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"It's Too Late. You Messed Up." The Most Important Investment Decision Your Kids Will Ever Make


What if you had to make the biggest investment decision of your life before ever having any investment experience?  Guess what – your kids do.  Watching your kids go through the college planning process is as stressful as it gets.  Will they get into their dream school?  Will they put themselves in an environment that doesn’t distract them too much?  Will I ever see them again??  Unfortunately, the question that not enough parents are taking seriously is, “will they walk away from college in a position to support themselves, and pay off their student loans in a reasonable amount of time?”

Did you know that the average college graduate needs 6.2 years to finish their “4 year” undergrad degree?  By the way, I’m only talking about the 50% of kids who actually finish their degree.  The best way to add to the cost of school is to stack a few more years on top.  I probably don’t have to tell you that student loans are suffocating millennials in our country.  Kids are coming out of school with massive piles of debt and they don’t have the education needed to obtain jobs that can pay for it.  Why is this happening?

The biggest reason is that kids go into college without a clear direction.  They don’t have an idea of what they want to do after college, which makes it tough to pick the right major, which makes it tough to pick the right school.  In the process of finding their way, students drop classes, change their majors, and even transfer schools.  The average college graduate walks away with $34,000 in student loans and to show for it, a degree that may or may not lead to their long-term career.  The tough love advice no one seems to want to give kids is that if they are undecided by the time they are already in their Freshman year, they are putting themselves at risk of falling behind financially.

We had a really sharp intern named Spencer.  Don’t ever tell him I said that by the way.  He had another job with Ohio State in an organization called Scarlet & Gray Financial.  He was basically a financial advisor that students would sign up to go speak with about college loans, credit, and other fundamental financial issues.  He would tell me about kids every day that came in to ask about their situation…

“I was here for pharmacy, I’m a 4th year junior… I decided to change my major to education… I already have $40k of student loans.  What should I do?”  The thing I loved about Spencer was though he was smart as they come, he lacked the bedside manner that comes with experience.  His response:  “It’s too late.  You messed up.”

So how do we prevent this?  This process has to start when your kids are in 11th or 12th grade because the best way to keep your college costs under control is to get these decisions right on the first try.  Try to make sure your kids don’t simply look at the list of hundreds of majors at a school like Ohio State and pick the one that matches up with their favorite hobby.  Make sure they are asking themselves questions like, “what kind of lifestyle do I want to lead?”  What are the jobs that can provide that?  From there, what type of environment do I want to be working in every day?  THEN – What am I passionate about?  Have them write down all of their interests and narrow down a career.

Then take the time to learn everything there is to learn about that job.  Find opportunities for job shadowing.  Set up a time for him or her to have lunch with someone who has that job to find out what his job is really like.  What is the best part of the job?  What is the worst part of the job?  What is something on one told them about that they wish they knew in advance?  Tell them to act like they’re making their final decision right now.

Then, the financial side – what is the path I need in terms of an education to position myself to get a job in that field? 

  • Will I need to pursue a graduate degree?
  • How long will it take?
  • How much will it cost?
  • How much debt will I walk away with?
  • Will that be a reasonable amount of money relative to my expected starting salary?
  • What school is the best place to start, which offers a competitive job placement rate in my field and won’t break the bank… that I will also enjoy?

 Then it comes down to picking the right school.  Does the campus feel like a comfortable setting?  How big are the classes?  Is it easy to get involved in extra-curricular activities?  What is the job placement rate for the major I am seeking?  What is the average starting salary?  The goal is to put yourself in the best possible position to succeed.  When shopping for a car, you don’t just go buy the best car on the lot – you look for what has the things that are important to you, that you are willing to pay for – then you make the best decision you can.  Why shop for a 6-figure college education any differently?

The effects of these decisions will be felt for years to come, and they lay the groundwork for your kids’ financial picture.  Here’s the tough love part – telling kids it is ok if they are a year or two into college and still aren’t sure about their major is doing them a tremendous disservice.