Saturday, June 15, 2013

Let's not let the student housing industry off the hook

"Living in a Van was the Best Financial Decision I Ever Made,"  by Ken Ilgunas (The Motley Fool via AOL)

Money Quote: "On the first night I tried to sleep in my van, I was lying in my sleeping bag sprawled out on the backseat, parked in a mostly empty Walmart parking lot. I'd wake up every 15 minutes because I was nervous that the security guard driving past my van would knock on my door and make me leave."

"My new home had 60 square feet and four wheels. While most people would consider living in a van an embarrassment, a low point, or even a 'rock bottom,' it would -- though I didn't realize it then -- turn out to be the greatest financial decision I'd ever made."

*****



Money Quote: "Brenden Heiland had breathed the vanilla lavender-scented clubhouse air. He had seen the beach volleyball court, toured the game room equipped with billiards, Ping-Pong and air hockey tables, and learned with delight of the Friday pool parties with a D.J., free food and snow cones, spiked with rum for those of age."

"Now, as he and the three friends he was apartment hunting with stood peering at the pool, Mr. Heiland, 19, pondered what life might be like if he chose to live in this off-campus complex, the Grove, when his sophomore year at the University of Missouri begins this fall."

"'It's like a vacation, almost,' he said. 'I'm not going to go to class -- that's how I look at it.'"

*****

With all the focus on deans and profs, we forget that there is a student housing industry also taking advantage of students. Not only are students taking out student loans to pay for luxury housing, but it gives students the false sense that after school is over, life will only get better for them. It keeps them from asking tough questions about post-graduate life.

28 comments:

  1. My financial aid officr recommended that I live near the school where rent was astronomical. I compromised by moving a little further into an outer borough. They made it seem like my salary upon graduation would allow us to keep paying our rent. Right.

    I did not choose the student housing because it was all in the most expensive of areas and many students ended up moving around a lot due to lottery. The school admitted more people than it could house.

    Despite my unusually modest apartment, I still could not keep it at the time of graduation.

    ReplyDelete
  2. My first year of law school I got an apartment to myself a block or two away from campus. Fourth floor walk up but I was so proud. The day after moving in I started noticing cockroaches. I bought stuff to kill them but it was never enough. I once tried to cook a meal and when I opened the silverware drawer there were hundreds of roaches on my utensils. When I went in my bathroom, there would be roaches on my toothbrush. After a week I called my mom and she let the landlord have it and got me out of the lease. And so ended the first humiliating week of law school. My mom screaming at my landlord to get my out of a lease for a roach infested apartment. Looking back on it, my mom taught me more about real estate law that year than my property professor.

    ReplyDelete
    Replies
    1. ^ Did you attend Touro Law School? Was John Koch your roommate?

      Delete
    2. LOL, (but try not to mention you-know-who....)

      Delete
    3. This comment has been removed by a blog administrator.

      Delete
  3. I always like to hear people's accounts of how they avoided debt or paid it off. Being debt-free is what true freedom is all about.

    ReplyDelete
  4. Avoiding debt isn't hard. Live within your means and don't ovrtspend. If you go to law school, go part time and work full time or go in resident state. Tak e temple law.. instate, costs less than many private colleges and its a great school.

    ReplyDelete
  5. I always like hearing people's accounts of how they trade items of value for commodities. Time is the most precious commodity around. People trade away years, decades, huge percentages of their lives for things like "24 hour lounge on campus." Of course, the most absurd of these is trading "20 years of my youth" for "exam grades at end of semester so I can take bar exam 36 months from now."

    ReplyDelete
    Replies
    1. Law applicants are stupid.

      If they don't get it by now, let them fail. Then they can come here in 5 years and start to whine about how they didn't know and how it's all a big scam.

      Kids these days are so risk averse, yet so stupid that they choose the riskiest option.

      Delete
    2. Yes, people don't equate money with time. They should stop and think "It took me x hours to earn this money and y hours to save this money, is it really worth that much of my life to buy this piece of plastic that I don't really need?" I really don't think students, even if they intellectually understand the concept of interest, understand how hard it is to pay off a debt with interest being paid first.

      Delete
    3. Agreed, RAB. Somebody once said, "Freedom is just another word for nothing left to lose." Interesting quote.

      It's the American way: https://www.youtube.com/watch?v=MvgN5gCuLac

      Delete
    4. Have you read the Legally Obligated blog? I really enjoy that very much, including her podcasts, although she hasn't posted much lately.

      I just don't think most students understand that they are going to probably have to live an extreme lifestyle to get out from under that much debt. It wasn't what they signed up for in their mind.

