Since student loans are the new mortgage, what can you do to stay ahead of the pack?
There are a few things you can do. You can use student loans to get the most marketable education possible. You can also use your salary to gain access to top-tier investment opportunities. Most importantly, you should seek professional help to build and preserve wealth.
Get The Most Marketable Education Possible
Student loan horror stories in the media typically show people doing the wrong things with student loans. It’s not just that they major low-paying areas, it’s that they go to schools without a major reputation.
In my study of the student loan conversation over the years, I’ve noticed an interesting pattern. People who are connected to a local community send their children to nearby state schools. They use their connections to get jobs and internships for the students, so that they can succeed. On the other hand, people without connections send their children to schools that can connect them. Once I decided to get a graduate degree out of state, the University of Texas-Austin was an obvious choice. It is ranked consistently in the top 2 for my field – a Ph.D in Accounting from there was ranked higher than Harvard and Yale even. I had already paid a $250 deposit for Ohio State University which was a great school too – but I had to get the most for my money.
People have a tendency to be cheap with other peoples money, and lavish with their own money. It should be the other way around. If you’ll be making principal and interest payments on something, it should be the best you can get. An expensive education without market recognition is like paying $100,000 for a Hyundai Equus. It’s a great car, but nobody’s ever heard of it so no VIP treatment for you.
Use Your Income To Gain Access To Investment Opportunities
This one is for people whose careers will inevitably lead them to six-figure incomes, especially the medical professionals whose household incomes will go beyond $300K. There are many investment opportunities out there that are reserved for high-income people. The reason? It is assumed that you are more informed and have more money to lose. However, with that assumption you can get access to huge opportunities like buying Facebook before the IPO. For the most part, the people with the most student loan debt will be the highest earning, but if they become too conservative they can miss out.
Whatever you do, don’t go it alone
Wherever big money is moving, there is an opportunity to strategically build wealth. It’s easy to be fooled if the big number is negative (debt). But with professional help, you’ll know the difference between Facebook and MySpace. There are professionals who can help you get into the most reputable schools in your field. And as a CPA I help my clients make investment decisions all the time. The worst mistake you can make is expect to figure your finances out all by yourself. Don’t think of student loans like the flu, think of them like a common, curable cancer: medicines that work are by prescription only.