Student Debt Can Haunt You Forever

Three million Americans are in default on
their student loans taken out 30 – 40 years ago !
How would you like to be 65 years old and still paying off student loans that you took out over 40 years ago?  Believe it or not, more and more seniors are facing this problem every year. 
Think you can just ignore the loans and no one will bother to chase you down?  Think again.  In 2013, the federal government took nearly $150 million out of the Social Security checks of America’s senior citizens in order to make payments on their unpaid student loans. The number of seniors facing these forced repayments has skyrocketed from 6,000 to 36,000 from 2002 to 2013 and the number continues to grow.  
Making matters worse, more than 3 million Americans aged 50 to 64 are in default on their student loans.  The number is so staggering it bears repeating: 3 million Americans are in default on their student loans taken out 30 – 40 years ago !  Stunning.  And that number is expected to grow as well as more and more Baby Boomers retire and see a decrease in their ability to pay back what they owe.  So what is going on here?  How can it be that student loans taken out by 18 year olds 40 years ago can still be out there like a drogue anchor on America’s seniors? 
The answer is twofold: (1) Most teenage borrowers didn’t have a clue about what they were signing on to when they borrowed the money all those years ago; and (2) most student borrowers thought that they would have good jobs some day and could easily pay off the loans long before they were planning to retire.  Life, however, caught up with them after graduation, jobs didn’t pan out like they thought they would, they didn’t earn what they thought they would earn, the expenses of life were more than they had imagined and they knew very little about how to earn, manage and invest money because no one took the time to teach them.  It was the perfect storm of financial bad news. 

Make no mistake, the seniors that still owe all this money are not dumb.  They are not bad people.  They simply never had the benefit of learning about the financial life skills they would need when they were young to really get ahead in life.  For today’s young people, however, that is going to change.

As a country, we are finally starting to recognize the benefits of teaching financial literacy skills before high school graduation.  Ever Fi, a progressive education company, surveys 65,000 college freshmen each year to see what their attitudes are about money matters.  It is probably the most comprehensive survey of America’s young people that there is.  EverFi’s conclusion: those students who are exposed to financial literacy programs before high school graduation have much healthier attitudes about money in college and beyond.  They are less likely to borrow money, more likely to save money and more focused on properly managing their money as they get older.  

As we prepare to send yet another crop of high school graduates off to college in a few weeks we need to remember what we can learn from EverFi’s annual surveys.  College students need to minimize student loans and borrow only what is absolutely necessary; they need to get a pair of scissors and cut up the unsolicited credit cards that will show up in their mailboxes with tempting credit limits that make it too easy to borrow money and buy things they can’t afford; they need to set up a budget that makes sense and stick to it no matter how much their friends may be spending; and they need to find a way to earn some money each semester to help defray the cost of the weekend parties and entertainment. 

With a little thought and a commitment to really understand what it takes to be “money smart,” today’s college students can avoid the pitfalls of their parents and maybe keep all of what Social Security sends them some day.


“Hey Dad, Does Money Grow On Trees?”

“Hey Dad, does money grow on trees?” “No Trent, it is stuffed inside your iPhone and all you have to do is hit ‘buy now’ and you can buy stuff for the rest of your life.”

In this increasingly electronic world where billions of dollars of transactions are done with the push of a button and now with electronic currency such as bitcoin it is not hard to understand why kids can become disassociated from the relationship between buying things and actually having the money to pay for them.  This is especially true where childrens’ iPhones are linked to their parents’ accounts which gives them the instant ability to buy things with Mom and Dad’s money.  

For many kids there is no longer the need to pull real cash out of a real wallet and hand it to the store clerk.  It all must seem rather unreal – almost magical – to a young person; a step or two removed from playing yet another video game.  But what is the consequence of all of this? What will such easy spending do to our efforts to raise kids who are disciplined savers and disciplined spenders?

