Paying for School: George Kamel Educates Us on Education and Finances

Drew Thomas  0:04  
Fast fact, a 2023 survey of 1,000 U.S.-based 18- to 20-year-olds found that 74% perceive a stigma associated with choosing a vocational school over a traditional four-year university. I'm Drew Thomas, and you're listening to Bank Chats.

Drew Thomas  0:36  
So, welcome once again to Bank Chats, the podcast that proves the idiom, if at first you don't succeed, try, try again. I am, of course, your host Drew Thomas, with me for this full episode of Bank Chats, is my sometime co-host, full-time producer, Jeff Matevish.

Jeff Matevish  0:49  
Hey Drew.

Drew Thomas  0:50  
Hey, Jeff. And for the record, Jeff does not have to be my part-time co-host, but so far, he seems to prefer that way. I think he just does enough editing with me that he doesn't want to have to listen to have to listen to me talk twice. So, today, we're going to dive into a discussion about college. And including who should or maybe shouldn't be looking at college, how to pay for it, and how to hopefully get what you need out of it to be successful in the career that you're choosing to pursue. And to join us in this, in this discussion, we have a really special guest with us on the program, and honestly, this is a big get for us, really. I mean, it's a big deal. I mean, you know, honestly, it's such a big get for our show that I'm gonna vamp for a second and I'm gonna try to savor it for just a second here. Because honestly, if you didn't read the episode description before pressing the play button, this is a big deal. Our guest today has a fantastically successful YouTube channel. He is the host of the Smart Money Happy Hour with over now this, a million downloads. Whoa, okay. And also, a co-host on what is currently the second largest radio talk show in the country, in America, and he's here. Now, normally, this is the part of the show whenever I would tell you that I'm lying, I would trot out somebody that does not fit this description. But no, he's actually here today. We are happy to welcome to the show, George Kamel. Hi George.

George Kamel  2:15  
Wow, I can't even follow that. You made me look so good. I wish my wife was here to see it, it means a lot. Thank you for that kind introduction.

Drew Thomas  2:23  
I mean, it's, it's truly, it really, is truly an honor to have you on the show. It's a big deal. And so yeah, and maybe your wife will listen to it, and then we'll have like, three listeners instead of just me and Jeff, so.

George Kamel  2:36  
If you can get her to listen, I will be impressed. I try to show, like, look at the video I did to[day]. No, I don't do that, though, that would be funny.

Drew Thomas  2:43  
That would be funny. Although I'm in the same boat. My wife doesn't listen to this very often either, unless I kind of force her into it.

George Kamel  2:48  
That means we married well. You know, you want someone who can keep you grounded, and that's part of it.

Drew Thomas  2:52  
That is absolutely true. I agree. I agree. So, yeah, so, so we do want to talk a little bit about, about college. And, well, I'll tell you what, let's do this. Did I miss anything that you'd like to talk about, as far as, as far as your credentials, or anything, before I delve into the topic here?

George Kamel  3:08  
I think you hit enough. I you know, I wrote a book that came out earlier this year, it was a number one bestseller called Breaking Free from Broke, and the reason that's relevant is because I wrote a whole chapter on student loans, the crisis, that we're in the right way to go to college, and so I'm going to be taking some notes out of that chapter as we have this discussion, so I have my stats ready to go.

Drew Thomas  3:28  
Yeah, that's, that's awesome. So, so let's talk a little bit about college just as a general rule, before we start getting into the financial side of it. So, I think there's a lot of discussion right now happening in the country as to whether or not college is truly the best avenue for every college student. And I went and did a little bit of research on my own, just to give you some stats, and you can tell me whether or not you agree with these. According to the U.S. Bureau of Labor Statistics, as of last year in October, so October of 2023, 61.4% of high school graduates between the ages of 16 and 24 were enrolled in college. All right, so, so we're so you're talking almost two thirds of college, of high school graduates, I'm sorry, are going to college. Is that something that everybody really needs to do? Because I don't know, because I found a follow up study from Burning Glass Institute and the Strada Education Foundation that said that more than half of those college graduates are actually working in jobs up to a year after graduation that don't even require a degree. So, is going, so I guess the first question we have to ask is, is going to college right for everybody? And in your experience, what have you, what have you seen?

George Kamel  4:40  
So, the short answer is, no, it's not right for everybody. I see it as a tool, and it might be a tool that you either need or don't need. But unfortunately, what's been told to all students for decades now is, you got to get good grades, show up, do the homework, follow all the rules, graduate, then go to the school of your dreams at all costs, and don't worry about the money. We'll fund it using some Monopoly money from lenders. And who cares about the interest rate? Worry about that later, and your life's going to be great. And so, we've sort of just ridden all these assumptions until we get to graduation, and students are frustrated. They're broke, they're delaying their dreams, their hopes are crushed. They're not starting families, they're not buying houses, they're not growing in their careers. They're stunted because of these student loans, and it's now become one of the largest pieces of consumer debt in America. Right there behind, you know, mortgage is obviously number one, the sheer amount of that. But then you've got student loans and car loans neck and neck, and so it's a really scary place to be. And I feel bad for the students, because at the same time, they sign, yes, they sign the dotted line, they didn't fully understand. I mean, no one's brain is baked at 17 years old enough to understand what the heck's going on when it comes to six figures in debt. So, I do think it's part of what led us to this crisis. I unpacked the history of student loans in the book and how Sallie Mae got in cahoots with the government, and its scary stuff to say the least.

