At TABASFUNDING, we don’t make student loans. Our funding is strictly for expansion or acquisition of businesses. In the course of looking at those, however, we do review borrower’s financials. One recent husband and wife whose financials we reviewed have a total of about $90,000 in student loan debt. The government offers terms that are flexible, so they don’t have to pay more than a certain percentage of their income. It is manageable, but my concern for them is, will they ever have the satisfaction of paying off their student loans?
More worrisome were the two Physical Therapists that started a PT business and were looking for funding. They both earned PhDs. One had a breathtaking $180,000 in student loans, and made around $80,000 in annual salary. The other had $139,000 in student loans, and made around $61,000 in annual salary. I can see incurring that kind of debt if one can earn a couple of hundred thousand dollars per year afterwards. PurdueUniversity has started a student loan program advancing money based on estimates of future earnings. For example, computer engineering majors may qualify for more aid than turf science majors, because engineers typically earn more.
It is clear why Bernie Sanders has such appeal to young people. His pitch about free college would have lots of traction with the students and families in the United States that have accumulated $1.2 trillion of student loans.
My take-away is that young people have little financial experience when applying to college or graduate school. They think that if they are granted loans, that somebody is looking after them and if approved they assume that the thing to do is accept the loan.
Seems to me that financial literacy should start when one is relatively young. My own little survey shows that two of the local school districts have a financial literacy course that starts in middle school. The course is optional. I am not aware that any of my children (they are older now) took such a course. Knowing about loans, credit cards, interest, bank accounts, and other financial matters is very important – Why it is not mandatory? Entrepreneurship is being promoted in high schools. It is pretty hard to run your own business if you don’t grasp basic financial matters. I was fortunate- my father was a businessperson, and at the dinner table, we talked about most of these things.
A related topic is; does it make a difference what college or university that one attends? Does it make sense to borrow big to get into a better college/university? From my point of view, with few exceptions, the answer is no. There are a dozen colleges/universities where the name (think Harvard) and education will certainly help to advance one’s career. Most of these colleges/universities will provide substantial grants if someone gets accepted. For the most part, in my opinion, borrowing and paying more for private college or university, as opposed to attending a public one cannot be justified.
TABASFUNDING has provided funding to Jackie London, an importer, wholesaler and retailer of women’s shapewear. The company seeks to serve primarily Latino and African American customers. These are growing markets, and we are optimistic about the company’s future.
Ameritech Media Services of Harrisburg is an existing client. Ameritech offers marketing services for growing companies. If your marketing could use a breath of fresh air, please have a look at the website: http://www.ameritechmedia.com/ or contact Dustin Foreman at 1 800 319 8481.
TABASFUNDING provides entrepreneurs with funding to acquire or expand businesses in the form of flexible loans from $100,000 to $750,000, or more. We supplement bank and other funds, and consider most types of businesses in Pennsylvania, New Jersey, and Delaware. Please call for further information.
LEE TABAS is available as a consultant or an expert witness. Areas of expertise include: Ability to help through experience in banking and investing: loans, deposits, administration, collection, leadership, liability, conflicts of interest and documentation. Experience as a Trustee for Trust and Foundations. Has track record of helping entrepreneurs with growth. Please call for further information.