Henry and Maria
Henry, twenty-three-years-old, borrowed more than enough money to attend private school in Louisiana. He
came out of college with $50,000 debt. Henry’s first job out of college had a salary of $38,000 plus benefits. He
went out and got a super cool apartment in a swanky part of town and super cool furniture on credit. He was a sharp
dresser—thanks to MasterCard. He later met a young lady and impressed her with dining at the best restaurants and
nightclubs. As a desperate measure he began taking cash advances from his credit cards to pay bills. His income was
eaten up with payments to creditors: car loan, credit cards, and Sallie Mae. What a life. He was barely thirty-years old
and now over $70,000 in debt. Not able to afford a home, Henry became depressed. Henry went overboard.
Borrowing $50,000 to make $38,000 a year makes no sense. Always research the beginning salary of the major field of study you are going into.
Maria, nineteen-years-old and a freshman at a small college in Texas, was afraid to borrow money at all for college and
dropped out. Once she figured out that her grant was not enough to cover the entire tuition for the year, Maria wanted
to go to college and earn a degree to become a psychologist. She dropped out because she became discourage by the
five-figure debt it was going to take to finish college. She later realized jobs that don’t require a college degree paid
just enough to get by. Frustrated that she is only getting by and not getting ahead, she regrets not taking out loans and
grants to go on to college. By not taking a risk to invest in her future, she paid a bigger price. Sometimes playing it
safe is not the wisest move.
In Henry case, he went overboard when it came to student loans. Had he done a little research on the starting income
of his major he either would have picked a less expensive school or changed his major. Find a happy medium when it
comes to education. Not applying to college at all can also be a risk you cannot afford.
Rule of Thumb: Borrowing money for education makes sense if you do not borrow more than you can expect to earn in a year at your first post-college job.
This guest post comes from L. Marie Joseph, author of First Generation White Collar: A practical guide on how to get ahead and not just get by with your money. She also blogs at First Generation White Collar