As parents, it is our job to put the reality back into our kids’ spending experience by doing the following:
  • make sure your mobile device is synched with your child’s device so that you get an alert every time they make a purchase.  Pay attention to what they are buying and have a clear understanding for who is paying for what.
  • review the bill with them when it comes in so that they can see precisely what their charges were and what they add up to.
  • have them sit with you when you pay the bill whether it be by writing a check and mailing it in or with an electronic funds transfer.  They need to see that “buy now” must be paid for with real money.
  • show them how your account balance decreases every time you pay for their charges.  Talk about what has to be done to replenish the account.
  • establish ground rules for who will be paying for the charges going forward and place a limit on anything you may be paying for.
It is important for kids to see the consequences of clicking the “buy now” button and the only way to do that is to spend some time walking them through the bill paying process.  Money doesn’t grow on trees and the sooner kids realize that the better off they (and their parents) will be.

The Power of Compounding

The power of compounding can make you lots of money!
Have you ever heard about a stock that had some huge run and thought to yourself, “how come I didn’t know about that before it ran up? If I had only known back then what I know now I could have made a ton of money.” Well, if you ever had that thought, here’s your chance to see what you can do.

Let’s pretend that you have a time machine and could step inside and go back to 1968. You would be the same age you are today, have all of the knowledge that you have now and the ability to buy any stock you want to buy. Pretty good deal, right? Who wouldn’t want to do such a thing? But here’s the trick: you will only be allowed to keep all of the price appreciation on the stock you select if you pick the one that had the biggest price appreciation from 1968 - 2014. Make the wrong selection and all of the profit you could have earned disappears. Select the biggest winner over that time period, however, and you will make a fortune. You in?

So what stock will you pick? GE; Johnson and Johnson; IBM; ATT; Exxon; Boeing; Caterpillar; Procter and Gamble; Coca Cola. You name it; any stock you want. And, to give you an even better shot at getting it right, we’ll change the rules and allow you to pick the S&P 500 in case you think this is a trick question and over time no one can beat the index. You can pick that too if you want. OK. Time’s up. Whatever it is you picked the odds are you didn’t pick the right one. The # 1 best performing stock from 1968 – 2014 was not a technology company, not an oil company, not a consumer products company, not a phone company, not a soft-drink company and not even the market itself; it was Altria, a cigarette company that, among other things, used to own Phillip Morris.

How could such an obscure company, with only moderate annual growth, doing business as part of an industry that gets sued all the time and that many want to regulate out of existence be the best performer of them all? Because of the power of compounding. That’s how.

If you had invested $1 in this stock in 1968 it would be worth $6,638 by 2014 (including dividends). The same money invested in an S&P 500 index fund would be worth $87 today or 98% less.

Here’s another way to drive the point home:
  • $1 invested in the average American industry in 1900 would have been worth $38,255 by 2010.
  • $1 invested in a food company, chemical company or electrical company in 1900 would have been worth about $700,000 by 2010.
  • $1 invested in a tobacco company in 1900 would have been worth $6.3 million by 2010 or 165X the average American industry. 
  • I obtained this data from an article written by Morgan Housel that appeared in CNN Money and the Motley Fool on February 19, 2015. Here is what Mr. Housel had to say about the power of compounding:
“High dividend yields, compounded over
decades, add up to massive returns……
The ridiculously large gains from compound
interest occur at long holding periods. The
key to building wealth isn’t necessarily high
returns, but mediocre returns sustained
for the longest period of time.”

You can’t say it any better than that. It is the power of compounding and never ever forget it.

-David Bianchi

It Is Never too Early to Start Teaching Our Kids About Money, Investing and the Stock Market

If you take the time to read Blue Chip Kids 
you will be way ahead of most kids your age.  
Consider these interesting facts.
The evidence is crystal clear: financial education is critical to our country’s future and America’s kids need to learn a lot more about money, investing and the stock market if they want to get ahead. Here are some interesting facts.

Blue Chip Factoid # 1
What do China, Belgium, Estonia, Australia, New Zealand, the Czech Republic, Poland, Latvia and Italy have in common? Answer: 15 years olds in those countries recently placed ahead of 15 year olds in the United States in a financial literacy survey. Source: Organization for Economic Cooperation and Development, Program for International Student Assessment 2012.

Conclusion: This is embarrassing and bad for our economy. We need to do a much better job of educating our kids about money matters so that they can compete in an increasingly competitive world.