      Personally, I am trying to be proactive with my children and head this off at the pass. I talk to them about the right college being the one they get a degree from without taking on debt. And I talk to them about making good choices about spending their money. I tell them they can give all their money to a mortgage company or live in a modest place and save for retirement and take a nice trip every summer.

      I remember when I was growing up hearing older family members making fun of a certainly elderly aunt who had survived three husbands and was well off. She had been traumatized by the Depression though and lived like a hermit. When they would visit her she would hand out a single sheet of TP when they asked to use the bathroom.

      I think this current generation is being traumatized although to a lesser extent.

      Delete
    5. I saw a little of that blog. IMO, there are 3 major ingredients to a relatively comfortable life:

      1. "Need" less shit.

      2. Avoid using credit. Maybe finance a modest home (if you must), but pay cash for cars (get a cheap, used one if needed) and everything else. Don't be afraid of living at home with mom and dad while you save up $100k in cash to buy your first, little home. If you ain't spending, you can save a heck of a lot more and pay with cash when the time comes.

      3. Don't figure on college as the key to a good life. Quite marketable skills can be acquired LONG before kids even graduate high school. Learn plumbing, carpentry, basic electrician skills, auto repair, etc. A blue collar skill is totally under-appreciated by the edumacated classes. Yet, these skills can pay easily as well as any $80,000 degree (not to mention the 4 years you wasted).

      Even blue collar tradesmen and small business owners can develop decent enterprises with employees if they want. It can be quite lucrative. There are sheetrock contractors out there managing crews while taking home $200k+.

      Finally, I would always recommend the book, "The Millionaire Next Door." Written in the late 1990's, it remains even more relevant in today's environment, and will continue to increase in relevance in the foreseeable future.

      Delete
    6. I'm the first in my family to graduate from college, let alone attend any form of graduate school, and I know of no one our age making over $50,000.

      Delete
    7. JeffM speaks the truth once again. You should hand him the reins to this blog, which, although miserable as a whole, is still 1000% better than anything Nando

      Delete
    8. Sure. Less debt, live responsibly, consume only what we need.

      But the average American is a thoughtless greedy pig (e.g. Boomers). It will not change. We have one, maybe two generations before total collapse unless the gov steps in with massive across the board debt relief for all (homeowners, students, etc.) plus a huge reset in the American psyche.

      Time to look abroad, I guess.

      Delete
    9. JeffM,
      I have disagreed with you in the past but I must (largely) agree with you here.

      One key is picking a blue collar job that isn't going to disappear or become outsourced. Plumbers, steamfitters and carpenters should always be able to get at least a living wage.
      [But really JeffM, sheetrock hangers? The only way you're going to make money doing that is if you're a supervisor. And that work really destroys your body]
      And you don't want to be a rough-in carpenter for too long; you need to learn fine skills that rich people will pay for.

      And it's not like these jobs are found equally around the country and are always the easiest to get. When I was unemployed after law school I looked into becoming a journeyman electrician, but the trade was controlled by the union and you flat-out could not get into their school if you were older than 35. And sometimes you need to give a "present" to someone in the organization to get accepted.
      This is where parents need to step up and realize that maybe their special snowflake shouldn't go to college. I have long envied the German economic model, which may seem a bit cruel if you're a middle-schooler shunted into the trades. It does produce a workforce that is matched to the needs of employers and pays workers decent living wage without this burdensome student loan debt.

      And don't forget, this manual labor takes its toll on your body. A lot of people get early arthritis and have all kinds of physical problems. That's why it's important to work your way up and learn skills like project management and managing crews. But it's still totally doable.

      LEMMINGS, REMEMBER THIS - after 5 years a journeyman electrician in Chicago is making upwards of $70K/year, and that doesn't even include jobs you can get on the side. Electrical work requires brain skills and doesn't require heavy lifting.
      I also knew a guy who went to steamfitters school and he STARTED at $80K/year.

      So in conclusion JeffM, I do agree with you on this on.

      Delete
    10. Don't worry about somebody else's greed. You're on your own. Make it happen, and let all the rest of them go to hell in a handbasket. It's just the way it works. When you have assets and no debt, it doesn't matter quite as much whether markets tank. Having no debt, if you need $1,500 a month to survive, it sure beats needing $6,000 a month to survive.

      As far as unions and lack of opportunity to enter blue collar trades, don't fear moving to where the circumstances are better. I can tell you, for example, Houston is alive and booming.

