Net worth measured in millions

I’m reading Jonathan Clements’ Money Guide 2015. Not for work. But his first two paragraphs of the first chapter are very much about Michigan Future’s work. Clemens writes:

Imagine you are a freshly minted, penniless college graduate with alarming student loans and an unhealthy credit card debt. Your net worth? It’s likely measured in the millions.

Over the next four decades, you might pull in tens and perhaps hundreds of thousands of dollars every year. To get a handle on how valuable that income stream is, consider how much you would need to invest in bonds or certificates of deposit to generate a comparable amount of annual income.

Clements’ is also right when he writes later in the book: “While most types of debt have been shrinking over the last six years, students loans have soared by 84 percent.The money borrowed should help make the U.S. more productive and help students involved earn higher lifetime incomes. Still, this burgeoning debt speaks to the financial sloppiness of the baby boomers, who are providing notably little financial help to their college-bound teenagers, thus compelling them to borrow more.” (Emphasis added in both quotes.)

Exactly! In two quotes Clements’ lays out the basic realities about college attainment and financing. (Each increasingly challenged by what passes for conventional wisdom.)

  1. Getting a college degree––even if it means taking out student loans––is the best investment one can make. It is by far the best way for most of us to have a net worth as Clements’ puts it in the millions.
  2. When more of us get college degrees the American economy does better. Increased education attainment is the prime driver of productivity growth and that is what grows economies and standards of living
  3. The prime reason for higher tuition and higher student loan debt is the increasing disinvestment in public higher eduction, particularly by states like Michigan. My generation, the Boomers, enjoyed low tuition primarily because state taxpayers were paying a big part of the cost of college at public universities. The Boomers have not returned the favor to their children. Instead preferring lower taxes, higher spending on health and corrections rather than higher education. 
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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

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  1. Yes, I am a recently retired baby boomer, and my generation should be doing whatever we can to make sure our kids have a chance for a great education. I graduated from college in 4 years for a bachelors degree and later on took 2 years for a masters. I worked (not quite full time) when working on both of those degrees. I lived in another state, and when I graduated from high school (nearly 50 years ago), the state gave me a scholarship that could be used at any qualifying school in the state, state or private. The scholarship was for a fixed dollar amount and was not designed to pay all education costs. But it did help a lot. I went to a small local private college and stayed with my parents. Even with higher tuition, it was cheaper than moving away to attend one of the state colleges would have been after adding in living expenses. I support higher state aid to education, but it should not be 100%. I think students appreciate their education and greatly benefit if they have to work part time to pay some of it while attending. I am not sure the state scholarship I received nearly 50 years ago would even be legal anymore because it could be used at a private school even if it was church affiliated. But for me it worked at that time. My kids are graduated from college and working at their chosen careers. They are all millennials still living in Michigan. My wife and I are putting money every year into 529 plan savings accounts for all of the grand kids.

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