Drew Thomas  6:03  
So, you mentioned something about, you know, yeah, they sounded on the dotted line, and we talked just briefly before the, before we started, you know, recording the show is that I've thought of that too. You know, a lot of times when you're, when you're buying a house, and you're being asked to produce all of this financial background for yourself to prove that you can make the payment on the home. And you know, a lot of times you, you know, in the, what's the average, Jeff, what's the average, right? Is it like $400,000 or $400,000 for a home in the US right now? Is the in the median average, something like that? Yeah. So, you know, a college education is probably at least half of that if you're going to a private school, maybe a little less if it's public, but you're buying a house at 16, essentially, and you're not being asked to produce anything other than your signature. Is that, I mean, is that fair?

George Kamel  6:47  
If you're a warm body, they'll just let you through. So, I mean, it's scary, yeah, and do you know why Drew? Do you understand why that is?

Drew Thomas  6:54  
No, I really don't.

George Kamel  6:57  
Well, when you look at the history of student loans, Sallie Mae just started doling out money because the government backed it. They said, hey, if the students can't pay, don't worry. We need to encourage all these students to get into college and get to college, get to college. So, what happens is, the colleges raise tuition, because who cares? The students will just borrow more to go to these same schools. They'll start, you know, really pumping the amenities and the marketing of the colleges, and less about the education, more about the, you know, the, the water park and the cafe. And all of a sudden, what happened was, people started taking all the debt. The student loan companies don't care if they pay, because the government, aka the taxpayers, are going to have to foot the bill if the student can pay. And that's what's led us to this point where the, the student loan companies don't really care to do their due diligence to go, can this person actually pay? Because it's not on them in the end, at the end of the day. Whereas the lender, there's actually, actually risk for a lender when they're giving you that mortgage. The student loan companies don't have that same say when they're, you know, in the boat they're in, yeah. So, that's, I think, what's helped to cause the crisis that we're in of $1.7 trillion in student loans.

Drew Thomas  8:03  
That number is mind boggling, to be perfectly honest. I mean, $1.7 trillion in just that type of debt. That's not even including all the other types of debt that people are in. The other, the other question, I guess, becomes, you know, when should you go to college? What kind of you know, what kind of career do you need to be looking to go into, to really require college as, as an education format? I mean, we’re looking at, we're looking at health care, right?

George Kamel  8:29  
Yes, education, law, you know, there's, there's some clear-cut ones that we all know. And the way I look at it, and this is from my friend Ken Coleman, a fellow Ramsey personality, there's two questions you want to ask, is it the only way? And is it the best way? And for most people, they sort of float into a college degree because they don't know what's next, and they're still trying to figure it out. And so, on one end, it's difficult to tell a 17-year-old, hey, you better figure out what you're going to do for the next 40 years of your life, and that degree has to serve you well. That's difficult, yeah. And on the other side, we see people that just get degrees because they don't know what to do next, and they end up $150 grand in debt, and they end up not using the degree, like you mentioned, and that's if they graduate. Because there's some scary stats out there. I want to read you this because it ties into your stats you read earlier, over 60% of recent high school grads enrolled in college. That's the number you said, almost two thirds of going to college. But the National Center for Education Statistics reports that only 63% of college students finish their degree within six years. And so, when you put it another way, for every 10 students who graduate from high school, six go to college, only four will finish within six years. And that means for a whole bunch of people with college debt, minus the, minus the degree. They don't even graduate, and for a third of students going to college, it might be the wrong next step. And so, to your point, a lot of people are just sort of stumbling into this because they think it's the path to upward mobility. They might be the first in their family to go to college, but they have no real plan. There's no real marketplace value on the other side. And even if there is, they may not, not have any passion for it. They just did it because they thought it was going to be a good job, yeah, or their parents did it, and so they went, well, my dad was an accountant, so I'll go be an accountant. And you know, that's, that's part of the problem is we're not helping students figure out what that journey might look like. We're not showing them all the options, like the trades, and we're not doing a good job of financial planning, saying, here's what it's going to cost. Do you fully understand what this means when you want to go to the name brand, famous school versus the community college down the road? 

Drew Thomas  10:28  
Yeah. Yeah, I mean, you said about trades, and I went and looked this up, and I don't know how reliable this, this source is, just because they might have a vested interest in making this sound better, but I found a, there was a story, or a an article published by ZipRecruiter at the end of July of this year that said that the average annual salary for a trade school graduate in the U.S. was just over $67,000 a year. Which is not small potatoes when you think about it, especially considering the most trade schools you can get through in 18 to 24 months and probably cost half of what a four-year degree might cost, you know, per year.

George Kamel  11:03  
10 grand, 20 grand to complete that whole thing.

Drew Thomas  11:06  
Yeah. And I can tell you right now that around here, if you want to try to find a plumber or an electrician, good luck. It's, it's getting too hard.

George Kamel  11:13  
You're gonna be mind-boggled about how expensive it is.

Drew Thomas  11:16  
Yeah, yeah. Well, that's why they're, I mean, but they're in demand. That's why they can, that's why they can demand that, you know. So, that's, that's crazy stuff. So, let's, let's talk a little bit about assuming that you, you feel like, you know, maybe you went to college, maybe your wife went to college, and so you make, you're making an assumption that your children will want to go to college. What's the best way, if you want to try to prepare for that, to go about trying to save money for a child that you may want to send to college someday? Like, should it be a 529 plan? Should it be a standard savings account? Should it be a CD? Should you get into investments? Like, what do you think would be probably the best vehicle for something like that if you wanted to try to save?

