Why should 18-year-old kids have to make decisions that will impact their lives for years into the future?
Yes, it isn’t fair, but life isn’t fair and we can’t change that. Many adults refer to you as “kids” only because you’re the son or daughter of an adult and not yet a parent. Things dramatically change at age 18: you can now legally vote, join the military, drive, have consensual sex, get a pilot’s license and purchase tobacco in most states. You may also enter into contracts and borrow money - although you may need a co-signer because of your limited credit history. You can marry without parental approval and start a family. For some reason in a few states you can drink at home but not purchase liquor until age 21. And at age 18, you may be legally prosecuted as an adult.
Like it or not, you’re metamorphosing. Metamorphosis is a natural biological process that changes you mentally and physically - the transformation from adolescence into adulthood. Metamorphosis is commonly used to describe this transformation in insects and animals; for example, caterpillar to butterfly.
You are now an adult: legally, physically and mentally. As a young adult, you may feel insecure like when first removing training wheels on your bike. With experience, however, you gain confidence and skills. You are ready to apply good judgment, make important decisions and proceed.
As you celebrate high school graduation and begin your college career, we want to alert you to the risks and consequences of student loans and help you make informed decisions. No one can guarantee any decision will prove to be “right”, but we need to invest the time to make informed decisions using the best available information.
Student loans seem great: someone gives you lots of money and you attend college. But, these are not grants or scholarships; they’re loans, and lenders expect to be repaid with interest. Default, failing to make regular repayments, will destroy your credit rating and then possibly trigger even more aggressive steps by lenders or collection agencies. And the interest keeps accumulating.
Student loans are your financial investment in your future; they are good when used responsibly. Excessive loans, those you can’t afford to pay back over five to ten years after graduation, create a restrictive financial burden with serious lifestyle constraints far into the future.
Your education will likely be the biggest investment you will ever make. You are about to make decisions that dramatically influence your need to borrow – school, major subjects and life style. By all means, seek advice from your parents and trusted advisors. Beware, however, of those who have self-serving agendas. Colleges have let costs skyrocket over recent years and they need you and your tuition. They will encourage you to borrow. Student loans are a profitable business to lenders and they will also encourage you to borrow more. Colleges and lenders should not be your trusted financial advisors.
Think carefully about your choice of school and major study area. Parents and guidance counselors frequently advise students: “Go to the best school you can and pursue your passion.” While well intentioned, this advice often ignores your unique financial resources and affordability. Don’t be misled; you can get a great education at many colleges, both public and private. You need job related skills to launch your work and career and that is a clear role of your college education. You have a lifetime to pursue your passions.
Your school choice, course of study, college lifestyle and student loans will impact your life for years to come. As an effective adult, you can make informed decisions. Due diligence is commonly used to describe the formal analysis to assess proposed business investments. We at the Zenie Foundation are developing due diligence tools to help you make informed decisions about your college career and its financial implications. I will introduce one of these tools in Blog 3 and we will maintain these tools and other valuable resources on our website (www.zeniefoundation.org).
If you want to read some real life student loan stories please go to the Resource Section of our website and read “Defaulting on your student loans is not the right answer” by Shelly Banjo, published in Quartz Magazine June 8, 2015.
You may not think being faced with these decisions is fair and you may not want to invest the time for due diligence, but you can make informed decisions and adjust as you gain experience to achieve a great outcome. Onward.
Our mission is to help students become effective adults.