Paths to avoid crippling student debt

Twenty-eight-year-old Kera Cheney works for the government, lives in a basement apartment with her boyfriend in San Francisco, and is stressed by her college loans. His student debt is now around $ 280,000.

He followed the classic recipe for success, graduating from Penn State. But now, he faces decades of debt.

Correspondent David Pogue asked, “Have you ever tried to figure out, ‘If I put that aside for a month, this is the year I’m going to pay that $ 280,000’?”

“That would be the goal,” she replied. “I’ve always thought about winning the lottery!”

And Cheney is not alone: ​​43 million Americans now have student debt. They owe the government more than $ 1.7 trillion. About two-thirds of all graduates drop out of college in debt. Many will work their entire careers without being able to afford it.

Cheney said, “We can’t go out as much as before for dinner, and we can’t make as many trips as we want unless it’s on our budget. So it affects us.”

No wonder college debt has become a White House priority.

• The White House is extending the break in student loan payments until August 31
• With paused payments, debt cancellation of student loans “still on the table” for Biden administration

One of the reasons for the crisis: the dizzying enrollment. Another reason: more people go to college first.

• The 50 most expensive universities in America, ranked
• The cost of delaying college by a year? More than $ 90,000 in a lifetime

According to Peter Cappelli, a professor of management at the Wharton School of Business at the University of Pennsylvania, only 8% of Americans had a college degree in the early 1960s. “And now it’s close to 40%. So that’s a big difference. You were pretty special in the ’60s if you had a college degree.”

Cappelli is the author of the book “Will College Pay Off?” So Pogue asked, “Will Does the university pay? “

“It depends,” Cappelli laughed. “There’s no doubt that going to college is incredibly helpful for people to improve their lives. What interests everyone most is financially: is it a good investment? Will it pay you because you’re better than a school? “Yes, if they graduate, sure. If they don’t, maybe not.”

The problem is that most students do not do it. Only 40% of full-time college students, less than half, graduate in four years. And even if you stop your school, your debt will continue to grow. Cappelli said, “If it takes you six years to graduate, you have six years of accrued interest.”

So the old formula (spending four years in college, getting financial security) is no longer safe.

But some new formulas are emerging instead.

Natasha and Stephanie Ramos, who live in Connecticut, are avoiding a massive debt. Natasha began her college career economically, with two years at a community college, and ended up at a state college. “The debt of University of Connecticut students is much better than the debt of private school students,” he said. “So I’ll leave it at that!”

Stephanie goes to a vocational training institute, where students can learn trades such as carpentry, plumbing or hairdressing. But it is taking a shortcut to the corporate world, thanks to Google’s professional certification program. For $ 39 a month, she can take video classes that prepare her for a tech career. “The courses give you a certification at the end that looks great for employers or for universities, whatever route you want to take,” he said.

Pogue asked, “When you finish high school, would you be in the world of work at the age of 18?”

“Yeah,” Stephanie laughed. “Nothing is ever fixed. Whether you want to go to college or go straight to the workforce, everything is changing.”

Pogue asked his father, Javier: “The pressure in one way or another for economic reasons?”

“So I support going to college,” he replied. “But at some point, the final decision is up to her.”

“Well, it looks like he’s working on your family.”

“Thank God!” he laughed.

The Google program has already placed 75,000 employees in high-paying technology jobs in more than 150 corporations that are eager to hire them. Meanwhile, opportunities are also opening up at the receiving end.

Ken Frazier, CEO and former CEO of Merck, and Ginni Rometty, former CEO of IBM, have led a campaign to eliminate the university requirement of as many job descriptions of their companies as possible.

“Eighty percent of what we call family maintenance jobs, $ 60,000 or more in general, require a four-year degree,” Frazier said. “And so companies filter people out, whatever their intelligence, their curiosity, their work ethic, their adaptability. But if you don’t have enough people to fill all the jobs we need in this country, I think it needs to be re-examined. “

Rometty said: “When I became CEO in 2012, we looked at each job and said,‘ Do we need a college degree to get started, or could we translate into a set of skills you need? So what started when more than 90% of jobs needed a college degree is now less than 50%.

“For example, lab technicians and things like that, they don’t necessarily need a degree in philosophy to get the job done,” Frazier said.

Pogue asked, “Obviously you’re not doing this just to be right; should there be something for corporations?”

“Absolutely; this is not philanthropy,” Frazier replied. “At the end of the day, you have people you can hold back longer because they’re incredibly loyal, they work. You can access them for a lot less money.”

“And our data has shown that their performance is equal to those with a four-year degree,” Rometty added.

“A college degree means you know how to distribute your time; you learn how to communicate with others,” Pogue said.

Frazier said, “Yes. But there are studies that show that people who really have the right skills training are five times more likely to succeed in the job than people who have a college degree. It’s counterintuitive.”

“Are you anti-college?”

“We’re not anti-college at all,” Rometty said. “It’s just a matter of acknowledging that you can start and follow a different path than someone else.”

“We know that college has a lot of value beyond getting a job,” Frazier said. “We think education is a good thing for people. It broadens their perspective on the world. And what we’ve seen in these kinds of programs is that, in the end, a substantial majority of these people go on and get a degree. “You won’t get a college degree before you get a job. It’s a matter of sequence, not ability.”

To extend this idea, Rometty and Frazier have founded OneTen, a coalition of 60 big business owners, and it is being counted. “OneTen came up with a proposal that would be useful if we tried to hire a million black Americans who didn’t have a four-year college degree for ten years, for family jobs,” Frazier said.

The coalition works with community schools, job training and apprenticeship organizations, persuading them to train young people precisely for the types of jobs they need to take up. Rometty calls them “new neck jobs.”

New programs, new sequences, new necklaces: for some careers, everything is part of a new wave of alternative paths that do not involve the university … or the university debt.

As for Kera Cheney, she has a long-term plan: “I’m really looking forward to going to law school,” she said. “If I can start making more money, I can pay my monthly payments.”

So, Pogue asked, “Was college worth it to you?”

Cheney paused. “I mean, I had fun in college. It was a great experience. But for the rest of my debt life I’m going to live with … (sighs) That’s very difficult. It’s such a difficult question.”

For more information:

• Peter Cappelli, Wharton School of Business, University of Pennsylvania
• “Will College Pay Off ?: A Guide to the Most Important Financial Decision You’ll Ever Take” by Peter Cappelli (PublicAffairs), in hardcover, e-book and audio formats, available on Amazon, Barnes & Noble and Indiebound
• OneTen Coalition
• Google Professional Certificates

Story produced by Gabriel Falcon. Editor: Joseph Frandino.

In:
• Student debt