Let's Talk $$$ - Education & Student Debt

I recently had a long conversation with friends on the large amount of debt and financial burden that our young people and new upcoming professionals have. I, myself also have those challenges as a child of a refugee family and as a young/new-ish professional (3 years out of college now). I took out a ton of student debt, graduated, and then got a job out of college, but quickly found out that I could barely afford rent, food, and my basic needs. Sometimes, I felt that I’ve been lied to about this “American Dream” and came under a lot of financial stress. Looking at this aspect, I understand that this is a complex challenge and has multiple perspectives. I am not a financial advisor, this is simply my reflection.

In this conversation, I reflected on my frustration on how the system (education and financial) had failed so many families and myself. Social structures and American cultural norms make it a taboo to talk about ‘money’ and don’t anybody dare to ever bring that up in the classroom. “Don’t share your salary, don’t talk about money…” The list goes on. In college, I was often told to pursue “my passion” and not worry about the money because “money can’t buy happiness” (More thoughts on that later). So I did what I was told and swapped out of my Biochemistry major to study Communications. I don’t regret that decision, but the interesting thing that I had to find out on my own later on is that, NOT EVERY DEGREE IS CREATED EQUAL.

Not every degree is created equal and not every job (career) is created equal; that is the reality of the society we live in. We use fancy terms like “supply & demand” or “job growth/outlook analysis” to cover that up. Usually, liberal arts/education major makes an average anywhere between $30k-$45k starting salary depending on which city/state that they live in and yes, data may have changed over the last few years and with inflation. To a person from a low-income background, that’s a lot of money! Sadly, in some states, that’s below the poverty level (California and New York for example). Usually, business majors and STEM majors (depending on state) will get a $55k+ salary and will exponentially grow in the following years.

Yes, a person’s salary is dependent on the sector of jobs they go into (private, corporate, non-profit, government, education, etc…). But guess what, our schools still don’t talk about the differences and the financial outcomes depending on which sector people go into! We as society tend to talk about these issues in private and hide them in public. Rarely would any class, across all disciplines, talk about money and salary and for sure, the classroom will never talk about how to invest (401ks, Roth IRAs, retirement, etc…) or other financial skills that we need (budgeting, taxes, credit, etc...). I won’t touch base with how schools don’t teach us how to invest in real estate or businesses because school already doesn’t teach us a lot of the essentials. The truth is, if you don’t study the right thing, your purchasing power early on is low and you might have to make a few career changes or make aggressive career moves later in life to catch up in your finances. Or if you’re lucky, you might find a partner to combine your purchasing power together.

Now let’s talk about debt. We see that student debt is one of the HOT topics all over the news and it’s true. Colleges and universities are having challenges to just recruit new students because these younger students are seeing a whole generation of people being financially crippled by student debt due to the rising cost of education and other factors. We saw the same phenomenon with credit cards in the 90’s and now a lot of people do their best avoid credit cards or spend more wisely. What amazes me is that taking out student loans is as easy as clicking a button; there are no financial experts to walk you through the process, the interest rates, the payments, etc… Taking out bank loan to buy a car or a mortgage to buy a house requires so much more consultation! I mean, even creating a bank account and getting a credit card has more consultation!

I use this comparison because there are thousands of people with the same amount of student debt as if it were a car loan and even a mortgage. As a young low-income individual, why would you read the fine print and even if you did read the fine print, there are languages and jargon on there that you don’t understand. Let’s be real, most of the folks that have student debt are low-income, first-generation students, and people of color and a lack of consultation doesn’t let people know what they are signing up for. Most of the people, if not all, who are getting student loans can’t afford a lawyer or an account to walk them through all of the jargon. Did you know that a person can file bankruptcy to get rid of all their debt (mortgage, business loans, etc…) at the cost of destroying their credit score (there are a lot legalities on filing bankruptcy), however CANNOT file bankruptcy on their Federal Student Loans no matter what? I didn’t even know about this until I already $56000 in student debt. That means that people will have to live their student debt for the rest of their lives if they can’t pay it off. The worst of it is that student loan consultation typically happens until the end of the semester that you’re supposed to graduate; but isn’t the consultation supposed to happen at the beginning before you begin rather than right before you leave? I know! This doesn't make sense!

In my reflection, I don’t have a solution for this issue, but even if I did, financial institutions and policies/laws makes it extremely challenging to resolve. What I can provide is a preventative measure to ensure that the next generation doesn’t commit the same mistake. The prevention is simple: mandate a curriculum that teaches financial literacy to everyone and to give the tools to become financially independent. Be completely transparent about the job outlooks and the salary ranges at the beginning of each discipline so that people know what they are getting themselves into. In addition, have a financial expert that is dedicated to educating and consulting people before they take out their student loans to make that investment because they not may get a valuable or even equal financial return.

On the flip side, I acknowledge the paradox of what education can do for people. I love that education does provide a number of opportunities for people and the provides the exposure to a better life. Like myself, and so many immigrant families, education is the doorway for so many people. And at the same time there is the aspect of crippling debt, low job prospects, and a lack of financial literacy. I believe in pursuing one’s passion and at the same time, I also believe in being paid well, being able to put food on the table, and having roof over one’s head. I also believe that IT IS A LIE that “money can’t buy happiness”.

Money by itself cannot create happiness. However, Money used as a Resource to Create and Amplify a higher standard of living (health, food, housing, etc…), to create more meaningful connections/relationships, to have more fulfilling experiences, and to open your time up so that you have more freedom does contribute to your happiness. I recognize that not everybody is going to agree with me and that’s okay.

Before this conversation with my friends, I truly felt apathetic towards everything because I gave up hope with the education and financial system. Through my reflections with my friends, I found another fire within myself and realized that maybe it’s time to build this new dream. I have always been passionate about making sure that people are financially free and financially literate. As I walk into this new year, I encourage people to have money conversations frequent and often. I encourage people to talk about whether higher education is the right next step. I encourage people to have conversations on how to find and do work that is passionate and at the same time, fulfills their financial needs.

As 2023 just opened, I truly hope that you will take the time to become financially literate, build your financial portfolio, and are becoming financially free.

It's time to mainstream conversations about money.

To your empowerment,

Tonny Yang