Advice is a form of nostalgia: on money and college
March 16, 2011, 2:18 pm
Filed under: overtly political, when I grow up

Reading yet another study about student loan defaults in America. A comparator study in a place where higher education is less expensive/less of a puppy mill would be interesting.

The afternoon after I finished my final university exam, probably ever, I went out and bought a book about money. Not one of those motivational be-a-millionaire things, an entry level book about things like taxes and RRSPs. Hello, geek. I figured that for the first time in my life I would have a salary that didn’t entirely go towards living expenses and tuition. As I read, the one thing I was sure of was I wish I had bought the book when I was 16 instead of 24.

Mostly, for the record, so I would have understood the nuances of tax credits, the stupidity of having my parents claim my tax credits at the advice of their accountants, and what different kinds of investments were. I would have been better at the kind of receipts I kept and didn’t keep – also crap advice from their accountant. I also probably would have applied for more government student loans on the interest free basis they were provided and would have invested the money to pay them off in bonds or GICs. I would have considered working harder during gap periods to make cash to max out my non-taxable income and inflate my GST rebate a bit. Basically, I would have taken a more active role in managing my cash.

It’s actually funny that I didn’t given that the rest of my financial life was pretty carefully run. I was good at budgeting, no stranger to coupons and sales. I came up with healthy recipes that would come in at less than $1 per meal, used every possible resource at my university to both entertain myself and get services at discounts or for free, from healthcare to pizza at public lectures. I mastered public transit and eventually crunched the numbers to find the perfect location where I wouldn’t need to take cabs home at night or have a bus pass but didn’t pay significantly more in rent. I found part time jobs that worked well with my schedule.

I thought knowing about the other stuff, like taxes and investments, was for old people. Or people with spare income. Or people who wanted to be accountants. Wrong, wrong wrong.

But, back to student loans.

Student loans, no matter how you cut it, are one of the worst possible deals out there and they are very poorly explained to students. I actually think the government loans are worse than the private ones, having dabbled with both systems. Obviously, I don’t have student loans right now or I wouldn’t be living (um, unemployed) with my boyfriend in another country. In some respects, I got crazy lucky: the 2008 crash happened while I was employed in a stable relatively well paying contract in a stable part of the country and the net result for me was hundreds of dollars saved in interest when the prime rate hit record lows. Knowing that prime would eventually bob back up provided incentive to find cash immediately to get rid of the debt before it went back up to the customary 5-6% I was used to pre recession. I consider myself relatively clever and inquisitive and yet found myself nastily surprised by the student loan system more than once.

Things I would tell a first year university student, and maybe myself back then, today.

1) Pick something you will do well in, which should also probably be something you like. There are secret scholarships that the Deans List students get automatically at a lot of schools which will basically cover your tuition. At least, there was at my medical-doctoral university. If you are top of your class and not getting funding, check out your options for switching to another school. In my first year of university I finished #1 in many of my classes and won multiple awards but all they gave me was about $800 per year.

1(b) If academics aren’t your strong point make sure your first degree is something you can find employment in rather than banking on pulling your marks up. Or get creative with your minor so that you can always go back and get a major with another year of classes. The minor I was guided towards by my first university was actually a terrible choice. And never feel obligated to attend university – many college programs translate into university degrees, and trade school is actually a really good bet.

2) It’s ok to be poor, and to have a family who can’t or won’t financially support you. Don’t be embarrassed at having to take the bus, wearing the same clothes, or because you live in a crappy place. It’s okay to have a social life that revolves around free concerts in parks and dollar drinks night. Find friends like you, there are probably lots to choose from. Being relatively cash strapped in college can be a sort of fun DIY thing that will see you have potlucks and try out creative lifestyle choices. It is a lot more fun to live a bohemian lifestyle in a university setting with a lot of emergency nets and fellow young idealists than it is to do it later. Avoid a circle friends who believe that the midterm was so hard they need to spend money on stuff to release stress, whether it’s nice dinners or expensive haircuts, or even just really expensive coffee. If you have these friends, don’t let their normal become your normal.

3) Get a part time job. No matter what. Don’t worry about it being resume building as much as allowing it to be part of your social life. My favorite jobs were those where I worked with people my age. Yeah, the work sucked, but I was actually excited to go to work to hang out with my coworkers and do our crappy, often funny job. We liked each other so much that we’d hang out together in our off hours. At my best job, I met all of the people I consider to be my ‘friends from undergrad’, they have outlasted the people I met through classes and groups. Another thing you’ll notice about a part time job is that you may spend less money on entertainment because you’re not sitting at home bored.

4) Avoid fixed expenses. Cable. Internet, if you can. A cell phone contract. Not only does this cut down on cash, and time wasting distractions that you won’t remember four years after you graduate, it also helps keep you mobile. When you move, you have to disconnect all this stuff or rely on someone else to. You probably move at least every eight months right now anyways.

4(b) Avoid buying stuff. And, the related friend, moving stuff. The classic example is a printer, which can generally be outsourced to a computer lab on campus, and which in the long run will still cost more than the ten cents a page you will pay to print on campus plus will tend to run out of ink at the most inopportune time and have a cartridge that can only be ordered online. Not that I would know anything about that.

5) Don’t pay rent when you’re not living in a place. If it’s that good, you should be able to sublet it. If you’re a good tennant, you may be able to work something out with your landlord. (Special bonus tip: try to find summer employment somewhere that rent is really cheap or free)

6) If your prospective roommate is a supporter of #4 and #5, review #3 and think about living with someone who is in a similar financial position to yourself and wants to take the same approach you’re taking. It’s going to be easier to live with someone who also wants to decorate your apartment with garage sale lamps than it will be to live with someone who thinks both of you should just kick in a few hundred bucks and hit ikea.

7) Always keep options open about what you could do with your degree and network throughout your undergrad career to find out how many openings there are, who/what controls hiring, and what they look for. Get second opinions. A few minor volunteer gigs at once will probably serve you better in the long run than one labour-intensive commitment. They will also be easier to slot in around your university commitments (priority #1) and a part time job. Try to find well run organizations headed by people you can learn from.

I actually regret not being more nakedly ambitious (but charming!) in both of my degrees, both for the practice in being nakedly ambitious and in the results it seemed to get for other students. My one spurt of apparent naked ambition, forging a friendship with an influential professor, was actually an accident because I was genuinely interested in their work and started to have coffee with them. Said professor tremendously influenced my career, offered me a key summer job, and I’m pretty sure wrote a great reference letter that helped land me my first job. They can also be credited with opening my mind to the idea of spending a semester abroad, which in turn led me to view solo international travel as easy and feasible, and in the end has resulted in meeting the current love of my life and motivating me to live abroad for awhile. No kidding.

Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth.
-Baz Luhrmann


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