Why We Have a Financial Crisis

If you really want to understand the grass root cause of our current overdose on debt, just sit in my office as I talk with juniors and seniors. Several of them are able to graduate a semester early or go part-time in their last semester. Such a move could save them as much as $15,000. 

When I suggest this approach, some students are excited to save the money. But almost as many say, “but I like college.” I am not sure whether they mean they like studying and going to classes, or they like getting drunk on a Tuesday night.

I usually ask, “Will you be graduating with debt and will the extra semester raise your debt?” I figured that they might be willing to pleasure themselves with another semester of college at the expense of their parents.

Shockingly, they almost always say that they have debt and spending an extra semester would add another $5,000+ to their debt. Even more surprising, many of these students have worked 30 hours a week while carrying a full load and have paid for a lot of their college education. They also cannot tell me how much the extra $5,000 will add to their monthly payments over a ten-year period.

When I meet with juniors and seniors for career and academic advising (I always do both), I am astounded that none of them can answer the question “how much debt will you be leaving college with,” never mind how much will that cost a month. We are training the next generation to embrace debt so they can have a good time in college.

Does this sound like the people who bought bigger houses than they needed because they could get the loan? Does it sound like those who run up credit card debt for the purpose of immediate gratification? Who says colleges don’t teach students anything? Learning to live with and expand debt may be the most widespread lesson of a college education.