George Kamel  11:59  
Absolutely, well, you know, the earlier you start, the better, because compound growth is the name in the game here, and that's going to be your savings rate plus time. And so, the more time you have, obviously the more your money's going to grow. And so, the 529 plan, like you mentioned, that's state specific, those are a great option. And the reason for that is you want to look for tax advantage plans, just like you would with your investments. You know, at Ramsey, we say, hey, the match beats Roth beats traditional. So, if you get the match, it's 100% of free money, take it. Roth, that's going to be after tax money that grows tax free, let's take that next. Then we move on to traditional, which has the least amount of sort of tax savings built in. And so, the same applies for college. When you look at the 529 plan or an education savings account, that's kind of like an education IRA, well, both of those can grow tax free, you're using after tax dollars. The money grows tax free, and then you can withdraw that money tax free, as long as it's used for education related expenses. So, those are my two favorite options. And in recent you know, last decade or so, 529 plans have made some major headway, and I'm a big fan of those for, for two big reasons. The ESA is great, but there's income limits and contribution limits. So, you can only contribute, you know, two grand a year, and if you make over a certain amount, you can't contribute, similar to an IRA. But with the 529 plan, there's virtually no contribution limit, virtually no income limit, and you have a vast variety of investment options within that 529 plan. And so, they're easy to get set up. I set one up for my daughter when she was born, almost a year ago, and now her birthday is coming up. And guess what I'm doing? Hey, instead of buying her more crap, everyone pitches into her college, her future. And let's put some money in there, instead of a toy that's going to get thrown away. And so that becomes a really fun thing to do. I understand this is a luxury for some people to have extra money. And we tell people, Drew put your mask on first, parents. If you're not financially prepared, you're not in the business of trying to save for your kids when you're not saving for yourself. And so, the time to actually invest for your kid's college is once you're totally consumer debt free, you have a fully funded emergency fund of three to six months of expenses, and you're already investing 15% of your own income into your retirement plan. Then and only then does it make sense to go, okay, I have the margin to put some money away from my kid. Because what happens is, the parents become a burden to the kids, because the parents are broke in adult life, and the kids are now having to support them because they didn't take care of themselves financially. And that is a way bigger burden than your student having to figure it out and make a plan that you can do together. And that might be, we're going to go to the in-state, you know, community college down the road for two years, then we're going to transfer. We're going to try to save up, work part-time, get grants and scholarships. There's a lot of things you can do, but you want to sort of set yourself up for a financial foundation first.

Drew Thomas  14:44  
That makes a lot of sense. It's kind of like the, the, the educator, or the savings equivalent of, you know when the, when the mask drops down in the aircraft, like you, your, your, your instinct is to want to put it on your kid first, right? But they tell you, put it on yourself first, and then, you know, your kids, because. I think a lot of parents feel that way. They're like, oh, you know, I'll sacrifice myself for my kids. And that's a, that's a fantastic sentiment, but you make a good point. If you're, if you're setting up your child long-term to then have to turn around and try to, you know, repay that, or somehow take care of the parent that does, you know, it sort of defeats the purpose of saving for them first, you know, in that regard.

George Kamel  15:23  
Well, I feel selfless in the moment, you think like, oh, this is, this is a good thing to do. I'm gonna take out a HELOC to pay for my kids’ college. I'm gonna take out the Parent Plus loans. Well, then the parents are on the hook, and they can't retire because they took on all of this debt later in life. And it's, it's scary for the kids and the parents and so really, the best thing to do is just to talk to your kids as early as possible. Even if you have shame and baggage and guilt and you haven't figured your own money out, you got to say, hey, listen, we don't have the money to pay for college. We're going to develop a plan for you to go to college debt free, because we don't want you to have that burden when you graduate, of trying to figure out your adult life, gain some income, grow in your career, while paying off all this stuff from the past. Yeah, and it just adds up, because you got credit card debt usually, the car payment, the student loan payment, now they want to buy a house, and so it's just too much for a student to carry, and it's why we're such huge advocates of going to college debt free, paying cash for your car, avoiding credit cards altogether, because we found that when you do graduate, you're debt free, with money in the bank, with a great income, you're more focused on your career, you're more present, you're, you're able to buy a house and really develop your adult life and live that American dream.

Drew Thomas  16:33  
Yeah, yeah. That's, that's an excellent point. I want to, I think you, I think you mentioned this, but I want to go back and touch on it just, just briefly. With the 529 plans, that's one of the questions that I think comes up a lot, is, you know, you're starting it early, right? Theoretically, like you said, you started, you opened up, you open one for your daughter, right? She's going to turn one. You don't really know what's going to happen 16 years from now, right? She may decide to go to college. She may decide she wants to do something else. She might want to join the Peace Corps; she might want to... So, what happens with those 529 plans, if your, if your child doesn't have the plan, you do? You know, can you know, what happens to that money? Can you, can you roll it over to a relative? Can you, can you extract that money and use it for something else? How did that? How does that work?

George Kamel  17:19  
Absolutely, and that's, we get that question a lot. What happens if my kid doesn't go to college and all this money is locked away and I can't use it? Well, there's a few things you can do. Number one, you can always change the beneficiary. So, that's a really easy thing to do, and it's a very loose definition of family. And so, this is like my cousin, a niece, a nephew, a mom, a dad, a brother, a sister. There's a lot of people you can then flip that money over to and the funny thing is, people say, I'm worried about them not going to college. I don't want to waste money investing. Well, what happens on the other side is they go, I didn't invest, and now my kid needs to go $100,000 into student loan debt. So, I'd rather have the money there, having it grown for me, that I can then change the beneficiary on. And you know, with a new SECURE Act 2.0, you can actually roll over a large portion of the funds over to a Roth IRA in that person’s name. And I believe it's up to $35,000 over time you can roll over. So, then they can use that for retirement instead. And there's other options. So, if you're saying, hey, I really don't think my kid's gonna go to college, which, by the way, you don't know, so we can make all the assumptions we want when they're four years old. The other options are just, they're not tax advantaged. And so, when you look at something like a brokerage account, that's just an open investing account, it's not tied to retirement, but you're going to use after tax money, and you're gonna have to pay taxes on the money, on the growth when you withdraw. And so, there's a downside. It's not the end of the world, but you're not going to get the tax advantages that you would in that 529 plan or the ESA. The other options, you may have heard of an UTMA or an UGMA. These are the Unified Transfer to Minors Act, Unified Gifts to Minors Act. And these are accounts where you can save for your kids. You can invest in it. But here's the thing, as you know, when they turn the legal age of 18 or 21 whatever it is in your state, the money goes to them automatically. You get no control over that, which is pretty scary to give an 18-year-old $100,000 and say, hope you use it for college. What's the kid gonna do? I mean, I hope my kid is wise enough to do it. They might go get a sports car and really, you know, do some financial damage to their life and blow that money. And so, there are some risks there to investing that account that you have no control over, and you can't change the beneficiary on those. So, there are some pieces of that that I don't like. And so, I highly recommend a 529 plan, or ESA, because of the factors I mentioned. You can change the beneficiary; you can also roll over an amount over to a Roth IRA if they don't use it. And worst case, you can end up just pulling the money out, and there will be a penalty if you don't use it for education expenses. So, you'll pay that, you know, 10% penalty on top of the income taxes. But it's, that's a worst, worst case scenario, yeah, and so it's, it's a theoretical problem that I hope we have one day. The truth is, not enough people are saving, and their savings rate is abysmal, because they're going, well, I have $4,000 saved. I'm like, that's going to buy books, if you're lucky, 16 years from now. You know, we just don't know the costs, and I'd rather have too much than not enough.