Blue Chip Factoid # 2
Students who like to learn and like to think about how to solve problems do better on financial literacy questions than those who are not inspired to learn or who find learning boring and uninteresting. Source: Organization for Economic Cooperation and Development, Program for International Student Assessment 2012.

Conclusion: We need to present financial information to our kids in a simple format that they will like to read. That was the whole point behind “Blue Chip Kids.” If the material is boring or too sophisticated, they will not read it and will tune out the whole subject matter.

Blue Chip Factoid # 3
In 2015 the average retired worker will receive $1,328 a month or $15,936 per year in Social Security benefits. Source: Social Security Administration.

Conclusion: It is tough to live on what Social Security pays. We need to make sure that when our kids grow up they are “money smart” and have enough money put away to supplement what Social Security may pay them if it is still around to send them checks. To accomplish this goal financial literacy must become a national priority.

Blue Chip Factoid # 4
51% of America’s workforce has no private pension and must rely upon Social Security benefits to live. Among elderly Social Security recipients, 52% of married couples and 74% of unmarried recipients receive 50% or more of their income from Social Security. Source: Social Security Administration.

Conclusion: Think about it. If the average payout from Social Security is less than $16,000 per year and the majority of elderly recipients get half (or more) of their annual income from that source it is extremely difficult for them to make ends meet. Would better money management skills when they were younger have made life easier for them later in life? Probably.

Blue Chip Factoid # 5
706,000 households headed by people 65 or over are holding unpaid student debt of $18 billion and 27% of those loans are in default. Source: U.S. Government Accounting Office.

Conclusion: No one wants their “golden years” burdened with student debt from 40 years ago. Had those borrowers had a better understanding of how to make money, manage debt and invest their money during their working years the debt they continue to carry today could have been paid off before retirement.

Blue Chip Factoid # 6
Debt from student loans among people of all ages jumped from $241 billion to $1.1 trillion in the past 11 years. Source: John Burns Real Estate Consulting.

Conclusion: If this trend keeps up, student debt will eventually exceed our GDP. When so much money goes to debt service it is not available to buy things that will help grow our economy and a stagnant economy hurts all of us.

Blue Chip Factoid # 7
The average amount of outstanding student debt jumped from $15,000 to $27,000 per student from 2004 – 2014; an increase of 74%. The increasing debt burden among young people is inhibiting household formation and curtailing their ability to buy a home. Source: New York Federal Reserve blog post in February, 2015.

Conclusion: The explosion of student debt cannot continue if we want a healthy economy with reasonable growth in GDP. Housing is one of the big drivers of our economy and if housing is not growing as it should the economy will not grow at a reasonable pace either. We need creative solutions to the student debt problem that could include a greater emphasis on low-cost colleges and universities, federal assistance with loan repayments under defined circumstances and possibly even a way to refinance student debt into a home mortgage.

Blue Chip Factoid # 8
29 million millennials (ages 20-39) or 1 in 3 of everyone in that age group have outstanding student debt that they are having to make payments on each month. Source: John Burns Real Estate Consulting.

Conclusion: A reasonable amount of student debt is OK but if gets to the point where it is 2X or 3X a young person’s starting salary that is a problem.

Blue Chip Factoid # 9
One-third of the U.S. (77 million people) has debt in collection and owes an average of $5,200. Source: Urban Institute.

Conclusion: Here’s the cold hard truth: we are a debtor society both individually and as a nation. We spend more than we should and we need to do a better job of making and investing our money. It will not magically happen. We have to work at it and we have to give our young people the financial skills they will need to save and invest their money wisely.

Blue Chip Factoid # 10
A child born in 2013 will cost a middle-income American family an average of $245,340 until he or she reaches the age of 18 and this does not include the cost of college or graduate school. Source: U.S. Department of Agriculture.

Conclusion: If you assume the “average” child goes to one of our expensive colleges or universities ($250,000 for 4 years) and then attends graduate school for 3 years (another $200,000) one can easily make the case that the real cost of raising just one child is $700,000 or more. (At a 30% tax rate, one has to earn $1 million to have $700,000 after taxes in order to have enough money to raise just one child.)

Blue Chip Factoid # 11
The public pension funding gap is currently estimated at $2 trillion. Source: Moodys.

