When your child’s student loan is bigger than your mortgage

Betting on Education

We did the math.

After us picking up half the tab, my daughter’s student loan was going to be larger than the mortgage on our house. It was not a comforting thought — letting your child rack up debt of that size even before she starts working. Student loan is big - Reboot Social

My daughter’s first career choice was to become a ventriloquist. She was ten.

My wife and I went along with her choice, on one condition – become a doctor, engineer, accountant, or a lawyer first, then a ventriloquist. She seemed okay with the idea. Clearly, at that time our take on career paths was rather narrow; it was the Indian in us.

If you want to be a millionaire, it’s better to be a software engineer than a pro athlete.”

Betting on education was the norm.

I should know, I didn’t.

I found out the hard way, an undergraduate degree will only take you so far.

Financially speaking, I have not made a lot of brilliant choices. I certainly made some really bad ones — I held on to Nortel stocks until they got delisted; sold my house just before the real estate boom; passed up on opportunities that have gone on to do really well; and opted out of a guaranteed retirement plan in favour of a contribution plan. You get the drift.

But, I did make a couple of investments that I consider more successful than all of my follies combined.

I bet on education, twice – once for ourselves and once for our daughter.

Going back to school, when you’re new in a country, living paycheck to paycheck, is not a decision that you make lightly. But after being underemployed for a couple of years, it was getting to a “now or never” point for us to make a move to get out of the rut.

Considering that my retail store gig paid more than my wife’s factory job, we decided that she should quit and go back to school to earn some Canadian qualification. The fact that she held a Master’s degree in Physics from a university in India had not garnered much interest among companies that were hiring. Telecom seemed to be a good area to pursue since there were concepts of physics and electronics at play. A full-time, one year course seemed like a lifetime. Then there was the fees: over a thousand dollars which seemed huge at the time.

But, choose education we did, albeit maxing out credit cards and paying off minimum balances. Before we knew it, the year was up and the Internet boom was on. Telecom companies were hiring and finally, my wife had found a job that matched her skills.

In a year’s time, it was my turn. The Information Superhighway was on everybody’s mind — whether they understood it or not. So it was back to school for me too, even though the fees had doubled. Plodding through technical concepts completely foreign to me was not something that I had planned doing at forty.

And finally, I landed a job in a hot industry!

When it came to our daughters’ ambitions to study at a law school in the U.S., we didn’t think twice. She had managed to get decent grades that got her accepted to a few good schools. The shock came when we received the tuition schedule. We knew it would be more expensive than Canadian universities, but five times more? And three years of that? Additionally, there were living expenses to consider.

The university counsellor that we talked to tried to calm our fears. Getting in is the hardest part, she said. She went on to reason that the money spent would be well worth it. After much soul-searching, we decided it was the right thing to do. The banks would provide the required student loans on a personal guarantee from the parents.

Once again, we went for it. We bet on education.

At the graduation ceremony, we felt a sense of relief. Campus interviews and subsequent offers from a couple of reputed law firms seemed to make it all worth it.

The counsellor was right; the outcome justified the expense.

The note from the bank informing me that I was off the hook for my daughter’s student loan came as a pleasant surprise.

Betting on education had paid off.

Before I sign off, I will leave you with one thought. Higher education is not for everyone. Many extremely successful businesspeople were college dropouts. Here’s a post titled “8 Hugely Successful People Who Didn’t Graduate College” for some perspective.

Nothing says that your child won’t make the next such list.

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