To the Class of 2017: Stay Out of Debt

High school graduation season is upon us. In coming weeks, valedictorians across the country will admonish their fellow graduates to follow their dreams. For some, that will mean heading off to college. For others, it will mean going to trade school or getting a job. But no matter which path you follow, there is one piece of financial advice that will pay greater dividends than any other: stay out of debt.

When you get into debt, you surrender some of your freedom. The more debt you have, the more freedom you give away. Debt obligations limit your future choices. The limitations may be small or large depending on the amount of debt you carry. Protect your freedom by limiting your debt.

Here’s an ugly truth: some lenders love to get their hooks into college students and young consumers. Credit card companies have long been notorious for this. Although recent laws have placed restrictions on their efforts, you remain an attractive target. Be wary. Few things will undermine your long-term financial health more than undisciplined credit card use.

Here’s another ugly truth: student loans can turn your academic dream into a financial nightmare. Student loans should be seen as a last resort and even then used sparingly. Student loans have to be repaid, even if you don’t graduate.  When the time to repay comes, you may be surprised that compound interest has turned your small loan into a financial monster.

Continuing your education after high school is vital to your long-term financial wellbeing. Whether you go to college or trade school, choose a field that will allow you to earn a good living. Following your dreams is important, but you also need a career that will allow you to pay for your dreams.

In 2015, Georgetown University published a study called “The Economic Value of College Majors.” Their conclusion? Not all Bachelor’s degrees are created equal. According to the study, workers with degrees in science, technology, engineering and math—the so-called STEM majors—earned on average 65 percent more than workers in education, arts and social work.

There is nothing wrong with majoring in education, arts or social work, but be aware of what it will likely mean for your earnings potential. If you decide to go that route, you would be wise to look for ways to reduce the cost of your education. Community colleges, including our very own Monterey Peninsula College, provide a great way to start at a fraction of the cost of a four-year university. After two years, you can transfer to a four-year university well on your way to your desired degree.

Another good way to help defray the cost of your education is to work on a limited basis while going to school. Beyond helping you stay out of debt, the non-profit Forum for Youth Investment identified several other benefits enjoyed by students who work. These include greater engagement in learning, greater success in the job search, better work skills, and better college persistence.  These benefits were highest for students working in jobs related to their majors. Declining grades offset these benefits as working hours exceeded 20 hours per week.

Graduates of the class of 2017, I wish you the greatest success. Work hard. Have fun. And above all, stay out of debt.


Steven C. MerrellMBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell,   2340 Garden Road Suite 202, Monterey, CA93940 or email them to