Tough love for a college graduate: confessions of a mother and a financial planner
I came across a question posed by a business reporter, “Should parents of a recent college graduate help pay back the student loan instead of retirement savings?” Of course the answer is a resounding no since saving for retirement is the holy grail of what to do with our current financial resources. This got me reflecting back on what my husband and I went through recently as we watched our boomerang son leave home for the second time. It was bitter sweet since that was our ultimate goal to see him stand on his own two feet when he came home after college over 3 years ago. I would like to offer some insights from my experience beyond the numbers or the strategies to take advantage of income based repayment option or student loan forgiveness programs.
My son attended one of the most highly regarded art design schools in the country if not the world. When he started school, we learned that 100% of the recent graduates had high paying jobs already lined up before graduation. Of course by the time he graduated the economy, his industry had imploded and after a few months of trying to find a job, he had to return home with 5 times the average graduate’s student loan debt.
Our stipulation was that we would offer him room and board but he was responsible for making the loan payments. He was compelled to be humble, immensely discouraged at times and often miserable for the next 2 years. He would pay about 80% of his take home pay while waiting tables at a restaurant. He shared with us that one day while going from table to table he had a surreal epiphany: ‘This is it. This is going to be my life!’ It was agonizing to witness for his parents.
2 years later, he would tell me that working at the restaurant was the best thing that ever happened to him. How did he get there? Sometime after he had that epiphany, he learned of a freelance opportunity for an online video game company. For the next year, he would not only build a portfolio of artwork but also self-teach himself the steps of converting his artwork to be used in the video game. Now he is one of the highest grossing artists for the company, has paid off all of his loans and has moved to another state with no state income tax.
So what were our lessons?
Tough love is hard for the recipient as well as the giver: As hard as I tried, I could not convince him of the downside of taking on that much debt by going to an expensive school or going another year instead of trying to finish in 4 or 4 ½ years. Some things cannot be taught without having to live through the experiences. His money lesson was very costly but now my son has vowed never to go into debt, which is music to my ear. As parents, we agonized and were tempted to consider paying part of his loans to lift his burdens. In the end, we are glad we did not, which might have jeopardized our plans and may have hampered his will to succeed. That is why it is called tough love, to help but allow your child through the struggles to fulfill a personal responsibility. I am glad to see that more students and their families are cognizant of high levels of debt that are common to graduates and the need to avoid them as much as possible. Only a few years ago the mentality was very different.
We should discuss, educate our children about money early on and not treat the topic as taboo: Amid all the concerns we have for the next generation, ways to raise and prepare them for the world, we are so lacking in preparing them with money skills. Personal Finance or some form of that should be taught in both schools and families. There are games for the young children, publications and other tools for the teens so that the concept of money would not be so foreign as they get older. I do not know of any adults who can live well without understanding money management. Inevitably everyone will be forced to learn them at some point in their lives with sometimes very costly consequences.
Luck will find those who persevere and who are ready: With a smile, I reflect on a headline that read ‘An overnight success 15 years in the making.’ How is it that putting in 15 years could be considered an over night success? Yet we hear of such stories from people of all walks of life from musicians, scientists, entrepreneurs, business owners and etc. Some may not be as long as 15 years but the point is that those who persevere will eventually find success in whatever form that may be to each person. My son’s luck came in the form of the increase in the membership of the online gamers. Within 2 short years the membership increased from 500,000 to 7 million. So he was incredibly lucky but had he not put in blood and sweat to learn the processes, to work to create his art, he would not have been able to take the ride when that train came.
While recent graduates and their parents are burdened with high level of student loan debt, the parents’ highest priority still should be saving for retirement. There is help available to them and ways to lighten their load. But the intangible lessons cannot be emphasized enough. In the end nothing can replace early money discussions in the families, personal responsibility and perseverance.