An educational system isn't worth a great deal if it teaches young people how to make a living but doesn't teach them how to make a life. - Anonymous
In the past, it was very simple. After you graduated from high school, you went to college, got a degree in a field that made lots of money, and then you got a high paying job after graduation. Sounds simple, doesn't it? Unfortunately, it's not. The simple educational formula that has been used in the past is no longer sufficient in a world impacted by globalization. There is no longer any guarantee that you will get a high paying job after graduation, and due to the high cost of tuition, most graduates will be in debt for decades after you graduate.
I recently ran across an article in U.S. News & World Report that I wanted to reference in this chapter. The March 12, 2007 issue of the magazine has a featured article titled "Is College Worth It?" As I read the article, it questioned the traditional educational model, and it questioned whether or not the high cost of tuition is worth it. I learned a number of things that were startling, to say the least. First, the average college student carries approximately $19,000 in student loans. For students who are attending Ivy League colleges, these loans could be well over $100,000. Add graduate school and these loans could be well over $250,000.
The article also stated that colleges today have a large number of drop outs. As a country, only 63% of the freshmen in college today will graduate in the next six years. For minorities such as Blacks and Hispanics, the numbers are even lower. Less than 50 percent of freshmen in this group are expected to graduate from college in the next six years. While dropping out of high school is bad enough, dropping out of college can be worse, since you may owe thousands of dollars in student loans. While those who graduate may get high paying jobs, those who drop out will be worse off then they were before they enrolled. While being broke is tough, being in debt is even worse. When you take into consideration the fact that colleges charge compound interest on their loans, it could be thirty years before you manage to pay back what you owe. I'm well aware of the reality of this article. I know three people right now who are in debt due to student loans. One of them owes $40,000, and the other two owe $90,000 and $140,000 respectively. Two of these people cannot get a job and have this tremendous debt to repay.
The guy I know who owes $90,000 quit medical school two and one half years into his program and has bounced from job to job ever since never making more than $35,000 per year. He is trapped in a vicious cycle that he may never get out of. To make matters worse, the proficiency levels of college students have come into question. I was recently watching a video where a guy went around randomly asking college students if they knew the year in which the September 11 terrorist attacks occurred, and only one student said 2001 out of ten students, which of course is the correct answer. Every other student interviewed gave the wrong year!
How can such an educated group be ignorant as to the year that such a monumental event occurred? However, this is just the tip of the iceberg. In 2003, the federal government carried out a series of tests to determine the proficiency of college students. The results showed that only about 30 percent passed the basic tests with a high level of proficiency. Similar studies indicate that less than 50% of college students graduate with broad math or reading skills. Minority students were found to perform even worse on the tests. This is incredible. Not only are kids going in debt to become educated, they are not even learning anything in the process!
I want to make one thing clear at this point in the chapter. I am an enormous advocate of knowledge acquisition. I have earned my undergraduate degree as well as my law degree and I am a member of the California State Bar. I will always be someone who supports knowledge. A lack of knowledge will lead to your demise. My goal in writing this book is to share knowledge with you, knowledge that can help you save and build wealth. Once you complete this book, and you begin applying the things that you've learned, you will be educated. The establishment tries to teach us that education and a college degree are the exact same thing, and this couldn't be further from the truth. A college degree is nothing more than a piece of paper. It is a certificate that says you completed studies in a particular field, however as the statistics show our college graduates are ill equipped to handle the the rigors of the real world and in today's economy there is a lack of jobs for them upon graduation.
When I was making my decision to attend an undergraduate school, I was basically choosing between Princeton University, at the time the number one ranked university and the University of California at Los Angeles (UCLA). Princeton carried an enormous amount of prestige however the price tag was around $45,000 per year with tuition and room and board. UCLA on the other hand was ranked in the low 20's and I received a full academic scholarship. My parents also lived close by therefore I could live with them and save more money. I chose the UCLA route and ended up saving a tremendous amount of money in the process. When I was ready to graduate, I wasn't sure what I wanted to do, my advice all along was go to school and get a good job. My parents being high school teachers instilled the importance of education at an early age and I continued into law school. The mistake I made this time was incurring over $100,000 in student loans. When I graduated from law school the economy was in decline and the amount of jobs as a high paying lawyer were limited. As it turned out, this was not the type of work that interested me anyway. I quickly switched careers but the $100,000 debt still remained.
