When I was in secondary school, I knew that there was no family funding for my university studies. This helped me to become very focused. I maintained a couple of part-time jobs and began taking senior year credits in my junior years so that by the time I reached the last year of high school I only needed one semester to complete rather than a year. This left me 9 months of full time work waiting tables to save money before starting university. I also took out some government loans which were interest free during my studies and then reverted to market rates on graduation. Market rates were 11% when I graduated law school in 1991. Interest costs serve as a healthy prod where it keeps one motivated to pay down rather than continue to lever up. It helped me to focus on continuing to work while I studied and to keep the debt as low as possible and then repaid as quickly as possible after graduation. In retrospect it was a lot of work. There were no cars or cell phones or trips abroad. But investment for the future, requires present consumption denied, and there can be no doubt that investment in a meaningful education provides life long dividends.
Later on when my husband and I had two kids under 2 and were both working full time, I resumed my studies for three years to complete the CFA on nights and weekends. My husband began his post-graduate degree at the same time. It was an incredibly busy time. At that point, I realized that my previous student life while busy, had been a cake walk in terms of a luxury of time and focus compared with the concurrent demands of parenting, working, maintaining a home, volunteer hours and a pretty intense program of study.
The point is not what I did; the point is that we humans are so much more capable than we often imagine. Context is everything. If we train by running on flat ground, we find subsequent hills difficult. If we train on hills, we are capable of duration on the most challenging terrain.
Easy credit and low rates have enabled less output and efficiency. Many people and governments have come to think in an unduly entitled manner. They have been able to use credit rather than curtail spending or sacrifice present consumption for future strength. They have trained on lowlands and their sense of capability has flat-lined as well. At the same time, cheap credit has enabled for-profit schools to become bloated and inefficient with resources. Their costs have escalated and fees soared. Education costs and student debt levels have now reached crippling levels and new leaner, more resourceful thinking is required across the board. Yes we can.
Denver has come up with a new approach that allows high school students to start college early with no cost other than the investment of time, initiative and effort.
When it comes to student debt in the United States, the numbers are truly staggering – in 2012, 71 percent of new bachelor’s degree graduates had debt, averaging over $29,000. Over the last ten years, student debt has quadrupled – topping $1 trillion.
Congress crafted legislation last month that would have allowed for refinancing of student loans at a lower rate, but it went nowhere – and President Obama’s recent executive action doesn’t full solve the problem.
Here is a direct video link.
Here we are July 2014 and as shown below, the Canadian TSX has manged to get “Back to the past” now within a stone’s throw of the level it last reached 6 years ago at the commodities cycle peak in June 2008. Of course that was just before the world realized that too much debt and financial leverage were toxic for families, banks, consumption, stability and economies.