Drew Thomas  20:13  
Now, is there any, and we can kind of use this maybe as a steppingstone to transition to talking about students that might want to try to pay for their own way through college, but is there an advantage, a true advantage, to things like in-state tuition versus out-of-state tuition, or public versus private schools? Do you see, you know, in your experience, that there's been, you know, a financial advantage to staying in-state, going to a public school versus something else?

George Kamel  20:41  
Oh, 100% Yeah. I mean, if you're looking at in-state tuition rates, I've got the numbers here that are recent. So, public two-year college, 2023 to [20]24 school year is what we're looking at. Public two-year college is almost 20 grand. Public four-year in-state college is almost 29 grand. Now, let's switch to an out-of-state four-year college, it's almost 47 grand. So, we jump from 29 to 47 from going in-state to out-of-state. And then when you look at a private four-year college instead of a public out-of-state college, you're looking at 60 grand a year. And so, when you start to add these numbers up, you're going, okay, 60 grand a year. That's 240 grand for a four-year degree. Or, if I did it in-state, we're talking about less than 30 grand. So, we're talking about less than half the cost to do it in-state. So, now you got to go, is my in-state, you know, public four-year degree, is it, is it going to be worth it? Versus the out-of-state, public, private degree that cost me over double? Yeah, the truth is, we're not seeing the stats that show that you're going to make over double the salary because you went to that private four-year school. You know, most employers, it's a checkmark for them, unless you got some crazy accolades at one of the most famous schools and you're trying to go to, you know, be in some, you know, health or law, medical program. It really doesn't matter. It's more about your, your soft skills. Do you have the experience? Are you going to bring some things of value to this company? That's what they're looking for. And like we talked about earlier, there's more and more employers that are just doing away with the college degree requirement because they want people with experience. And what happens is you get these people who are overqualified because they have way too much education and no real-world experience. Who are you going to hire, the guy who graduated high school and has been working for four years or five years, or the guy who's never worked a day in his life and has his third master's degree, but no clue how to actually do the job?

Drew Thomas  22:31  
Yeah, I mean, Jeff can actually probably speak to that a little bit, right? Because you got a, you got a bachelor's degree. You get onto, you went into the workforce, and then you actually went back and, but you went to community college, right?

Jeff Matevish  22:40  
Yeah, I did it a little bit backwards. Yeah, I got my bachelor's degree in computer science and worked, worked in that field for almost a decade, and I went back to school to a community college, for media, then, and that's how I landed this job.

George Kamel  22:57  
Hey, that's amazing, yeah. I mean that also goes to show you that your plans change.

Jeff Matevish  23:01  
Yeah, and it was the best decision I could make, yeah.

Drew Thomas  23:04  
And I think that's a good point that you made too. Like, plans do change. I mean, statistically, I think I read one time, and I can't, I can't speak to where this is from, so it's completely anecdotal, but the average person changes careers seven times in their life. And if that's true, and now I don't know if they consider like, oh, I worked at Dairy Queen to start, and then I, you know, you know, was a dishwasher at the local steakhouse or something, right? What is a career? But if you're changing your position, if you're changing your career, or your, your job, or whatever, seven times in your life, how often is your college grad, your college degree, directly applicable to the job you're doing? And I think that's, that's to your point, you know, a lot of employers, they want to know that you have a bachelor's degree. They don’t necessarily care what it's in, just because it's more showing that you have the tenacity to stick with something, that you have the ability to, you know, follow a curriculum, to get through the process, than it is necessarily... Now, would I necessarily personally advocate going and getting a sociology major? Probably not, unless you really want to think deep thoughts for a living. But I don't know how much that's, I don't know how much that's a thing.

George Kamel  24:17  
Well, you end up being a professor or teacher, hopefully, if you can hopefully, yeah. I mean, it's kind of like philosophy, I was, I'm a big philosophy fan. I had like, a half minor in philosophy, but I knew at the other side, no one, I can't search philosophy on, indeed, and find a bunch of jobs out there other than Professor of Philosophy. That's a tough one.

Drew Thomas  24:37  
Yeah, that makes sense. Let's talk a little bit about, you know the idea that I want to go to college. I'm 16, I'm going to graduate from high school in a year or two, and I want to go to college. My parents don't have two dimes to rub together to give me. What would you say is the first thing that I should be looking for to try to help pay for that?

