Student debt crisis: How to graduate college debt-free

Roughly four million young adults are starting their senior year in high school. What's in store for them when they graduate and how can they start planning for retirement?

Robert 'Bob' Powell, and Girls With Impact founder and CEO Jennifer Openshaw break down the student debt crisis, women in business, career advice for the next generation, and more in this week's episode of Decoding Retirement.

How to graduate college debt-free (00:25)

Four million high school students will graduate high school in 2025. 61 percent of those high school graduates will attend college. And at present, about 51 percent of them will graduate college with debt, on average $29,400 in debt, according to the U.S. Bureau of Labor Statistics.

Openshaw provides her tips for how college students can graduate without debt. "One of the things that we've found with our business academy at Girls With Impact is the colleges don't see young women or students with this kind of business training. And so they are awarding these young women with full rides to college as a result," Openshaw explains. "And so what we hear from our young women is that by leveraging this business training where they bring a business idea to life, they learned the fundamentals of business. They learned tools and concepts that come straight out of Harvard business schools."

Federal student loans: How to afford college and pay off debt (08:40)

Openshaw explained the role of parents, and especially grandparents, in helping students pay off loans. "One thing that parents can do is really bring their kids into the conversation about what portion the parents are going to pick up if they can," Openshaw says. "But the other really interesting other piece can be the grandparents ... Grandparents die. And only then do those assets pass on ... but what a difference they can make by passing some of that on now and seeing the joy of the grandchild benefiting from it."

Career advice for the next generation (17:25)

Openshaw also provided her tips for millennials and Gen Z, including how to start building your nest egg for retirement. "Literally it can set you back by hundreds of thousands of dollars if you don't get a good start on your earnings, Openshaw says. "I do think a couple things that young people can do is set up informational meetings with people in different roles, focusing on those industries that are most of interest to them."

Ask Bob: FAFSA (12:10)

In our special segment, Ask Bob, Bob answers the most common retirement and investing questions from our listeners.

Question:

A reader asked about the FAFSA. What is it, and when do I need to fill it out?

Answer:

The Free Application for Federal Student Aid (FAFSA®) form is an application for federal student aid. You need to complete the FAFSA form to apply for federal student aid such as federal grants, work-study funds, and loans. The FAFSA application season typically starts on October 1, and the FAFSA deadline is typically June 30, or the end of the academic year, whichever comes first.

Ask Bob: Building credit (22:35)

Question:

What is a good way for my child to build credit as a college student?

Answer:

A few things to consider: open a student credit card, open a secured credit card, become an authorized user. If you become an authorized user, make sure the credit issuer reports authorized users to credit bureaus.

If you've got questions about money or retirement, email us at AskBob@yahoofinance.com.

Video highlights:

00:20 - How to graduate college debt-free

04:45 - College admissions: Keys to boosting chances of acceptance

08:40 - Federal student loans: How to afford college and pay off debt

09:20 - How to utilize rental income to pay off debt

12:10 - Ask Bob: What is the FAFSA?

12:45 - How Girls With Impact has helped women in business

17:25 - Career advice for the next generation

22:35 - Ask Bob: How to build credit as college student

Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!

Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds and Alexander Frangeskides.

Find more episodes of Decoding Retirement at https://finance.yahoo.com/videos/series/decoding-retirement.

Thoughts? Questions? Fan mail? Email us at yfpodcasts@yahooinc.com.

Editor's note: This post was written by Zach Faulds.

Video Transcript

Some 4 million young adults are starting their senior year in high school.

What's in store for them when they graduate?

Hi, I'm Bob Howell and welcome to Decoding Retirement where we go behind the headlines to help you plan for or live in retirement.

In today's episode, we're going behind the headlines with Jennifer Char the CEO of girls with impact Jennifer.

Welcome.

Great to be here, Bob.

Thanks for having me.

Oh, it's a pleasure.

So let me do a little table setting.

1st 4 million high school students will graduate high school next year.

Some of them, 61% will go to college and of those going to college, 65% or so will be women, about 57% will be men.

Some will graduate with debt and at present, about 51% of them will graduate with debt with about on average $29,400 in debt and you have a plan to help them graduate without debt.

It's a chunk of change, isn't it?

So, one of the things Bob that we've seen is uh colleges are looking for students who demonstrate some kind of leadership skills, right?

And the old paradigm of sports, volunteer and good grades.

If, if everybody's doing the same thing, the question is how do you stand out and all the more important for scholarships, right?

