Blog | Personal Finance
5 Things To Do Instead of College
Student debt is a financial plague. If you’re asking what to do instead of college, here are five alternatives
Rich Dad Personal Finance Team
October 24, 2023
Summary
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You don’t have to acquire college debt to be successful
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Needing a college degree to obtain wealth is an antiquated way of thinking
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There are ways to secure a successful future without having to go into college debt
Student loan debt; the modern-day rite of passage.
When Kiyosaki was a kid, his poor dad (his natural father) encouraged him to go to college. He wanted Robert to get a good education so that he could get a good job and enjoy a good salary with a good pension. He and Robert had different definitions of the word “good.”
Back then, college wasn’t nearly as expensive as it is now, but the line of reasoning was the same. The cost of college would be worth the return you got in better work and higher pay.
It’s common advice, trotted out by parents all over the world, but turns out even they don’t really believe in it.
Most Americans regret their college debt
Back in 2013,the U.S. News & World Report reported, “In its ninth annual report on student loan debt, TICAS found nearly 7 in 10 graduating seniors in 2013—69 percent—left school with an average of $28,400 in student loan debt, an increase of 2 percent from 2012.”
These were astonishing numbers. All said and done, in 2012, the Wall Street Journal wrote that student loan debt eclipsed $1 trillion for the first time.
More recently, things are only worse. As USA Today reports, “It was big news when outstanding student loan debt surpassed credit card debt and then later exceeded $1 trillion for the first time. That shocking statistic keeps climbing, with no sign of slowing down: Americans now have more than $1.4 trillion in unpaid education debt, according to the Federal Reserve.”
And the average student debt burden today? $37,718.
It’s no wonder then that a According to a new survey by Citizens Bank, almost 75% of Americans "wish they had done more to minimize the burden of their student loans”.
The survey also showed the top advice they would give themselves if they could go back in time and have a conversation:
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Prioritize paying off student loans as soon as possible (43%)
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Spend time to fully understand student loan options (41%)
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Have more conversations on educational financing with experts (33%)
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Attend a less expensive college (29%)
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Refinance student loans to get a lower interest rate (26%)
College debt doesn’t even pay for college
Perhaps you’re slightly shocked by the growth of student debt, but maybe you’re also thinking at least it’s going toward a college education. That’s a good thing, right?
Wrong.
Nearly 50 percent of college kids take out student loan money in order to spend it on things like:
Aside from the fact that many graduates don’t think their degree was worth the debt, the reality is that a lot of student loan money doesn’t even go towards an education!
According to "USA Today", "About half of students blow some of their school loan money on non-educational expenses, including 3% who spent it on alcohol and drugs, according to a new Student Loan Hero survey."
It’s this mentality that leads to statements like these by debt-ridden graduates:
“I once believed that part of the American Dream was to earn a college education and this would ensure a great career and financial freedom. Unfortunately I am losing hope. I'm a mother of three, and my husband and I have been turned down from purchasing a home due to our income-to-debt ratio.”
“My debt is a life-swallowing, all-consuming, hole in my life. No college degree is worth that.”
“My life revolves around work. I'm barely able to afford rent, I'm cutting back on bills and I'm barely able to feed myself. Why? Because almost half my monthly income goes to Sallie Mae.”
The combination of easy money, lofty promises, and low financial intelligence have propelled the student loan industry to over a trillion dollars in market share. That’s a lot of money, and a lot of people with regrets.
The worst part is that many people try to solve the problem of too much college debt with...wait for it...more college debt! For example, consider an MBA, which can range from $25,000 to over $100,000 for two years of tuition, not to mention lost income from taking time off work. The consensus is the cost is worth it because you’ll make it up in higher salary over time. Same reasoning and same bull. Read more about why MBAs aren’t worth it in the post, “Is an MBA Really Worth It?”
With so many people regretting their college debt—and how they spent it—you might do well to learn from their mistakes. If you’re thinking about college (or going back to college to finish your degree or get an advanced degree), consider doing one or all of these five things instead.
Work to learn
Robert Kiyosaki didn’t go to a traditional college. Instead, he went to the Merchant Marine Academy, a military college focused on training young men and women to protect our vital marine commerce lines. At the time, graduates of the Merchant Marine Academy easily had some of the highest paying jobs waiting for them...because they had very specialized and vital skills.
When he graduated from college, Robert had the opportunity to work in the shipping industry and make good money--the equivalent of six figures today. But after continued mentoring from rich dad (his best friend’s father), he knew that he didn’t want to be an employee. Robert wanted to be an entrepreneur.
So instead of taking a sure thing, he did the risky thing — Robert took a job as a salesman at Xerox making next-to-nothing in a field he was not experienced in. Why? He knew he needed sales skills in order to be successful in business. At Xerox, Robert could learn those valuable skills while getting paid.
At first, he was the worst salesman on staff, but as he learned on the job and applied himself, he became the top salesman. Those sales skills have paid off more than anything he could have ever learned in college.
Explore non-traditional education
There are important skills you can learn outside of the traditional, four-year institution that will help you, depending on what you want to do with your life.
Many community colleges offer courses on investing hosted by professionals rather than professors. Also, you can learn important new-world skills like computer programming, web design, and more at a fraction of the cost. Rather than spend four years wondering what you want to do, racking up debt and taking classes you’ll never use, figure out what you want to do and take specific classes that will benefit you in the future at a fraction of the cost.
Additionally, build your financial education by attending seminars, reading books, taking classes, and hiring a coach. All of these services are widely available, including through the Rich Dad Workshops.
Begin investing
If you have to spend $45,000 to get a degree just to work at Starbucks, you might as well skip the debt, get a job at Starbucks, save some money, invest in your financial education, and begin investing.
Find an asset class that you’re interested in, learn all that you can, and use the money you would have spent on college to start building your financial future now rather than later—even if you have to take out a loan to do it.
“But wait,” you might ask, “Didn’t you just tell us not to go into debt?” No, the idea is not to go into college debt. This is why it’s vital to know the difference between good debt and bad debt. Good debt (investing) puts money in your pocket. Bad debt (college debt) takes money out of your pocket.
Start a business
For most people, the whole point of college is to get a good job. Chances are that if you’re reading this, you think differently than most people. Some of the most successful business owners and entrepreneurs never went to college or dropped out. They understood that they could spend all their time, youth, energy, and talent putting money in other people’s pockets and building other people’s dreams, or they could use those resources for their own pockets and dreams. If you have a good business idea, run with it now.
Serve your community
Finally, spread some goodwill with some of the free time you’ll have from not writing term papers on ancient history at three in the morning.
A lot of people want to serve their community but never seem to have time. “I’ll do it after college,” they say. Then it’s, “I’ll do it after this internship.” Then, “I’ll do it after the kids are older.” It goes on and on.
Helping others is not only good for your soul but also good for your financial future. As the old proverb goes, if you plant good things, good things will be harvested.
Serving your community allows you to think outside your world, make connections with people you’d never meet otherwise, identify needs and opportunities, figure out ways to meet those needs, and opens many doors that would otherwise be closed—all while doing something worthwhile and good.
So the next time you think you need a college degree to achieve your dreams, think again. Instead, invest in your financial education to secure your future and your riches!
Original publish date:
April 03, 2012