George Kamel  25:02  
Well, number one, there's a mindset shift, a sort of paradigm shift, that's difficult for a lot of people to make, and it's this, take debt off the table. If debt was not an option, what would you do? How would you figure it out? How creative would you get? How hard would you work? And the problem is, debt is such an easy shortcut to the things that we want, that it just becomes normal in our life. And it's largely, you know, it's, it's kind of why America has become land of the free and home of the broke. Because we just went, I could afford the payment. I could afford that payment. Yeah, stack another one on and now all of a sudden, we're clamoring about inflation, and the guy in the White House has to fix it. And when you take debt off the table, it actually opens up your options, because you realize how many things that are in your control, and that might be all right, I can open a college savings account, even if it's for a few years. That's going to allow me to stack up some cash to maybe get through the first semester or the first year, or get the books, whatever it may be. And the second thing is choosing an affordable school. That's the number one factor, is the school you choose. And there's a lot of affordable schools out there. I know community colleges, they've gotten a bad rap in the past, but the truth is, they've come in such a long way, education wise, and competing with the in-state schools, with the private schools. I interviewed a student and professor who went, she taught at the in-state school. She taught at the community college, and it was the same exact course material. There was no difference in the quality of education that students are getting, and it's at a fraction of the cost, because community colleges have lower overhead. They're for the local community. They're not trying to market to a broader base, and, you know, being wasteful with all this money. And so, there's a lot of options when it comes to affordable schooling, there's certifications, there's things you can do online, which also has lower overhead costs when you sign up for these kinds of courses and programs. And then the next thing is scholarships and grants. A lot of people go, well, no one's actually winning those it's like the lottery. And what we found is that if you make looking for scholarships and grants a part time job, this amazing thing happens, you might get seven of the 80 you applied for. Yeah, and, you know, once you have a good, you know, a good essay, there's some, there's some classic things they look for when it comes to applying for these, and if you just make it a part time job and just focus one or two hours a week as a student to apply for these, the little ones add up. 500 bucks here, 1000 bucks there, all of a sudden, you're going, oh my gosh, that paid for a full year. Yeah, if I kept doing this year after year I could cash flow school completely. And then the last one is just working part-time while in school. We found that there's a correlation between a higher GPA and students who worked a part-time job of, you know, 15 to 20 hours a week. And there's a piece of that, that, that diligence, that discipline. You got to know your schedule. You've got to be on top of things. And that helps cash flow college as well, while keeping your GPA up.

Drew Thomas  27:48  
Yeah, I can speak to that a little bit in a personal way. You know, I went to a local college, I lived at home to try to save money. My parents were really great about letting me do that without having to pay a lot of, you know, bills on the side, or anything like that. And I think you know that, that's also something that I think a lot of students and parents, quite frankly, don't always consider, when they're sending a child to school or you're going off to school, is that they look at tuition and they look at books, but they don't necessarily look at room and board, food, everything, transportation, all the other things that go into living, not at home, when you're in college. So, there's that. But I was the same. I worked a part-time job all through school. And, you know, 30, probably 30, 40, hours a week. I mean, I don't know how, but it was, it was a lot, I mean, and at one point, I had three jobs, you know, and you have to, I guess, you just have to make that decision, like, is it worth it to me to put the nose to the grindstone and do what I can, or is it not right?

Jeff Matevish  28:51  
And sometimes you can work while you're going through school, through, like, work study, yeah, yeah, yeah.

Drew Thomas  28:57  
I mean, colleges will definitely offer work study programs. Now, I don't know how, how much money you're actually going to make, necessarily working at the library on, on campus, but hey, it's better than zero. Yeah, right. I mean, I guess anything better than zero?

George Kamel  29:10  
I did that at my college, even though I went into debt. And so, I was the guy, a knucklehead, you know, 20 years old, going into debt for this. I didn't understand. I thought my parents just said, oh, don't worry about it. Next thing I know, I signed on the dotted line for like, 11 different student loans. But while I was in college, I worked for the Media Relations Department, doing kind of PR work, you know, writing press releases and all that, getting paid, you know, $9 an hour, and it adds up, and you feel this sort of dignity in making money, especially while you're a student. And guess what? It helped me with my future, because future employers saw that experience and it counts. They go, hey, that's a job. You got paid to do something. And I did gain some real-world experience by doing that.

Drew Thomas  29:51  
Yeah, that makes a lot of sense. I was looking in, you know, to be fair to the people that go to college, right? One of the other statistics that I found, again from the U.S. Bureau of Labor Statistics, they said the college educated workers generally enjoy an annual median and median earning about 86% higher than those whose highest degree is a high school diploma. So, now that number could possibly be skewed based on the fact that a you know, a cardiac surgeon, is going to be making hundreds of 1000s of dollars a year, maybe millions of dollars a year, which is going to sort of artificially, maybe move that median number a little bit, but at the end of the day, statistically speaking, if you go to college and graduate, you are likely to make more money than if you are a high school graduate only. Is that, is that fair?

George Kamel  30:43  
Yeah, well, I have these stats in the book because I compared them, so let me go through both and get your take on this. Sure. I kind of cover both sides because I'm not anti-college, I'm not anti-education, I just show both sides. So, it might not be the right next step, and here's some quick reasons. The four-year degree isn't the requirement it used to be, we covered that, not all degrees rake in the big bucks, we covered that. You might end up with regret of taking all the student loan debt and how it affects your future. And number four, we'd mentioned this, graduation is not a guarantee, and so if you graduate, if you don't graduate, and you still have the student loan debt with no degree to show for it, that adds, you know, insult to injury, there. Now some of the reasons that it might be the right next step, and this is what you're talking about. Some jobs do require a college degree, teaching, nursing, engineering, law, and even when it's not required, it can help you stand out. And then the next thing is, college grads earn more. Here's a study I found 2021 the average college grad earned $69 grand a year, compared to $42 grand earned by someone with only a high school education. And that gap shrinks a bit for those that have some college or an associate degree, but the data is clear, the lifetime earning potential of college grads is higher.