If you talk to some college students, many of them are quite arrogant. They look down on having an Associates Degree or not having a degree at all, and they believe you should either have a Bachelors, Masters, or Doctorate. However, these are the very same people who owe thousands of dollars in student loans and credit card debt. They believe they are superior to those who do not have an undergraduate or graduate degree because they have a higher degree. They automatically assume that they are smarter. But the joke is on them. Research clearly indicates that outsourcing is sending many jobs overseas, more jobs than the government would like you to believe. Paul Craig Roberts, an economist who served as the Assistant Secretary of the Treasury during Ronald Reagan's presidency, has disturbing things to say about the educational system in the U.S. At his website http://vdare.com, Roberts published a landmark article in October of 2006 entitled "The New Face of Class Warfare" http://vdare.com/roberts/061009_newface.htm. In the article, he exposes the attack on the American middle class, and he explains how many jobs, especially those which are related to engineering, are being sent offshore at alarming rates. The number of jobs being created in the U.S. is not keeping pace with the growth of the population. In other words, many students in college today will be working as bartenders and waitresses when they graduate.
Paul Craig Roberts pulls his statistics directly from the BLS, or Bureau of Labor Statistics. Between 2001and 2006, the U.S. lost over 600,000 jobs in the information sector. Computer Systems designs lost over 100,000 jobs during the same time period. However, this is nothing compared to the manufacturing industry, which lost over 2 million jobs over the last five years. Because manufacturing is closely related to engineering, it is not surprising to see that over 1 million engineering jobs were lost. When you look at these statistics, it is easy to see why the middle class is being decimated. If millions of jobs are being sent to India and China, Americans need to do more than just get a college education?
The United States is rapidly being turned into a service economy. While the United States has been the hub of innovation for over 100 years, China and India are quickly becoming the innovation hubs of the future. When you send your manufacturing/technology jobs to foreign countries, you can only expect that technological innovations will occur in "those" countries, not your own. Many corporations are either too shortsighted to see this or they simply don't care. Either way, you have to protect yourself.
To truly achieve your financial independence and become rich, you must utilize ways to reduce the overall debt you may incur should you decide to go to college. This is harder than it seems. When you contact colleges, the first thing they want to offer you is student loans. They could care less about your educational future. Similar to a corporation, profits always come first. Many colleges show this by charging students compound interest on their student loans. It isn't enough to charge them regular interest. It has to be compounded. My friends loan was originally $5,000. After compound interest was added, it became $8,000. This is the result of institutions that are only concerned with profits. As you may have probably guessed, the first step in getting a college degree without debt is to save. The earlier you start saving, the better off you will be. Many parents are very irresponsible. They have children, and then they don't bother to save any money for them. By the time the children graduate from high school, they have to take on student loans just to graduate from college. This places the children at an immediate disadvantage because they will be forced to take a job to pay off more money than they borrowed due to the interest. If you are thinking of having a child, you shouldn't have them until you can start saving for their education the day they are born. Each month, you should put money into a interest bearing account that can be accessed when the child becomes 18 years of age.
I didn't have someone telling me to save for college when I was younger. As a result, I racked up over $100,000 in student loan debt. Through hard work and diligent saving, I have been able to pay that debt down, however most people carry their student loan debt throughout their lives. I urge parents to help their children obtain a good education. Save as much money as possible from birth until the age of 18. Even if you can only save $100 per month, over a period of 18 years this will be $21,600, not including interest. However, there are many of you reading this that is already approaching your college years, and your parents didn't save up any money. Or perhaps your parents have lots of money, but they have no interest in paying for your college education.
There are a number of clever strategies you can use to get a college education in a situation like this. First, you can look at alternative programs like the Job Corps Program. Job Corps is an educational program offered by the U.S. Department of Labor. It is a work based training program where you can learn a specific trade that will allow you to find a stable job. In addition to this, you can also enroll in the Job Corps college program. The program is available to people who are between the ages of 16 and 24, and Job Corps centers are located in states all over the U.S. You can stay in the program for a maximum of three years.
When you enroll in Job Corps, you can either stay on the campus, or you can live off campus as a residential student. Now, here is a trick that can allow you to get a college degree without going into debt. You can enroll in Job Corps, finish your vocational program within the first six months, and then enter the college program. You will first be sent to a two year college, and if you can knock out your credits quickly and get your Associates Degree, you can transfer to a university and work on your Bachelors. Job Corps will take care of your tuition until your three year term ends. This one strategy can allow you to save thousands of dollars on the cost of your education. Many people don't know about the Job Corps program, but it is a little known secret that can allow you to become educated. In addition to your vocational certificate, you can also earn your high school diploma or GED, and if you're 16 years of age when you enter the program, you can get your high school diploma in as little as six months, much faster than students who attend traditional high school. You can learn more about the Job Corps program at:http://www.dol.gov/dol/topic/training/jobcorps.htm.
Here is the second strategy that you can use to get a college education without going into debt. If you're starting high school, and you know your parents don't have the money to pay for your college tuition, you can get a part time job, and begin saving money from the time you enter high school until the time you graduate. Most students stay in high school for about 4 years. If you start saving $150 per month from the time you enter the 9th grade until the time you graduate, you can save approximately $7,200.