      For those nearing retirement and worrying about finances (yet, they will get social security and maybe have a bit of equity), look into Cuenca, Ecuador. Lots of Youtube on it. Think I'll be paying a visit to scout it out. Not looking at retirement soon, but want to see what the fuss is about.

      These days, the only vote worthwhile is voting with your feet.

      Delete
    11. In addition to my note above concerning voting with your feet, I would also suggest that home ownership (as opposed to renting) inhibits mobility. When you have to move, you are stuck paying realtors and closing costs, not to mention the possibility of being stuck with a note for the prior home, plus rent/mortgage on the new home. Ownership can be way over-rated when there is the possibility that within a handful of years, you will move. 10% (commissions and closing costs) on a $200k home is $20k, and that's a pretty steep price to pay just to move.

      Delete
    12. Jeff, while Houston's economy may be booming largely due to oil and gas, that has not tanslated to much in the way of opportunities for local law grads. I graduated from South Texas in Dec. '12 and I can report that out of the 20-30 students in my class with whom I was friends, a total of 5 have jobs at firms. A further 6 or 7 have hung out their shingle in a brave attempt to do legal work, while I honestly have no clue what the rest are up to. I myself am right back working at my pre- law school employer. It's pretty rough out here, bro.

      Delete
    13. It always is tougher on the new kids on the block. Nobody knows you exist. You have to make a pipeline.

      Delete
  6. That guy living in his van could have been a somewhat inspiring story if he did it for a good reason - to save up funds for something praiseworthy or useful. NOT a Masters in "Liberals Arts", whatever that generalized degree is.

    The story came off as someone lacking wisdom who sacrificed much to obtain something silly.

    Another angle on his story is this: the way this country's going, with a "recovery" that's still piling on debt and punishing productive work, the van guy's story might be in our future.

    --Jim

    ReplyDelete
  7. For what percentage of college students will their university housing be the nicest living situation they can get living on their own for 5 or 10 years after college?

    ReplyDelete
  8. I'm sorry but this article about student housing irritates me. When I went off to college in 1990 I didn't even have a phone in my dorm room. I had to share my room with another person and we had communal showers at the end of the hall. I worked part-time as a dishwasher throughout college to get food/beer money and to pay for my meals. And when I did finally get an apartment it was crappy; so crappy that the floors sagged and the weak electric heaters barely kept up with the harsh Illinois winter air.

    There was none of this nonsense with spas and saunas and pools. WTF?! Do these people not realize that all this costs them money in the long run? What happened to the concept of the poor student? Whatever happened to hard work and delayed gratification? Jesus effing Christ! If I wanted to play pool I went off to the student Union and socialized with the other students. If I wanted to go swimming I went to the gym. If I wanted beer I drank Mad Dog 20/20 or Colt 45. It was cheap and it got you drunk.
    College is supposed to be about a fairly simple, spartan lifestyle. You have to earn the niceties of life, not have them fall in your damm lap.
    This country is going straight to hell.

    ReplyDelete
    Replies
    1. Though I agree with your sentiment, I have a worse case scenario. In 2008 I had a concrete box for a dorm, didn't purchase any beer (went to giant parties and only drank other people's beer), ate more tuna fish than was probably safe, worked a part time job, and STILL couldn't afford to pay the cost of the mandatory on campus living.

      I know the kids that stayed in palatial estates, but there are also a ton of us that bent and scraped and still went into debt.

      It's a verifiable fact, tuition and college prices (including dorms) cost more (even adjusting for inflation) than in the 90s. These kids probably just figure, why the hell not? Tuition is insanely priced, they must be pretty confident the value is there.

      Pretty stupid logic, sure. But I'm just trying to get a handle on what could make them spend that kind of money.

      Delete
    2. Yeah, I do feel sorry for everyone who has gone to college in the last 15 years. I went to one of the top engineering schools starting in 1990 and tuition and housing/food came out to $7,500 a year. I was able to graduate owing only about $12K and paid it off within 3 years.

      I struggled with unemployment/depression after gradauting jobless from law school, but I can't fathom how infinitely more depressing it must be to have that $150K of non-dischargeable student debt hanging over your head. And you have NOTHING to show for it except some useless crap you learned in Law, Economics and Justice or International Comparative Law.

      My mortgage is less than that! I can deduct the interest from my taxes and I'll have a nice home when I pay it off.

      Sheesh. Anyone who would go to law school now, knowing the facts and what awaits them on the other side... well, they'd have to be a cretin.

      Delete
  9. Now a days student housing is necessary and this is very important you live any other country or state so mostly first upon search a stay in student housing so this is best benefit for you.

    ReplyDelete
    Replies
    1. Hahaha damn spammers...

      Delete