Drew Thomas  31:53  
Yeah, so, but again, it depends on whether you even stay in. I think that you make a good point about you, whether, whether you graduate or not. I remember sitting in my, I remember sitting in my college orientation, and the person up at the front, you know, said, okay, look to your left. All right, look to your right. Because, you know, four years from now, one of those two people isn't going to be sitting here, right? They're, they're not going to make it through the program. And you think to yourself, why would you like, why would you invest all this time and effort and money? But I think some of it comes from the fact that, you know, I mean, let's be honest, there are students that go to off to college because they want to party, because mom and dad are paying for it, you know, they go, they look for the school that that allows you to sort of skate through, or whatever it might be, and that's not a reason to go to college. And I think maybe some, some students have lost that. I don’t want to say all because a lot of students go to school for the right reasons, but some students don't. They see the, they see the movies of what it's like to be in a frat or sorority or something like that, and they want that experience. But there are probably better ways to get that experience than spending $240,000 over four years.

George Kamel  32:55  
You can take a lot of trips to Europe and be on your journey for $240 grand, I'll tell you that much, if you're just looking to get life experience.

Drew Thomas  33:02  
Yeah, so, and you, you kind of touched on this earlier too, but there are a lot of schools that seem to be investing that money in ways that don't necessarily correlate directly to education. You know, they, they, they, they try to attract students because they put in a brand new pool, or they put in some big quad, or they put in and, you know, sometimes I think that the schools are a little bit to blame for some of this, because the money that they're asking for is not necessarily going back into providing quality education, quality teachers, professors. To your point, you know you have a person that you know decided to leave an in-state school and go to a college, you know, community college and you're getting the same education. You know that person didn't lose half of her knowledge just because she decided to start teaching at a community college instead, so.

George Kamel  33:48  
Absolutely. And you're right, this does come down to the marketing. And when you look at a college campus tour, it's usually not, look how many books are in our library. Look at how cool our classrooms are. It's the landscaping, the football team, the world class cafeteria, the luxury dorms, the water park and all of that kind of became, you know, grease in the gears that helped this marketing engine for colleges. And, you know, we talk about the scam that is the U.S., you know, World News and World Report, we've seen the college rankings, and we cover it in Borrowed Future, how it became sort of this, this scam that colleges could pay to get on this list because it helped their marketing. And it became less and less about the quality of education, and it became more of this, like just capitalist rat race to see who can make the most money and how we can inflate tuition, tuition. And guess who's caught in the gears here? It's the students. Yeah, who are just shelling out more and more money, because this is the path we created for them, and we have not guided them in any other way.

Drew Thomas  33:48  
Let's take just a just a couple of minutes, I'd like to talk a little bit about the other side of this, which is, I've graduated from college, and I am saddled with debt. I made the decision to, to take out loans. I made the decision to do those things, and, you know, to be fair, that's a lot of people. There's a lot of people that are in that boat. What would be some of your best advice on how to try to pay down that debt and get out from under that, that anvil that's hanging over their head as efficiently as possible while still being able to live a life?

George Kamel  35:18  
Absolutely I remember feeling that way. I graduated with $36,000 in student loan debt across, you know, 11 different student loans, and I felt helpless because I wasn't making that much money back then. So, to see that kind of number in front of my face, it just felt like a mountain that I would never be able to get over. And so, as we take calls on the Ramsey Show, one of the hardest things to do is just look in the financial mirror and go, it's not all my fault, but it's my responsibility. At the end of the day, my name is attached to that loan. No one's going to come save me. The government's not going to forgive it. I'm not going to wait on the next President to see what they do. I'm not going to let the interest continue to accrue. I'm going to do something about this. And those are the people that end up paying off their debt. And the way that I paid off my debt, the way that we've seen millions do it is through the Debt Snowball Method. And this is different than Debt Avalanche, which focuses on the highest interest rate. We focus on the smallest balance. That's the one thing you want to knock out. So, make minimum payments on all of your debts. List them out from the smallest to largest balance, and on that smallest one, we're going to throw as much extra as we can toward it, and that's by getting those side jobs. That's by cutting down our budget. We're not going to go out to eat. We're going to keep living like a broke college student because we want this debt out of our life ASAP. This is not a 10-year plan. This is a two-year plan. We found most people can pay off all consumer debt within two years. It took me 18 months to knock out that $36 grand plus another $4 grand in credit card debt, and I found that people in their 20s are able to do this. They're calling in. They're doing their debt free scream, live on the show. They're paying off $50, $60, $100, $150, even $200 grand. And obviously, hopefully, the more student loan debt you have, hopefully the higher your income. You know, when if someone calls in, they go, we got $400 grand the student loan debt. We go, Who's the doctor? Who's the lawyer? Please tell me there's a surgeon in here somewhere.

Drew Thomas  37:02  
Yeah, that's a lot of money. That's, yeah.

George Kamel  37:04  
Exactly, so, you know, the bigger the shovel, the faster we can, we can clean this up, but the Debt Snowball Method is the path. But it takes sacrifice, it takes diligence. But you make progress real fast, you get momentum, and you start to believe that there's actually some light at the end of this tunnel.

Drew Thomas  37:20  
So, just to be, just to be sort of clear about this, because I'll be honest, I was, I was watching one of your, one of your, one of your YouTube videos that explained the difference between that method and the method of sort of paying off high interest debt first, right? So, like, what is the difference between those two methods? Because I think they sound similar to a lot of people.

