have worked here at one time or another in the last 30 years. To my knowledge, I have never hired anyone, ever, based on where they went to school, ever. Now, when we look at the overall person and you say someone has a degree, someone doesn't have a degree. And it's in a specific field that they're going to be working in, like, accounting—that does matter. But where you got the accounting degree? All we want to know is do you know accounting?”
If It Doesn't Really Matter Where You Go to College, Why Do We Choose the Colleges We Choose?
There are about 5,300 colleges and universities in the United States that are all competing for the same students.4 The way they stand out? Good marketing.
Colleges have gone to insane lengths to stay competitive in the marketplace. A few years back, Louisiana State University opened an $85 million recreation center complete with a lazy river designed in the shape of the school's letters.
Michigan Technological University has an on-campus ski resort, and High Point University boasts its own fancy steakhouse which indulges students in weekly three course meals of filet mignon and roasted duck.
You've got to be aware of this marketing gimmick when choosing a school.
Seth Frotman, the executive director of the Student Borrower Protection Center in Washington, D.C. has a warning for students:
“Be careful . . . there’s a whole lot of people who have a big target on your back. Who view you and your ability to take on a ton of debt as their chance to get rich. And I've worked now in my career on exceedingly large colleges and universities who have just preyed on students from coast to coast. And they're good at it. They have 100 years of marketing and American lore telling you to go to college—colleges are the good guys, and it's all going to work out.
“And we've seen, time and again, predatory schools load up tens of thousands, hundreds of thousands of students with tons of debt, and just totally worthless degrees . . . This is probably one of—if not the most—important financial decision in your life. And my number one piece of advice is: If someone is pressuring you, if someone is promising you the moon, slow down and ask questions . . . And I know it's hard to hear, but this is big business for a lot of folks, and you need to be careful. You need to try to understand what you're getting into.”
Student Loans Rob You of Your Future
Seth Frotman also warns about losing sight of your long-term future when you’re considering taking out student loans. Because having $50,000 in student loan debt equals years of lost contributions to your retirement account, to a fund for a down payment on a house and more. In fact, Seth has seen analysis that show the average family who takes on student loan debt will ultimately lose nearly a quarter of a million dollars in household wealth.
He says, “That's the more holistic nature of this discussion we need to have, which is we just can't think about it as your student loan bill because it's so much more. This debt is impacting both borrowers, their communities and the larger country.”
Millionaires Don’t Take Out Student Loans
Ramsey Solutions Research Team recently conducted one of the largest, nationwide studies ever done on millionaires. One of the most surprising findings? Seven out of 10 millionaires never took on a penny of student loan debt. Also, 79% of millionaires he talked to didn’t go to a prestigious college. In fact, 62% of them went to a public state university, 8% went to community college, and 9% didn't go to college at all.
You see, millionaires know the truth. Taking out student loans to attend a prestigious university won’t make you rich. Living a debt-free lifestyle and building wealth as early as possible will.
The Best Way to Go to College Debt-Free
At the end of the day—contrary to popular belief—where you go to college will not define the next 20 years of your life. According to experts like Mark Cuban and Anthony ONeal, having a plan is the best way to avoid student loan debt and set yourself up for a successful future.
Here are 10 steps to get you started:
- Apply for aid.
- Choose an affordable school.
- Go to community college first.
- Consider directional schools.
- Explore trade schools.
- Apply for scholarships.
- Get grants.
- Work while you’re in school.
- Live at home or off campus.
- Get on a budget.
It’s also time to redefine a dream school. The new definition? A school you can afford. A school you can cash flow. A school you can graduate from debt-free.
Do you or someone you know need a step-by-step plan to avoid student loans and graduate debt-free? Anthony ONeal’s new book can help. Debt-Free Degree teaches parents how to help their kids pay for college without debt, even if they haven’t started saving yet. Debt-Free Degree doesn’t just tell you what to do. It tells you why, how and when to do it.
If you're looking to get ahead of college costs, an investing professional can help you figure out a college savings plan that won’t lead to debt. Connect with one of our pros today!
In the next episode of Borrowed Future, we'll explore how compounding interest rates on student loans are keeping graduates stuck in more ways than one. You’ll also be surprised to find out who should be responsible for the dumpster fire that is the student loan debt crisis.