4A- Forming An Opportunity Belief
I think that student loans and the associated crises is a huge problem, not only for those with the debt but for everyone else who would suffer the trickle down effects.
I think there needs to be a realistic set of opportunities for people to receive higher education in a manner which is significantly lower in costs so that they do not have to take out loans. This is a need shared by anyone who wants to pursue higher education or even professional certifications which can be very expensive.This need has developed over the past 2-3 decades as more and more people have rushed to get college degrees, driving up the price for the degree and decreasing its value. There is really nothing substantial being done. Many people are making minimum payments or no payments at all. The proposed solutions are politically divisive pieces of legislation currently have no hope of being passed before the next election.
I think there needs to be a realistic set of opportunities for people to receive higher education in a manner which is significantly lower in costs so that they do not have to take out loans. This is a need shared by anyone who wants to pursue higher education or even professional certifications which can be very expensive.This need has developed over the past 2-3 decades as more and more people have rushed to get college degrees, driving up the price for the degree and decreasing its value. There is really nothing substantial being done. Many people are making minimum payments or no payments at all. The proposed solutions are politically divisive pieces of legislation currently have no hope of being passed before the next election.
Drew: Recent Graduate
Drew didn't realize he had a need until he was two years into college. On paper he did all the right things- he attended two years of community college and lived at home to save money. But when he got to UF, he was suddenly on his own and there was stuff he wanted to do. So, he joined a fraternity and payed the dues approx. $5,000/semester with student loans. He started having car troubles, so he bought a pre-owned truck and financed it with a student loan. All the sudden, Drew had jumped head-first into "student loan culture", in his words. Now, working his full time job, he immediately has to begin repaying his loans. Luckily for him, he got a good job in is home town and moved back in with his parents, so he should be able to pay off all of his student loans in less than two years. But regardless, he wishes he had another option to complete his education. If there were other options, he wasn't aware of any.
Reflection: Most surprising here is how quickly this individuals situation changed from debt free to severely burdened. He ultimately fell victim to life-style inflation, but I think the problem for him was that he was given essentially a credit card without a perceivable credit limit in the form of a subsidized student loan. This was at a time when he was not mature enough to make good spending decisions.
Erica: Master's Student
Erica is in her final year of a 5 year Master's program at a private college, where she will simultaneously receive a Bachelor's and Master's degree. When she was in high school she was a gifted musician, and she used this talent to get a full-ride scholarship playing in the school orchestra. However, in order to qualify for her scholarship, she had to major in music, which for her meant that she had double major, since she really wanted to study elementary education. Eventually, the schedule proved too rigorous, and he realized she didn't have enough time to complete all her credit hours and fulfill the research requirements and field work needed for her masters. So, she dropped her double major in music, and in doing so lost her scholarship. She was now in a situation she had not planned for: she had to pay out of pocket approximately $15k/yr in tuition for the final 3 semesters of her education. After deducting the effects of other academic scholarships and her parents college savings, she was left with about $10,000 that she will have to pay back. Her parents have agreed to pay the sum in full, and have decided that Erica can then pay them back. This works out ok for Erica, but she acknowledges that this could have been much worse- she easily could have been in a situation where she was straddled with $50,000 or more in debt if she had been forced to quit her second major a few semesters earlier. For her, this is the big problem- the unpredictability involved in the whole college experience. When you are in high school, you make certain plans, and allocate funds in accordance. But over the course of four years, plans will often change, and what you need changes with them.
Reflection: Erica did not want to take debt unlike Drew, but she was forced to in-order to finish her degree.Her main issue was that despite planning well for how to pay for school, she was eventually unable to fulfill these plans. Even though her parents are paying off he loan balance so that she will not have to pay any interest, she is still stressed out by the idea of having to repay so much money.
Ben: Dr. completing his residency
Ben is in his second year of his residency to become and ophthalmologist. He has no student debt because he is doing his residency through the U.S. Air Force and he agreed to do this while he was still an undergraduate at FSU. Before he had even graduated, he had joined a program which paid him a living stipend throughout his undergrad and medical school, in addition to his school fees. So, Ben joined the Air Force. Now, he is a full rank Captain, and when he completes his residency he will be promoted to Major. He then must serve four years in the Air Force, during which time he will likely deploy at least once. This is a lot of commitment, but for Ben the program is great. He has no debt, and the living stipend he had received has allowed him to support his family while he was in school still. In the end, one of the main benefits of the program is that he doesn't have any stress or worry about debt piling up- he has clear constraints he has to conform to, and that is reassuring for him.
Reflection: Ben is very happy with where is education has led him. Even though he has to give the first four years of his career to the Air Force, his journey has been dependable and relatively stress-free in matters related to money. He has had to be frugal, but he and his wife and son have been able to live well, and will continue to do so.
Summary: Ben is definitely the happiest of the three people I interviewed. Whats interesting about this is that Ben's path is the most rigid and constrained, whereas Drew and Erica have had more flexibility. This flexibility has ultimately caused them more stress. In Drew's case, the flexibility to spend without immediate consequence has caused him to put himself into a deep debt whole. My idea starting out was to find a way to provide cheaper, easier financing for education. Now, I think the key might be to establish a framework that encourages students to follow a seemingly more rigid plan to graduation.