Once you graduate, you may not be able to enter college immediately. This is okay. You will need to continue saving more money. You can either live with your parents, or you can get roommates and use the strategies I discussed in Chapter 3 to cut the costs of your living expenses. Choose the option that is the cheapest. You can either help out your parents by paying a portion of their rent/power, or you can share the expenses with your roommates. At this point you will need to get a full time job and work 40 hours per week. Your goal is to save between $500 and $1,000 per month or more.
You can do this by using all the strategies which I show in this book. Now, in my hypothetical example, you started high school at the age of 15, and you graduated at the age of 18. You got a part time job while you were in high school, and you saved $150 per month. Since you've done this up until your graduation, you now have $7,200. Now that you're working a full time job, you can save more. You goal is to save up $25,000 or more before enrolling in college. If you save $500 per month for three years after your high school graduation, you will have $18,000. If you save $1,000 per month for three years after your high school graduation, you will have $36,000. Now, let’s say you graduated from high school at the age of 18. You got a fulltime job instead of going to college immediately, and you used the many strategies in this book to save $1,000 per month. Once you've done this for three years, you will be 21 years of age, and you will have $36,000 in cash, much more money that 90% of people in the same age group. Now you can afford to attend a state university. Before you enroll in college, you will want to reduce your hours at your job to part time. There are two reasons why you want to do this.
First, you will need more time to study. Second, when the college reviews your income to determine if you can receive financial aid, you will be declined if you make too much. By reducing your hours to part-time, you will be eligible for financial aid, especially if your parents don't have a large income. Even though you now have $36,000 saved up, you want to spend as "little as possible" for your college education. Since the college will judge your financial need by "income," not "savings," you will still be eligible for financial aid even if you have over $36,000 saved up.
This is the power of saving money. The government doesn't look at what you "have." They look at what you "make." Truly wealthy people understand this concept. Even if you have $50,000 in savings, the government may still consider you "poor" if you only make $20,000 per year. Learn how to use this to your advantage. So after saving up the $36,000 in my hypothetical example, you will still want to use grants, scholarships, and financial aid to supplement your savings. With all four of these sources, there is absolutely no reason why you should graduate from college with any debt.
However, saving a large percentage of your income can allow you to take things to the next level. Let’s say you decide you would rather skip the state college and get a degree at an Ivy League institution. The typical New England Ivy League institution will start at about $40,000 per year. In my example, you have $36,000 saved up, barely enough to attend an Ivy League school for one year. What do you do? The answer is simple. You save even more. If you can successfully save $1,000 per month for another three years, you would have $72,000. At this time, you would only be 24 years of age. If this $72,000 is combined with scholarships, grants, and financial aid, it should be possible for you to at least earn your Bachelors degree at an Ivy League institution. Will this be difficult? Absolutely. Will it be impossible? Not by a long shot. While many people would be content just graduate from a state university, saving a large percentage of your income can allow you to do virtually anything. Now imagine if your parents set aside $100 per month for you since you were a baby, and you have $18,000 when you graduate. Then you manage to save $72,000 from the age of 18 to 24. Now you have a grand total of $90,000, enough to attend virtually any college without borrowing a penny in student loans. This is the power of saving money. When you save, you set the stage for becoming successful. You will never be given the advice I just gave you from most college advisors. Their only advice is to "get a student loan." They assume that when you graduate, you will automatically get a high paying job that will allow you to pay for your debts quickly. This is a complete fallacy. It takes the average college student at least 10 years to pay off their student loans.
If you don't get a high paying job, it will be even longer. Saving money is the true secret to obtaining an education without going into debt. By using the strategies in this book, getting a degree at a state college without going into debt will be a walk in the park. Getting a degree from an Ivy League school will be harder, but not impossible. Regardless, while other college students are struggling to pay off their debts after graduation, you can take every penny you earn from your new job, and put it right in the bank. You won't have to pay back anything to anyone.
