Episode 118: Investing In Your Education with Robert Farrington, Founder of The College Investor

Robert Farrington is a Millennial Money Expert and Founder of TheCollegeInvestor.com, which he launched in 2009 while finishing his MBA at the UC San Diego Rady School of Management after wanting to find other young adults who shared his passion for investing and personal finance. Through his work to help millennials get out of student loan debt and start building wealth for their future, Robert has emerged as one of the nation’s leading student loan debt experts.

Going to a University VS Going to a Community College

Getting a degree from an expensive private school is a double-edged sword. On one side, it can be a stepping stone and marker showing that you achieved this but say you do not get that job in the first six months or even a year. It starts to become a big red flag to employers. They will start asking how have you not landed a job within a year even though you went to a fancy university. They will assume that there must be something wrong with you. It starts to become a hindrance. As with everyone who has gone through the early stages of their career and also the mid-career, after your first job, nobody cares where you went to college. The degree does not matter in the least. It can open up a potential job interview if you built that network. In reality, about 98% of college graduates did not leverage their college network to have an interview. For employers, they do not care about the school, they care about the skills and expertise you can bring to the job that you are applying for. There are soft benefits of going to college like being on your own and making new friends and even building a new Network. These soft skills are nice to have but you are paying a lot of money. The goal of paying this money now is that you will have even more money in the future. It is a very math-driven equation. Using a net present value philosophy and using the statistics, those with college degrees earned roughly $1 million more over their career than those that only have a high school degree. We hear this instilled in us and also from social security data. The real question is what is the value of $1 million over 40 years today? If we are going to do some net present value and then take in all the variables we can roughly break this down to say it is worth about $80,000. The college and college education is more expensive than $80,000. It could definitely be much more expensive or it could be less expensive if you go on the path of going to a community college for 2 years which is free for a lot of people in the country. After that, you can transfer to a local state school for $5,000 or $7,000 a year. This way you can get a 4-year degree for less than $20,000 so there is a solid potential ROI. If you go to a private school, and you spend $240,000 in 4 years but you could have a very negative ROI on the value of that college degree, and when you add loan debt to this equation, this is where the student loan crisis appears.

What tools are provided for students when looking at what college to go to?

On the college investor website, there is a full list of financial aid and scholarships by state. We have learned that 36 states have some variation of the Georgia scholarship that offers free community college and or tuition waivers for community colleges. Some of this applies to state schools as well. There are great programs available. We never want to dissuade any young adult from pursuing any career path. We need people with all kinds of jobs in this world. There are ways that you can go about it that can get you to that desired outcome in a cost-effective way so that when you do get into the career or job you want to have, you are not burdened by loans or financial hardship. This way you can enjoy your career and enjoy doing things you wanted to do. When dealing with the psychological aspect of choosing where to go there are many factors that take place as trying to follow in the footsteps of a family member or trying to go to the same school as your best friend. The student then wonders if people will look down on him if they go another route. It is important to stress that the student will be successful financially which is the wish of every parent for their child. It is not necessary the name of the school, it is just that they want that because that is what signals them. Helping families change the mindset they have and not to burden those young adults with the negative connotations of these paths.

How do you help students navigate when they are racking up debt?

It starts with getting organized because as much as we want to generalize student loan debt, laying out everything and getting organized is the first step. There is no point in having a rational conservation until everyone understands what you owe, what you own, and what is coming in and going out. Specifically with student loan debt, there are options depending on what types of loans you have. Federal student loans have a lot of generous options from repayment plans to loan forgiveness to hardship options. There is a bunch of tools that we can leverage to make your Federal student loan debt, affordable, easy, and potentially even forgiven. Private student loans have much fewer options to handle this, and so they kind of have to be treated a little bit separately, almost like credit card debt or other types of debt. When it comes to Federal loans, you start with figuring out the repayment plan first. There are a lot of different payment plans out there but the best one for students is income-driven payment plans. They set your monthly repayment as a percentage of your discretionary income which today is either 10% or 15% depending on your repayment plan. Next year it might go down to 5% with a modification of an existing repayment plan so this can make your monthly payments on your Federal student loans very low and or 0 if you don't make a lot of money. The other part is the loan forgiveness program. As it stands today, 50% of all student loan borrowers with Federal loans qualify for loan forgiveness in some way, shape, or form. The most popular one is public service loan forgiveness which could impact up to 1/3rd of all borrowers with student loan debt and that is a huge incentive. You work for 10 years in public service, and you get your loans for given tax-free to create benefits.

Contact Robert Farrington

LinkedIn: https://www.linkedin.com/in/robertfarringtonmba/

Twitter: https://twitter.com/rrobfarrington

Learn more about The College Investor

Website: https://thecollegeinvestor.com/

Instagram: https://www.instagram.com/thecollegeinvestor/

LinkedIn: https://www.linkedin.com/company/savewithsummer/

Twitter: https://twitter.com/CollegeInvestin

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About N2N Services

Founded in 2010, N2N is committed to serving educational institutions and helping them figure out how to serve their students, faculty, and staff using the most innovative technologies and solutions available in the marketplace. Over the last decade, N2N has served over 300 academic institutions and enabled their student success journeys.

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