Conclusion: Any young person who thinks that he or she will one day retire with a comfortable public pension should think again. The funds are simply not there to pay the promised retirement benefits and it will be up to the individual to save and invest their own money to cover the future shortfall.

Blue Chip Factoid # 12
College freshmen who took a financial education program in high school were significantly more responsible in nearly every aspect of planned financial behavior, loan behavior, banking behavior and credit behavior. Source: EverFi 2014 survey of 65,000 college students.

Conclusion: This proves the obvious: “money smart” kids will do a better job with all aspects of their money in the future. We need to present financial information to every school-aged child in all formats (in-class teaching, parental discussions, web initiatives and old fashioned books) so that the information is accessible, interesting and informative. Financial education does indeed make a difference and the EverFi study supports that.

Blue Chip Factoid # 13
Half the families in the United States live on less than $50,000 per year. Source: Census Bureau.

Conclusion: There are many families within that group that make much less than $50,000. It is impossible to save money for one’s retirement when everything you make has to be spent to make ends meet. Like a broken record: “money smart” kids can earn more, invest smarter and have a more financially secure future.

Blue Chip Factoid # 14
From 2009 – 2012 the net worth of the wealthiest 1% of Americans surged 31% while the net worth of everyone else increased just .04%. Source: Economist Emmanuel Saez, University of California at Berkeley.

Conclusion: “Money smart” people are out there and they are using their financials skills to grow their wealth every day. Everyone can improve their financial skills and do a better job of earning money and investing what they accumulate. The question is: do we care enough to make sure our kids learn these skills or are we content with just hoping that they may learn the skills some day?

Blue Chip Factoid # 15
The wealth gap is getting bigger all the time. There are now 1,645 billionaires in the world; an increase of 268 newly minted billionaires in the past 12 months alone. Source: Forbes.

Conclusion: It takes money to make money. An increase in savings coupled with the power of compounding and knowing how to invest one’s money can and will increase the financial security of America’s families. The wealthiest people in the world know this and they know how to utilize their financial skills. For everyone else, even a modest increase in financial literacy can make a difference in terms of savings and financial security.

Blue Chip Factoid # 16
Read this twice to make sure you really get it. By 2016 the richest 1% will own half of the global wealth and have a net worth equal to the net worth of the other 99% combined. At this moment, the 80 richest people in the world have the same wealth as the poorest 3.5 billion people. A staggering statistic. Source: Oxfam report, January 2015. 

Conclusion: Knowing how to make money is a learned skill and some have learned the art of wealth generation better than others. By teaching our kids the basics of money management and wealth creation they will have a better shot at earning more in the future.

Blue Chip Factoid # 17
American families have nearly $12 Trillion of household debt as of 2014. Source: N.Y. Federal Reserve (November, 2014).

Conclusion: “All things in moderation.” Having some debt is fine if you can afford to service it and still grow the family’s net worth. Knowing how much is too much, however, is the trick and paying down debt is never a bad idea.

Blue Chip Factoid # 18
The U.S. savings rate in November, 2014 was 4.4%. In other words, Americans were saving 4.4% of their “disposable income” which is defined as the money they have left over after taxes are paid. In January, 1959 when this statistic was first recorded, the U.S. savings rate was 11.2%. Source: U.S. Bureau of Economic Analysis.

 Conclusion: Over the years the cost of living has gone up and the amount of money Americans save as a percentage of their income has gone down. It is a trend that needs to be reversed. To save more money most people need to earn more and become more efficient with how they manage what they accumulate. That’s where “money smart” comes in.

Blue Chip Factoid # 19
As we try to imagine where the jobs will be for our children in the future, it is a safe bet that the government and large cap companies will employ fewer people than they do today. Technology is displacing workers every day and those jobs are never coming back. To be ready for the “working world” in the years to come, America’s kids will need to become more self-sufficient, more entrepreneurial and more skilled in knowing how to make money and invest the money that they earn.
Source: Me.

Conclusion: Gone are the days when a 4 year college degree would assure our young people a solid middle class lifestyle. To compete and thrive today, “20 somethings” need skills that their parents did not have and knowing how to make money, invest money and make it grow over time will be more important than ever. The time to start that education is now and “Blue Chip Kids” can be the first step on that educational journey.