There are a number of strategies you can use to become educated, and some of them don't even require you to attend the traditional college. Many large companies and institutions will offer crash courses that students can take to get a specific job. A friend of mine was telling me about a special medical class you could take for $500, and once you get your certificate, you could get a nice paying job at the hospital. There are many such programs available, and the Internet is a great resource to find them. To avoid scams, make sure the program you choose is legitimate. There are a large number of vocational schools that are much cheaper than their university counterparts. You can become highly educated and spend less at the same time. No matter what you do, you must think outside the box. Believe it or not, there are many jobs that don't require you to even have a college degree. A friend who is self taught at computer animation has found several jobs without a college degree. The employer is simply interested in viewing his portfolio. ,
One thing that you must realize is that having too high of a degree in the wrong field can actually diminish your chances of getting a job. Due to globalization, companies are seeking to cut their costs in any way possible. They may be less likely to hire someone who has a Masters degree compared to someone who has an Associate, simply because they can pay less for the person with the Associates Degree. It is also important to realize what jobs are at risk for outsourcing. It doesn't make much sense to get a job in a career field that can easily be outsourced to India or China. Below is a list of jobs that can be easily outsourced. You may want to think twice before going to college to major in them:
Top 10 Jobs that can easily be outsourced to Foreign Countries
1. Anything related to Information Technology
2. Web Development Applications
3. Computer Animation
4. Programming
5. Accounting and Finance
6. Call Center Customer Service Jobs
7. Application Maintenance
8. Engineering
9. Manufacturing
10. Software development
These are just a few of the many jobs that can be sent overseas. If you are in college paying for an education in either of these areas, you may be wasting both your time and money. If you've taken out student loans to major in either of these areas, you may be in deep trouble. If you're interested in going into a specific career field, it would be in your best interest to check and see how easily it can be outsourced to foreign countries. Outsourcing is something that you had better take seriously. I talk to so many people who feel that outsourcing is not a big deal. They won't be saying this when they are affected directly. To add fuel to the fire, Paul Craig Roberts mentioned in his article that the United States government is now allowing immigrants to come into the country to work on H-1B visas. Again, while most people are familiar with outsourcing, this is something that hasn't been heavily reported in the mainstream media. Not only are jobs being sent overseas, immigrants are now being flown into the country to essentially work as indentured servants.
Corporations can allow them to work for a few months, and then they can return home. The corporations can save a killing, and bringing these workers into the country may even be cheaper than outsourcing. No matter how you look at it, Americans lose. Foreigners get all the jobs, and they take home the money. Ultimately, the corporations are the winners. Because of outsourcing and the introduction of the service economy, there are certain jobs that will be high in demand over the next 12 years. Below are the career fields that have the largest growth outlook in the United States. Each career field will be listed with the median yearly pay:
1. Medical assistants - $24,000
2. Network systems and data communications analysts - $60,000
3. Environmental engineers - $66,000
4. Physician assistants - $68,000
5. Social and human service assistants - $24,000
6. Home health aides - $18,000
7. Postsecondary teachers - $49,000
8. Medical records and health information technicians - $25,000
9. Fitness trainers and aerobics instructors - $25,000
10. Physical therapist assistants - $37,000
Many of the jobs listed above don't require you to have anything more than a Bachelors degree. Some even require less. This means that just by saving money and attending a state college, you can easily find a job in a field that is growing rapidly, and you will be shielded from outsourcing and globalization. However, no matter how much you make at any of these jobs, it is always important to make sure you follow the rules listed in this book to gain wealth. The law for education can be listed in this one simple rule:
Rule Number Nine:
Never apply for student loans in order to pay for the cost of education.
Either start saving money as soon as you have children, or, if you're already a teenager or young adult, spend a few years working at a full time job while keeping your living expenses low and saving 30% of your income or more.
By combining your savings with financial aid, grants, or scholarships, you should be able to supplement the cost of education without going into debt.
Make good use of government programs such as Job Corps.
By following this simple rule, you will be light years ahead of people that use the "traditional" method of earning their degree. I find it disgusting that the educational institutions in this country favor profits over substance. Do not fall victim to their scams. Never allow a financial aid officer to talk you into getting student loans. Trust me, you will regret it. While it may be tough to save for your education, it will be worth it in the end. Society has brainwashed many people into believing that they must go into debt in order to attend college.
They also try to trick us into thinking that intelligence equals wealth. This is completely wrong. A recent survey conducted by the United States Bureau of Labor statistics showed that highly intelligent people did not have a greater chance of obtaining wealth. Those with an average to below average IQ are just as likely to have the same amount of wealth as someone who has a higher IQ. While intelligent people are much more likely to earn more, in the end, they weren't found to build significant wealth in comparison to those who are less intelligent.
This further reinforces what I stated in previous chapters. Though college graduates are much more likely to earn in excess of $50,000 each year, having a high income does not equal true wealth. The same is true for intelligence. As I've stated before, many college students and graduates believe that once they graduate a good job will be waiting for them. They think their high IQ and earnings will allow them to become extremely wealthy. However, building wealth requires more than just the information you will learn in college. It requires a great deal of discipline and determination. This is the thing that so many smart people don't understand. I once knew a guy who had an IQ of 167. He was certain that his intelligence would lead him to wealth.
The truth of the matter is that he owed large amounts of money in credit card debt. His credit was so bad that no one would lend money to him. Despite the fact that he got married and had a child, he and his wife divorced, and now he has to pay child support every month. What went wrong? If you want to succeed financially you must get past the myth that intelligence equals wealth, even if you are incredibly smart. If you think that your IQ will bring you riches, you are sadly mistaken.