June 1 2019 Endings & Beginnings
We are entering the season of moving forward. This is the time of year when graduating high school seniors are closing the door of an old life and moving forward to a new one. Upon graduating, the next step for some is seeking more education from technical schools, colleges, or advanced degrees to secure their career. Financing education is clearly an important factor in these next steps. For others, entering the real world of a career/full time job puts their knowledge to use.
For those in the first category, entering an education path (college, technical training etc.), there are many facets that should be considered. Academic program, social/cultural fit and financial means are the three important parts of the education path decision. We also know that many who try this stage end up changing their path. It is important to keep your expectations and decisions with your loved ones flexible and reasonable so you can manage through any plan B moments.
For most families, financial funding of education typically includes financing from student loans. Key challenges with needs based aid on the FAFSA application as well as the source of loans should be part of the discussion. We can review in detail how to approach this as you may want a guide, similar to the other financial areas in your life. An important and often unknown source is that the student can also apply to the state for loans. Residency and location of school requirements may apply. I’ve referenced a good website that comments on much of this as well as the Minnesota Self Loan.
In reviewing private college costs and aid, consider approaching any acceptance and aid letter from the school with a negotiation spirit. Private schools are competing for your student so that offer might be improved with a discussion.
With the student loan crisis upon us, we want to remind all of you that loan pay back terms should be illustrated to your student in terms of their likely earnings. As a rule of thumb, total loans should be equal or less to the first year wages in the career track anticipated. Clearly, engineering or IT may support modestly more in debt vs. teaching or other degrees that may have lower starting salaries.
Lastly, we now exist in a time when retooling your own skills at the age of 20, 30, 40, or 60 may be necessary. Globalization and fast changing business models require vigilance on skills necessary to compete and succeed. Consider the newer industry areas from increasing robotics, artificial intelligence, genetics applications, and solar/wind energy industries in order to encourage success as roles change and industry’s and business models morph. We anticipate that a good wage will likely be paid to those with the new skillsets needed in the future. So consider putting yourself back to school as well!