Last Wednesday (October 26, 2011) best selling business author Daniel Pink visited Fresno Pacific for our annual Business Forum. About 1000 business, education, and community leaders turned out at 7:30 AM to hear him speak on the topic of his most recent book, Drive. At noon he spoke to the business faculty and students, along with some of the events financial sponsors and other community leaders. Between these two events, he spoke in College Hour to the undergraduate student body on how to think about preparing for the future, what attitudes and discipline are needed for succeeding in college, personally and professionally. It was one of the best I have heard on the topic, perfectly calibrated to the student body (see his The Adventures of Johnny Bunko: The Last Career Guide You’ll Ever Need).
What I want to relay here was his answer to a question from a student regarding whether it is advisable to take out loans for college. Pink paused, thought for a moment and then gave one of the most succinct and insightful answers I have heard. He first said it depends. Taking out loans for many things that are not needed can be just plain harmful, bad for one’s financial position, and personally debilitating. On the other hand, he said, some debt is an investment. A moderate debt that leads to future possibilities may be a good investment. Pink pointed out that some say that on average a college graduate makes about $600-700,000 more than a high school graduate. Hence a debt of $50,000 may be a good investment rather than a bad financial decision.
A couple of weeks ago I wrote in this space that the average income of a college graduate over a high school grade is actually closer to $1 million (see the post on The Value of a University Education). FPU students average about $24,000 in student loans by the time they graduate. Compared to Pink’s estimate they are in an even better position. And we can think about this in more practical ways. The student who graduates with this average FPU amount, will pay back the equivalent of the cost of a moderately priced car, and do so over 10 years instead of 5 or 6. And instead of the car declining in value with every mile driven, the student’s potential continues to rise as he or she builds on their university education with experience in their professions.
No one likes debt. Pink noted the dangers. But sometimes borrowing can be a wise financial decision, especially when it leads to better and more creative future for us and those communities within which we work and serve.