If you're lower to middle income student.

So one of the things that we've found with our Business Academy at girls with impact is the colleges don't see young women or students with this kind of business uh training.

Uh And so they are awarding these uh young women with full rides to college as a result.

And so what we hear from our young women is that by leveraging this uh business training, where they bring a business idea to life.

They learned of fundamentals of business, they learn tools and concepts that come straight out of Harvard.

Business Schools for the colleges.

It's an eye opener because in the business world, um you know, women make up about 54% or so of the workplace, but they are only about 8% of the CEO S. So from a college's perspective, boy, a young woman who comes in with business training and some acumen is a standout.

It also shows initiative and what uh employers and colleges are looking for today.

Um Employees are, are looking for, show us something you've done tangible.

Our program actually allows that if a student does and go through our program, they can still demonstrate that to colleges because colleges are also looking for, show us something you've done to demonstrate real leadership.

And it's interesting because in the early days of the development of our program, I actually picked up the phone to the head of admissions at, at uh Harvard.

And I said, you know, just tell me the difference of a student of volunteering for something like a habitat for humanity off in Africa versus starting their own project or venture, even if they're maybe not going to stay with that long term.

And she said starting their own venture shows much more initiative, right?

Takes much more work, uh uh discipline, et cetera.

So it's a really good takeaway, I think for families.

So um in your case, these students are graduating without any debt at all, no debt at all.

I mean, let me just give you a great example.

Uh Jody Bell raised by uh two parents, but the mother was the primary breadwinner.

She could not afford her first choice of college, which was Fordham University.

She visited her second choice college.

She showed them her girls with impact business plan and venture in this case.

And the next day she said they called me into the guidance office, handed me a $20,000 check and gave me a seat in the Mock Un and put her into the honors program in business from there on out.

She was on a full ride scholarship.

We have another girl who got literally three full ride offers to college, full rides.

Um totaling nearly a million dollars.

She's at Johns Hopkins right now.

Um, so incredible stories of just being able to diff differentiate yourself from the pack and looking at those spaces that, you know, for women, the, the business training is really one of the core areas where they're looking for more women in, in our colleges, lots of other things too.

I mean, you know, uh, there's two other important strategies I think for families.

One is the community college track, not to be forgotten because boy, you can save tens of thousands of dollars just by going to community college the first two years.

Um I actually put myself through college and, um, and it was a tough challenge.

I went to three undergraduate colleges did not want to graduate from.

The second was determined that I was gonna go to someplace better.

But, um, I ended up moving in with my uh, aunt and uncle and paying $100 a month for food and board and, you know, graduated with very little debt and it's just so freeing.

Right.

So when I think about college admissions process, I agree with you.

They're not looking for folks who have these typical profiles of sports, some service and good grades or SAT or AC T scores.

Um, but when you talk about uh, college admissions, they're also looking for uh, commitment.

So they're not looking for someone who has done something for one year but has done it consistently over three or four years of high school.

So is that the case that you?

Great point?

I think that is true, which is why to some extent things like boards or other things where you're showing discipline over a number of years.

But the other thing I would add to that would be um thinking about the story that you can paint that does look like a commitment over uh a number of years.

So going back to this young woman, Anika who got three full right offers to college, she had some interest in autism, actually kids with autism.

So then when she came into our program, she had done some research, came into a program, did this business plan around that very idea using virtual reality of all things.

And so she bolstered her story, showed discipline and commitment to a pretty rigorous program and some other things and use that in her college applications in three ways.

So three key areas to, to think about one is your essay?

Was there listing it as your extracurricular thinking?

What is the thing that's gonna stand out?

And that fits with a very powerful and unique story.

Uh And then the last is your uh interviews.

We don't always do interviews.

But if you do, we've seen that these um the interviewers are really zeroing in on this business training or tell us about your venture because they again, they don't see that a whole lot.

And they know that this training is so important for success.

A, a couple of personal notes.

Uh, my wife does essay coaching for high school students.

And it's really interesting if you can, uh, get the students to sort of differentiate themselves in their essay.

It goes a long way.

One of the students that she helped, um, it was actually noted in the acceptance letter that was delivered from the university to the student, her essay in the acceptance letter that you've been.

So it matters, it hugely matters.

And it's interesting because we have another one of our graduates who's in college right now.

And, and one of the things that I think is super important, particularly when you're in college to set yourself up for financial success uh to get the best paycheck that you can is getting work experience while you're in college.