George Kamel  37:42  
Well, with the Avalanche Method, you're not really concerned about balances. You're just looking at what has the highest interest rate. Okay, my credit card is, you know, $5,000 and the interest rate is 28%. So, my student loans, even if I have one that's $1,000 with a lower interest rate, your brain goes, Okay, I'm gonna pay off the highest interest first, because I'm losing out the most mathematically. But what we found is almost nobody's actually doing the Avalanche Method with success. And with the Debt Snowball Method, it's focusing on psychology, and it's about behavior change. It's about seeing that quick win, because when you're attacking the highest interest, it might take you, you know, a year to pay off one debt, but when you do the Debt Snowball Method, you knock a debt out fast, which frees up a payment. Now we have more money to throw at the next debt. And you can see, that's why we call the snowball. You gain more snow as this thing rolls down the hill. Yeah, and you free up another payment, another payment. And, you know, it's funny, there was a, there was research from Harvard Business, Time Magazine, all saying Dave Ramsey was right, the Debt Snowball Method is the best method to pay off your debt. And so, it's funny, after all these years, research shows it works. So, we had, obviously, millions of people, as, you know, evidence, but, you know, it wasn't enough. You need science sometimes to back all that up.

Drew Thomas  38:56  
Well, yeah, yeah, you have to have some, some big name, you know, think, Think Tank, you know, put their name on the side of it and say, you know, yeah, this is the way I do it, you know.

George Kamel  39:06  
No w, if you want to do Debt Avalanche, and you're going to be super intense, that's fine. The, I want you to debt free, no matter how you do it. We've just found that the actually, the finance, the finance part, is negligible of how much money you're going to save by paying off the highest interest first, because of the speed at which you're attacking this debt. Now, if you're gonna wait 15 years, well, let's attack this highest interest. But we're talking about a two-year plan, you know, 18 months, 24 months, maybe 36 months, if you've got a big pile of debt, and as you knock it out fast, you really save a ton on interest just by getting rid of it fast, regardless of, of the order. Yeah.

Drew Thomas  39:40  
I mean, that makes a lot of sense. I mean, and let's be honest, if you're a struggling college student all this time, you're already used to eating ramen, so exactly, you know, you just go back. Yeah.

George Kamel  39:49  
Well, the problem is, when you graduate, everyone goes, well, you're still driving that beater car. You need to get something nice; you have a job now. You need to get a house; renting is a sin. Buy a house, buy a house. And so, all of these sorts of like post college adult things we think we need to do, we got to have a nice apartment, we want to buy a house, we want to upgrade the car, we want to get some fancier furniture. All of that leads us down to sort of consumer vicious cycle where we stay in debt, we have payments up to our eyeballs, and we're really not any happier than we were previously because of this debt. Yeah, and that's really the problem I'm seeing. It's not an income problem in America. Has nothing to do with inflation. It's simply the levels of consumer debt. They keep going up, and no one is willing to sacrifice their lifestyle because they feel like life is hard enough. Let me just enjoy. You know that this pile I'm in, guys, you know, just stacking up more and more debt, and some one day I'll deal with it, and that one day never comes. Yeah?

Drew Thomas  40:43  
Well, I mean, you know, so, I mean, whether you're a college student or a college graduate, I should say, or whether you're not, I think that applies. You know, no matter what kind of, you know, debt you may put yourself into, I think there's a, there is a way out if you're, if you're responsible enough and dedicated enough, I think, to try to make a difference with it. But, yeah, so, I mean, from, from a college perspective, I mean, I think this is a, an important conversation that I think a lot of people should be having within their families, you know. And I would like to think that maybe at some point, you know, some of the colleges would, would have to be held accountable to some degree as to, you know, how much they can keep, increasing their fees, their tuition, things like that. But I don't know if that's, if there's anything on the horizon that would possibly do that, being especially for the private schools that are sort of less beholden to public funding and things like that. But what other, what other topics have we not touched on that have, that have been in your book, or that you've dealt with in your, in your time, in your career, that maybe you might want to talk to us a little bit about, that I just didn't think of?

George Kamel  41:48  
Absolutely, well, you know, student loans are definitely one of the biggest crises we're facing as, you know, Americans. But there's other pieces to the puzzle that I think sort of plug into all of this, and I go through it in order in the book, the first two thirds of Breaking Free from Broke I really unpack this sort of, I call the toxic money culture of just, we've gotten into debt at an early age, to get more debt, to get more debt. So, I start with credit scores. And I know, you know we're talking, you know we're, you're tied to a bank, and so it's funny to even talk about these things. I have a controversial stance, I get it. But I think the credit score is one of the greatest scams that our students are falling for, because here's what they're told, get a credit score as soon as you can, which means you have to get a credit card as soon as you can, and start racking up some bills as soon as you can, so that you can have access to more debt, like a car loan. So, they go, great, I can get a great rate on my car loan. So, they go out and they buy a $40,000 car when they make $30,000 and the math ain't math-in here, but they take on the payment because they can technically afford it, because the car salesman goes, oh, we can get your payment down, no problem. And now they have credit card debt, they have student loan debt, they have probably a mortgage on the horizon, probably more than they can chew because the lender said, oh yeah, you're eligible for $500,000 and the student's going, are you sure? I don't know that I can handle that kind of payment. You know that they're way more lenient than they should when it comes to real people's budgets and what things cost. And so, once you start stacking all of this up, the other one there, let me see I have student loans, car loans and credit cards, mortgage traps, investing traps, all of that sort of just adds up in your life to where you go, I'm making $5,000 in payments to lenders every month. Yeah, just to live. And that's where people have such razor thin margins that it's, it's hard to get ahead. They're going wait George, you want me to invest 15% of my income with what like show me where it is, let alone providing for kids. It's one of the reasons that you know students are, younger, people are delaying having kids because they're going, I can't afford to live for myself, let alone raise another human being. And it's sad to see those dreams delayed, of buying a house, starting a family, living where you want to live, all because of debt. Yeah, and so I think there's a bigger system at play here, and student loans are, they're a major part of that, because of the amount of debt it creates in someone's life. When you look at, you know, okay, I've got a few grand in credit card debt, I have my car loan, but student loans can be the highest amount of debt you have, yeah, outside of a mortgage. And so, it's definitely one of the big ones we got to tackle, but I advocate for a debt free life, and you can still, I love my bank, and you can still bank and have a great life and invest, and everyone's going to win. But I don't think debt has to be a part of your life sentence.