Blue Chip Factoid # 20
The “average” U.S. worker had a 2% growth in earnings from 1999 - 2009. It was 22% from 1979 – 1999. Source: Pew Charitable Trusts report, January 29, 2015.

Conclusion: Everyone, from the hourly wage worker to the white collar executive, can benefit from the additional income that can only come from understanding how to make prudent investments that will grow one’s net worth over time.

Blue Chip Factoid # 21
The majority of American households can replace less than one month of their income from liquid savings. “This study reveals a striking level of financial fragility …. This reality must begin to change if the American Dream is to remain alive and well for future generations.” Source: Pew Charitable Trusts report, January 29, 2015.

Conclusion: A majority of American households; not a small minority, not even a minority but a majority of American households have hardly any cash in the bank. Too many American families live paycheck to paycheck and the more they can learn about how to save money, invest money and supplement their paychecks the better they will be and the better our economy will be.

Blue Chip Factoid # 22
This from the Federal Reserve Bank of New York: Across the board, the bulk of earnings growth happens during the first decade of one’s working life and the trajectory of those earnings increases will set the bar for how much you earn over your lifetime. Workers who are projected to earn the median income in the U.S. will see their earnings grow by 38% from the time they are 25 until they are 55; those projected to be in the top 5% of income earners will see their income rise over the same period of time by 230% and those projected to be in the top 1% will see their income rise 1,450% over that time period. In other words, successful people will not only earn more money over time but their earnings will increase at a faster rate than everyone else.
Source: Federal Reserve Bank of New York report, February 6, 2015.

Conclusion: This report just reinforces what we already know: the better-prepared one is early in life to earn and manage money, the more financially successful one will be over the long-haul. It is never too early to get kids prepared for the road ahead.

Blue Chip Factoid # 23
“The time to hustle is when you’re young, because unless you’re a fantastic anomaly, you’ll probably see your last big raise well before you celebrate your 40th birthday.”
Source: article of February 6, 2015 commenting on the Federal Reserve Bank of New York report of the same date.

Conclusion: more of the same. Load the rocket fuel early and give your kids every advantage that you can so that they blast off as soon as school is over.

Blue Chip Factoid # 24
Since 2007 only 5 of 50 countries surveyed had paid down some of their national debt. Which countries were they? Egypt, Israel, Saudi Arabia, Argentina and Romania. The remaining 45 countries saw their debt burden increase over that time period. Source: McKinsey Global Institute.

Conclusion: Debt at all levels is an increasing problem: from student loans, to overall household debt, to our national debt, to global debt the world is borrowing money at an unsustainable pace. We must break our addiction to debt or sooner or later it will derail economic growth and cause an ever-increasing number of defaults.

Blue Chip Factoid # 25
The average retirement account for a working woman is $78,000. The average retirement account for a man is closer to $121,000.
Source: Vanguard.

Conclusion: The disparity in the balances can be explained by a number of things such as the fact that women often make less than men and women are often out of the work force for a longer period of time than men but that is not the point here. The point of concern here is that as a nation we have a long way to go to insure that retirees will have enough money to live on when they stop working. Taxes must be paid on funds withdrawn from a 401(k) so the buying power of America’s retirement accounts is even less than the amounts referenced in the Vanguard survey. Saving more, spending less and getting a good financial education early in life can all be part of the solution to more money in retirement.

-David Bianchi

A Financial Education Can Be Fun and Easy

 "If we don¹t learn as much as we can about money 
and investing when we are young we will have
 a much tougher time when we are older."
Imagine a running race with 100 kids where they all are told at the start that the first 50 to cross the finish line will get all the best jobs and all the best salaries. The other 50 will be left to fend for themselves. They will have to scrounge around for whatever jobs they can find no matter how menial they may be.

Now imagine that 50 of the kids are told they have to wear 30 pound backpacks for the race and big heavy boots to go along with it. How do you think those 50 are going to fare? Every parent of the “backpack kids” would complain that the process was grossly unfair; none of their kids would even have a chance at placing in the top 50. The burden for them would simply be too great and they would automatically be destined for all of the worst jobs. It would be over before it started.