I just think it's, you know, you see a big difference between these students coming out and what we are seeing out there is that entry level jobs in the descriptor will usually say we want 4 to 5 years experience.

How can you really compete if you don't have something going for you?

Right.

So in one of my other enterprises, I hired students from Northeastern University that where they have an actual six month co op program.

And you know, these kids are getting real world experience in the world of journalism.

So it's a game changer in terms of them landing, not just a job but a job that's um, you know, paying the bills and, and something that they can learn a lot from.

So we talked a lot about graduating from college without debt.

I want to tell you about my personal experience.

I have triplet sons and one of the things that we did was we, instead of talking about school in terms of reach schools and safety schools, we talked about funded and unfunded schools or retail versus wholesale schools.

And what we tried to do was knowing full well that the kids in the top quartile of the incoming freshman class based on GPA or scores as AC T and sat, that's where the most merit aid was available that we would apply to only those schools where they would be in the top quartile of incoming freshmen.

So brilliant.

I love that, especially if you have triplets, my trips, especially if you have triplets.

But the other thing that we had to do in addition, because, you know, it's roughly call it 100 and $50,000 per year to send kids to a private four year school is, you know, you have to rely on 529 plans, you have to rely on maybe some cash flow.

And because I wanted my Children to have skin in the game, I did have them take out federal student loans in order to say that, you know, this education has value to me above and beyond.

It just being a college experience.

So I think that is so important and one thing that parents can do is is really bring their kids into the conversation about what, what portion maybe the parents are gonna pick up if they can and the Children.

But the other really interesting other piece can be the grandparents.

One of the things that, you know, is so common is grandparents die and only then do those assets pass on and it's usually gonna go to the grandkids anyways.

And it doesn't matter how much it can make such a big difference, but what a difference they can make by passing some of that on now and seeing the joy of, you know, the grandchild um benefiting from it.

So you have another strategy around paying for college, which has to do with rental income properties.

You know, I started this whole strategy myself a while back.

But, you know, if you're paying for your child's rent, which could be a couple $1000 a year.

Um A lot of people are buying units that their kids can then uh stay in, in college towns.

But even if your child is not in a college town, it's such a great investment strategy.

So, uh you know, supply and demand really dictates prices, right?

And you think of college towns and maybe not only strong college towns but where there's in, in the, in the case that I'm uh uh focused on, for example, um it's uh bill where there uh is a major hospital and so you wanna be really mindful if it's not your own child or maybe others, who is your target audience that, that is gonna be renting from you?

Um You also need to make sure that somebody is gonna be there to care for the property, right?

Uh And it's interesting because the property management services I think have gotten really uh modern today.

Uh you know, 20 years ago, you know, they commonly take like 10%.

It can be a lot, but today, you know, they will, they will use an online platform to give you the full view of the status of the apartment or the unit.

Um you know, the background credit checks of people that they're looking to uh to lease to.

Yeah, it sounds like a great strategy.

What does someone need to do in order to execute it?

Obviously cash, cash.

Yeah, but the one of the is that in some of these areas that the um opportunity to get in for a first time is a lot less expensive than other areas.

So, uh if you know, let's say 300,000 in a good town with people who are employed in good jobs and can rent.

So, um clearly you need a down payment unless you wanna put all your eggs in that basket, I think being mindful of that, right?

You wanna think about it with regard to your entire portfolio, how much of, of it is in real estate?

Um You need to line up a, a management firm if you're not in the area or know somebody who's in the area and then um uh be mindful of uh the the renter types that you're going after to uh to lease from you.

Is it fully employed people?

Is it students, is it graduate students?

Uh and also looking at what the rental properties are, are going for for, for like properties, gives you a sense of, you know, going to be breaking even at this point or am I going to be coming out ahead?

But I just think the college strategy can make so much sense in your overall portfolio.

Jennifer, we have to take a quick break, but when we come back, we'll talk more with you about girls with impact.

But first we're going to answer a reader question in our Ask Bob segment.

What is the FAFA?

And when do I need to fill it out?

And the answer is this a free application for Federal Student Aid FAFA form is an application for Federal student Aid.

You need to complete the FFA form to apply for federal student aid such as federal grants work, study funds and loans.

The FAFA application season typically starts on October 1 and it, it typically ends on June 30th or the end of the academic year, whichever comes first.

So when we come back, we'll talk more with Jennifer Openshaw about girls with impact networking and other topics.

Welcome back to Decoding retirement talk with Jennifer openshaw from girls with impact.

