‘Money Magic’ author says you shouldn’t borrow for college
OWith many elite universities offering super-cheap online courses, students can now pursue unconventional and affordable routes to certification in in-demand skills. In this Motley Fool live clip recorded on January 11, Laurence Kotlikoff, professor of economics and author of the new book The Magic of Money: An Economist’s Secrets to More Money, Less Risk, and a Better Life, offers a new perspective on paying for a college education.
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Laurence Kotlikoff: I have a chapter called “Don’t Borrow for College”. If you’re considering borrowing for college, you have to start with the proposition, the fact that 40% of kids who start college never graduate. Here you are considering borrowing to invest in something that [inaudible 02:46:49] in advance has a 40% chance of not refunding anything. And we know we have so many kids over their heads and parents borrowing. The government lets parents borrow at a higher rate. So maybe the parents are going to dump that loan and that loan repayment on the children’s heads of bond or leave them less money as an inheritance when they die. It can come out of the child’s skin.
Even at a young age, at 18, parents need to sit down and talk to the child about it, does that make sense? That you wanted to go to that expensive place rather than go to community college maybe for a few years and then transfer to a more elite school. We can help you for two years or help you, but not four years. Or you go to that community college, but take online classes that are very cheap at MIT, which you can do. I’m talking about it, like I’m giving the example, if you’ve taken 20 online quantum computing courses and got certificates and grades, those courses are from all the top schools, Harvard, MIT, whatever, Stanford , Chicago, do this from Podunk U. Then you take your 20 certificates and you follow the grades, go to IBM when you graduate and say, I graduated from this school you haven’t heard of, but here my 20 certificates and you are looking for quantum computer scientists, they will hire you in an instant. They’re not going to hire the guy or the girl from Williams College who majored in English to do quantum computing.
I think you need to think about what you want to do. As soon as you can understand that, at least to start a career and then make the investments that are specific to that. He might not go to college at all, he might go into plumbing. The first chapter is called “My daughter the plumber”. Jewish mothers said my son the doctor, since the Middle Ages, Jewish mothers really wanted their sons to be educated, but also to be doctors to help people. I come from this environment. I always heard my son the doctor. So I made “My daughter the plumber” the title of the first chapter.
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