Drew Thomas  44:34  
Yeah, I you know it's, it's only a loose connection, but it is a connection that I remember when I went to college, the first day I walked into the Student Union, there was, and this is, I'm going to date myself, because this is now not allowed to happen anymore, but there was a train of booths and tents set up in the Student Union from all these major credit card companies all offering me a free T-shirt if I just signed up for you know, this or that credit card. And they were the most expensive free T-shirts I've ever had in my life, because I didn't realize exactly what I was signing up for. Again, I was, I was 16-17, years old, you know. And I, all I wanted to do was be able to buy a pizza on a Friday night and hang out with my buds. And I realized that, hey, I could, you know, use this piece of plastic and I can get, you know, pizza, and not any other type of beverage under the age of 21 of course, but definitely we'll pretend right? But that, that, and that was part of my I almost considered that a part of my student loan debt, because at the time, I would not have gotten those things had I not walked into the Student Union at my college and been exposed to that kind of, that kind of, now it's not allowed, it's not allowed to be done anymore. But, and thankfully you know, thankfully for that. But that was, that was a big deal.

George Kamel  45:50  
As soon as you turn 18, now you get offers in the mail and email. I mean, it's, it's crazy. Even you know team members here who said, I don't have any debt. Well, as soon as their kid turns 18, they start getting all of these marketing offers, and all they talk about is the benefits of these cards, and never the downside, never the risk, never the APR that you're going to pay when you have that balance. And that's the scary part, is it's just market it as a tool to live your best life, and you can travel and you can eat out, and you're going maybe you shouldn't be traveling and eating out when you're riddled with all these types of debt. Maybe we should take a pause, use our own money and be a little bit more diligent and intentional. And it's, it's easy when you they the marketing is so dialed in these days with digital marketing, social media, they'll just track you all over the internet and just hunt you down until you sign up for that offer, yeah, and then they want you to up your credit limit and spend more and spend more. So, you got to realize these card companies are not your friend.

Drew Thomas  46:43  
Yeah. Well, I got to be honest, this is, this has been a fantastic conversation, and I'm still a little, I'm still a little amazed that I'm having it with you on the show. That's what I'm afraid of, to be honest. But so, George, I mean, thank you very much for taking the time to talk with us to be on the show. Is there anything that you'd like our listeners to, our, I guarantee we can get you at least two more people to watch a YouTube video.

George Kamel  47:16  
One life change is that's all I need to fight for another day. Definitely the, the YouTube there's a lot of free resources we have. Of course, all of our shows are free. The Ramsey show, that's, you know, five days a week, three hours of call-ins. You can, you know, if your audience is listening, they can call in and ask their question on the Ramsey show. And as well as my YouTube channel, the George Kamel YouTube channel, we got three videos a week helping people understand personal finance, making it fun. There's a lot of quips and jokes and pop culture references and clips to make it entertaining. They're short. And then Smart Money Happy Hour, which I host with Dave Ramsey's daughter, Rachel Cruz, we have a good time. There's no call-ins, no real script. We're just talking about a financial topic, weaving in pop culture and trends, and it's a blast. A lot of laughs over there. And if you do want to go deeper, I highly recommend the book Breaking Free from Broke that I wrote. It's a great one to hand to that younger person in your life, because it's sort of like the Ramsey plan translated through like a Gen Z Millennial translator, and I did my best to make it super fun, super simple, but also very in depth. And that's the best way to help someone in your life. Are you going, hey, if you're a parent, you don't know how to talk to your kid, hand them this book, and that will be, that will be the start of a great conversation.

Drew Thomas  48:26  
Thank you. Thank you very much. Yeah, definitely check those out. Really, really happy Jeff, do you have anything before we before we let Jeff get back to his real life and we...

Jeff Matevish  48:35  
No, thank you. Thank you.

George Kamel  48:37  
He's the best part time host I've ever had the pleasure of interacting with.

Drew Thomas  48:41  
I gotta get him to talk more, is the thing you know, Jeff. Jeff sits in.

Jeff Matevish  48:44  
Well Drew's a talker, I'm not as much a talker.

Drew Thomas  48:47  
I do. I talk a lot. That's a that's, that's a fair statement. I do.

George Kamel  48:50  
There's a reason that he is the part-time host and you're the full-timer, yep, something like that. Yeah.

Jeff Matevish  48:55  
I absorb everything.

George Kamel  48:57  
He's a great sidekick. I gotta say, he made me feel very comfortable the whole time just knowing he was there.

Drew Thomas  49:04  
Thanks very much.

George Kamel  49:06  
Thank you guys.

Drew Thomas  49:16  
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats is not intended and should not be understood or interpreted to be financial advice. The host, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The host of Bank Chats is not an attorney, accountant or financial advisor, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation.

Drew Thomas  50:23  
We were genuinely excited to have George Kamel on the show today offering his insight into the process of saving for and paying for a college education. While college is certainly a viable and often necessary step toward many careers, it is also a significant financial undertaking. Parents and educators should encourage students to think through the pros and cons of a college education and begin to make it more acceptable to choose alternative paths to success. As always, AmeriServ Presents: Bank Chats is produced and distributed by AmeriServ Financial Incorporated. Music by Rattlesnake, Millo, and Andrey Kalitkin. Production and editing by Jeff Matevish. Please subscribe to the podcast on your favorite podcast app or listen by visiting ameriserv.com/bankchats. We also really appreciate it when you share the podcast with your friends and family. For now, I'm Drew Thomas, so long you.