And before the break, I promise that we would talk more with Jennifer about girls with impact.

Tell us more.

Well, you know, um we're really focused on leveling the playing field for young women in business.

And if you look at Bob the whole uh job market, our young people coming out of colleges are not really prepared to look for a job and to step into the workforce ready on day one.

And the vast majority of employers say that they are hungry for talent, but they need ready talent.

85% of employers say that first time hires lack basic skills that they need.

I mean, that's a huge number, 85% basic skills um Excel, communicating some of the executive functioning skills, uh how to follow up on projects and those sorts of things.

So lots of basic skills, which partly what we're trying to do with girls with impact is we focus on young women because even though women make up over 50% of the workforce, there are only about 30% of executives and companies and just 8% of the Fortune 1000 CEO s and mckenzie talks about this huge untapped economic opportunity for all of us to thrive and for America to thrive.

If, if we take advantage of the the female talent.

And so these young women come into girls with impact.

Um they basically bring an idea to life, could be a for profit, nonprofit venture idea.

And in the process of that, Bob their confidence takes a 180.

And that confidence is so important because we see it trickling into the workforce, for example, um 30% of women don't see themselves as leaders in the workplace.

Uh Something like 80% of women aren't comfortable asking for sponsors in the workplace.

So it starts very young and these are also skills that uh that high schools are just not equipped to train at high schools and college.

So these young women come into the our academy, uh it's offered tuition free for these young women, our corporate and philanthropists make that possible and they come out of it with a huge leg up for college or their career, just tremendous leg up.

So you mentioned the technical skills, some of the soft skills that I'm fond of talking about are networking.

Sometimes networking is easier for what men than women.

Well, I think so, I mean, we're, you know, me, men are sort of taught to be a little bit more bold, right?

Which is why again, I think starting very early with these young women, but you know, networking is not just about who am I and here, here's what I do and I'm looking for a job.

It's not about that.

I think it's important to remember that networking the best way is, well, how can I help you further your own uh agenda or goals?

And so taking interest in other people uh goes much further.

It's like if you're interviewing for a job, what are the challenges you're facing in your business unit or whatever?

And then connecting the dots, how can I actually help you with that is building, you know, a more meaningful relationship, right?

And, and I think if we think about it that way those relationships come back to uh help you in a, in a lot of different ways.

One of the things Bob when I was in uh Silicon Valley, uh you know, in the boom days, I saw how men mostly because they have most of the venture capital were networking in the venture capital world and I sort of scratched my head.

And so, you know, the founders of paypal and all these companies and I thought, you know, what are they doing that the rest of the world needs to know about?

And it wasn't golf, it wasn't golf.

Well, maybe a little bit.

But what I found was that people who are millionaires, not including their home, did a much better job of leveraging the, the things around the people, places and organizations around them to get to where they wanna go versus the people who are non millionaires.

And so what I mean by that is you know, just last week I had somebody say, you know, gosh, I'm, I'm looking for a job and, you know, how, how do I get started?

We don't look at the things and the people around us.

So that could be, you know, your, um, your parents, your neighbors who work at XYZ Company.

Right.

It could be the, the gym that you work out at there.

There's a lot, a lot of interesting people at these places, right?

It could be your, your place of worship and, and um so we forget to just pay attention to the sort of I, I call it your home zone, but the things that are right around it that can get you to where you want to go.

Yeah.

So another lesson that young people need to learn perhaps uh I'm fond of quoting Joe Kman from the MIT age lab where he talks about you may have eight careers in your life and where you started may not be where you end up in this notion of reinvention is really important for young people to learn.

You mentioned that you've reinvented yourself a number of times as well.

How important is, is it for young people to re invent themselves or think about reinventing themselves?

Well, I think they need to be agile today.

Right.

First off your career is going to be a zigzag.

It's not going to be a straight shoot, right?

And so really important to remember that you have to be agile.

I think one of the most important things that your, your, your future boss is looking for are people who are agile nimble problem solvers being able to connect the dots.

Those are those soft or durable skills that are really valuable today.

Um And really looking for those opportunities where you're gonna learn as much as you can, particularly if you're a first time person coming out of college.

you know, it might not be the exact job that you thought you should be going for.

But is it in the space and can you learn a lot?

And I think that is so important because it's the people I think who go the extra mile in a job that stand out and they want you on their team, right?

They want you.

And so if, if the company comes to a point where they have to make some tough decisions, it's the people who stand out who go the extra mile.

Um You know, who are thinking about what is, what is my boss?

