Thinking about student debt, particularly with Robert F. Smith’s donation still top of mind, I’m wondering what will be the solution to generations of students entering the work force with debt. Higher education costs have far exceeded inflation and the epidemic has a potential to financially paralyze a generation of our best and brightest.
In two recent meetings with folks who recently entered the workforce, I came across two contrasting scenarios.
Student number 1: She and her parents were paying out of state tuition ($45k / year) for a business degree at a popular SEC school. Upon graduation, she spent 18 months figuring out what she wanted to be when she grew up and decided on sales — because she is popular and likes talking to people. She spent 2 years as an SDR with an OTE of $55-60k before recently working her way up to AE where she can now make $80k-110k. She has approximately $100k worth of student loans that will take here approximately 8-12 years to pay off depending on how aggressive she wants to pay them. In college, she joined a sorority and tries to go back to as many home football games as possible on the weekends in the fall.
Student number 2. During his junior and senior year of high school he started working part time as a Project Manager for a 50 person software company. This startup was bootstrapped and growing well. After graduating high school, the student decided to go do a gap year before college. After spending a year of part time work on the project management side — which was a role where he just added value on any role or project within the company — he realized sales is where he could start a career, make a good living, and learn timeless, transferable skills. He started as an SDR on the second half of his gap year and excelled in the role. People hired for his role were 4-5 years older than him with a college degree (and most with debt). As summer rolled around, he didn’t go to college but instead stayed on selling. After 20 months as an SDR, he moved to an AE, at the age of 19. His OTE was around $80-$110k. He doesn’t not have any student debt and has saved over $50k. There are no fraternity functions to attend or dorm rooms to live in, but he picked an SEC school to root for because he likes to visit that town.
Obviously, this student is the rare exception. When I was his age, I was not “building my cathedral” and instead was trying to pay rent by driving cars through an auto auction.
There are many professions where higher education is needed: medicine and law are two examples.
For the majority of professions, there are less expensive options to figure out what you want to do with your career than college as we know it. The most productive way is to enter the workforce now even though it might be at the expense of a few social parties in a very expensive culture.