Drew didn't realize he had a need until he was two years into college. On paper he did all the right things- he attended two years of community college and lived at home to save money. But when he got to UF, he was suddenly on his own and there was stuff he wanted to do. So, he joined a fraternity and payed the dues approx. $5,000/semester with student loans. He started having car troubles, so he bought a pre-owned truck and financed it with a student loan. All the sudden, Drew had jumped head-first into "student loan culture", in his words. Now, working his full time job, he immediately has to begin repaying his loans. Luckily for him, he got a good job in is home town and moved back in with his parents, so he should be able to pay off all of his student loans in less than two years. But regardless, he wishes he had another option to complete his education. If there were other options, he wasn't aware of any.
Reflection: Most surprising here is how quickly this individuals situation changed from debt free to severely burdened. He ultimately fell victim to life-style inflation, but I think the problem for him was that he was given essentially a credit card without a perceivable credit limit in the form of a subsidized student loan. This was at a time when he was not mature enough to make good spending decisions.
Erica: Master's Student
Erica is in her final year of a 5 year Master's program at a private college, where she will simultaneously receive a Bachelor's and Master's degree. When she was in high school she was a gifted musician, and she used this talent to get a full-ride scholarship playing in the school orchestra. However, in order to qualify for her scholarship, she had to major in music, which for her meant that she had double major, since she really wanted to study elementary education. Eventually, the schedule proved too rigorous, and he realized she didn't have enough time to complete all her credit hours and fulfill the research requirements and field work needed for her masters. So, she dropped her double major in music, and in doing so lost her scholarship. She was now in a situation she had not planned for: she had to pay out of pocket approximately $15k/yr in tuition for the final 3 semesters of her education. After deducting the effects of other academic scholarships and her parents college savings, she was left with about $10,000 that she will have to pay back. Her parents have agreed to pay the sum in full, and have decided that Erica can then pay them back. This works out ok for Erica, but she acknowledges that this could have been much worse- she easily could have been in a situation where she was straddled with $50,000 or more in debt if she had been forced to quit her second major a few semesters earlier. For her, this is the big problem- the unpredictability involved in the whole college experience. When you are in high school, you make certain plans, and allocate funds in accordance. But over the course of four years, plans will often change, and what you need changes with them.
Reflection: Erica did not want to take debt unlike Drew, but she was forced to in-order to finish her degree.Her main issue was that despite planning well for how to pay for school, she was eventually unable to fulfill these plans. Even though her parents are paying off he loan balance so that she will not have to pay any interest, she is still stressed out by the idea of having to repay so much money.
Ben: Dr. completing his residency
Ben is in his second year of his residency to become and ophthalmologist. He has no student debt because he is doing his residency through the U.S. Air Force and he agreed to do this while he was still an undergraduate at FSU. Before he had even graduated, he had joined a program which paid him a living stipend throughout his undergrad and medical school, in addition to his school fees. So, Ben joined the Air Force. Now, he is a full rank Captain, and when he completes his residency he will be promoted to Major. He then must serve four years in the Air Force, during which time he will likely deploy at least once. This is a lot of commitment, but for Ben the program is great. He has no debt, and the living stipend he had received has allowed him to support his family while he was in school still. In the end, one of the main benefits of the program is that he doesn't have any stress or worry about debt piling up- he has clear constraints he has to conform to, and that is reassuring for him.
Reflection: Ben is very happy with where is education has led him. Even though he has to give the first four years of his career to the Air Force, his journey has been dependable and relatively stress-free in matters related to money. He has had to be frugal, but he and his wife and son have been able to live well, and will continue to do so.
Summary: Ben is definitely the happiest of the three people I interviewed. Whats interesting about this is that Ben's path is the most rigid and constrained, whereas Drew and Erica have had more flexibility. This flexibility has ultimately caused them more stress. In Drew's case, the flexibility to spend without immediate consequence has caused him to put himself into a deep debt whole. My idea starting out was to find a way to provide cheaper, easier financing for education. Now, I think the key might be to establish a framework that encourages students to follow a seemingly more rigid plan to graduation.
How much of your original opportunity is still there?
My opportunity is still there, student loans are a huge problem, I am still certain of that.
My opportunity is still there, student loans are a huge problem, I am still certain of that.
Do you believe that your new opportunity is more accurate than when you started?
Absolutely, and I am also starting to adapt a solution to fit the opportunity,
Absolutely, and I am also starting to adapt a solution to fit the opportunity,
How much do you think entrepreneurs should 'adapt' their opportunities based on customer feedback? (In other words, is there a trade-off between adapting and staying firm?)
Yes- the trade off is ultimately based around confirmation bias. I have interviewed to small of a sample size to confirm my belief, I need to interview more people!
Yes- the trade off is ultimately based around confirmation bias. I have interviewed to small of a sample size to confirm my belief, I need to interview more people!
Hi Zach!
ReplyDeleteMy opportunity belief was very similar to yours. College tuition and debt is turning thousands of students away from receiving a quality education. While public schools, funded by the state, attempt to keep tuition down, private colleges and grad programs are reaching astronomical prices. As you mentioned, many people spend the first years of their first job just paying off student loans. A huge opportunity exists to improve the system. While, individuals may be happy with the education they received , we must ask ourselves at what cost?
Hello Zach,
ReplyDeleteI completely agree with your opportunity belief. It is very frustrating how expensive college is and how many of us cant afford it. It is counter productive to have the future of America to be in debt. I think it causes a lot more problems than it fixes. By lowering the cost of colleges, I could only see positive results.