What does the stakeholders need and what, what can I do right then?

And there or after a meeting that really, um that, that carries them far.

So when you think about the current generation that's in the workforce, the or the youngest of those in the workforce, um do you have a sense that they have that mindset?

Because sometimes I think that they uh value a work life balance.

That doesn't always place that desire ahead of their own desires.

That's a great point and it's something we know a lot about.

So this generation is usually focused on social impact and the majority of them wants to personally drive innovation, which is a longer conversation.

That's something that employers need to think about.

This is the generation I see a lot of it where they are juggling a few gigs at the same time.

It is not easy to start a business though, right?

So that's why I think it's can be very valuable to go into the traditional workplace and build skills.

Uh And, and, and that will take you, you know, where it's going to next.

Well, it leads to this other question.

You'd like to talk about purpose and paying it forward.

I sometimes think when I think about purpose, you know, the typical question is what's the meaning of life?

And I was, would always say that the meaning of life is to have a life of meaning and, and, and for you, what is the purpose?

How does someone identify what their purpose is because that can be hard for a young person?

Yeah, it can be.

Well, I think first off you can, I don't think you can go with just what your passion is.

I think you have to be realistic with, you know, what's the economic potential?

I think.

Yeah.

What am I, what am I good at?

What am I?

What do I care about?

What am I good at?

Yeah, and what can I earn money doing?

Right.

And so I like to think about growth industries, like healthcare, technology, I mean, healthcare is hugely booming, right?

And um and by the way, if a if a young person is interested in certain areas like tech, that certainly can imply and uh uh can there can be opportunities in these other growth markets and not to forget about that.

I think where you can learn a lot is really important.

Um, and uh Joe Coughlin is fond of noting that, that, that, that you need to be a lifelong learner.

Yes, you need to be a lifelong learner.

Yes.

Yeah.

So we haven't talked about retirement at all really yet.

But one of the, I think it's all integral, right?

If you can earn a higher salary, you might have more discretionary income to enjoy the things that you want to enjoy now.

But you might as well have more income to set aside for retirement.

Is it fair to say that all these things?

It leads all of it leads to having a better retirement.

It does.

And one of the things that I think is so important is that when young people are, um, you know, I have, I have a cousin right now, a niece actually who's not sure what to do.

She wanted to go into veterinarian is, it's, uh, you know, it's very competitive if you are spending months and potentially, you know, what could, could turn into years doing jobs where you're not learning skills and not starting to earn that paycheck where you can build your, uh, your nest egg, it's gonna have a long term impact on you, right?

And so literally, it can set you back by hundreds of thousands of dollars if you don't get a good start on your, um, your earnings.

And so I think it's really important again to look for those up, not, not to be so um narrow minded in the kind of job because the world is shifting their quickly as well, right?

Um But I do think a couple of things that young people can do is set up informational meetings um with people in different roles, um focusing on those industries that are most uh of interest to them.

And we also at girls with impact, we have a fabulous, uh totally free mentorship program to help young people land in either college or career depending on their age and stage.

And this is, you know, an opportunity for them to be coached by executives.

Um But really helping them think through some of the things.

What am, what am I good at?

What are my interests and, and what's my uh my training?

And now it's time for ask Bob where we answer reader questions about money and retirement.

Our next question goes like this, my child wants to build credit as a college student.

What's the best way?

Well, a few things to consider open a student, credit card, open a secured credit card become an authorized user.

Now, mind you if you do become an authorized user, make sure that the credit issuer reports, authorized users to the credit bureaus and sign up for credit commerce or some agency like that.

Well, I would also be mindful of, uh, you know, people perhaps a boyfriend or a girlfriend, a accessing a credit card and doing some damage on it.

I mean, things happen alerts now the banking companies have gotten much better.

So alerts are real time.

You want to be mindful of that.

Uh and also just the importance of building credit in your own name as you get a little bit older and maybe you're coming together with your partner.

It's really important to have good credit in your, in your own name.

Jennifer.

That's all the time that we have in today's episode of Decoding Retirement.

I want to thank you for sharing your knowledge and wisdom with us.

It's so greatly appreciated if you've got questions about one of your retirement, email me at ask Bob at Yahoo finance.com.

That's all the time we have today for this episode of Decoding Retirement.

Stay tuned for future episodes on whatever platform that you listen to and also keep watching and reading Yahoo Finance for more retirement news.

This content was not intended to be financial advice and should not be used as a substitute for professional financial services.