Such is the case with today’s kids who start the journey into adulthood with no meaningful knowledge of money and investing. They will always be racing from behind and will have a tough time ever breaking into the winner’s circle.

So what to do? Here are some suggestions for how to incorporate financial a education into a child’s everyday life without making a big deal out of it.
  1. Engage with your kids and speak to them about money. While most parents are not experts on financial issues it doesn’t matter. Parents know more about money than they may think and they certainly know more than their kids do. Take the time to share what you know and your kids will learn something from you every day. 
  2. Get over the notion that talking about money, investing and the stock market will make kids too money obsessed. It won’t. It will help them. It is never too early to get a good education and the benefits of a good financial education will help them in ways they cannot even imagine at a young age. 
  3. Make the learning fun. For example, whenever the bill comes at a restaurant, play “guess the check.” Have everyone guess what they think the bill is going to be before taking a look at it and then congratulate the winner. Kids love competition and they will soon be anxious to beat their parents and their siblings at this little game. In the process, they will be developing a real appreciation for what things cost. 
  4. Once the restaurant bill has been disclosed, tell them you want to leave a tip of between 10% - 20% depending on how good the service was. Have them rate the service, decide on the percentage and then have them calculate the amount in their head. It is a great little math exercise where they will quickly learn to calculate 10% of a bill (just move the decimal point one place to the left) and 20% of a bill (double the 10% amount) and then pick the ballpark number in between for the agreed upon tip. (15% would be the mid-point; 17% a little more than the mid-point, etc.) The spirit of competition will keep them interested and sharp and they will become increasingly comfortable with everyday math. 
  5. When they pass storefront signs that advertise 40% off “today only,” ask them what the price would be for something that normally costs $100? Or $150, etc. It gets them thinking about money and how to quickly do simple financial calculations on the fly. 
  6. Open a small trading account at an online brokerage firm for your teenager to manage. Fund it with whatever you can afford and tell your child that he/she will get to keep half the profits. For example, if the account is funded with $4,000, tell your child they can buy any 4 stocks they want to buy but they have to give you a reason for buying each one before the purchase is made. That will force them to start thinking about why they want to buy a particular stock rather than just picking something out of thin air. Once that is done, they will have to calculate how many shares of each stock they can buy with $1,000. At $15 a share, how many shares can they buy with $1,000? At $110 a share, how many shares can they buy with $1,000? Finally, show them how to buy the stocks online through the account you have funded. Thereafter, encourage them to check the account regularly to see how they are doing. When the time comes that they want to buy another stock, no more money from mom and dad. They will quickly understand that they will have to sell something to raise the cash to buy a new stock. The concept of “fully invested” will suddenly mean something to them. 
  7. Take them to one of the currency exchange booths at the airport and have them convert some U.S. dollars into the currency of another country. It is a great way to get an appreciation for the relative value of different currencies. Have them study the pictures and writing on the foreign currency so that they can learn about it and see how it differs from our money and money from other countries. 
  8. Start a foreign currency notebook. Arrange the notebook by country and have them go online, print out a map of each country and place the map in the notebook next to the currency from that country. It is a great way to learn about foreign currencies and world geography. 
  9. Take them with you to buy groceries. Have them guess what the total cost of the goods in the shopping cart will be and then see how close they come to the actual number. While there, have them swipe your credit card at the checkout line. They will quickly learn how that system works and how you have to sign when the transaction is completed. 
  10. Review your credit card statement with your kids. Show them where the line item is for the grocery store transaction that they signed for so that they understand the relationship between signing at the store and having to pay for the purchase later on. 
  11. Give them a dollar bill and a magnifying glass. Tell them they are official “money detectives” and they need to study every detail of what is on the bill. When they are done, ask them questions about what they observed. Do the same thing with other denominations as well and ask them why they think there are differences between the denominations. Give them a $100 bill and ask them how many times “United States of America” appears on the front of the bill. Most people say “two,” but there are at least three. Can you find the third? 
These are just some of the suggestions for what can be done to introduce kids to the world of money and investing on an everyday basis. Come up with your own ideas and share them with us by emailing We will post some of them on the website. 

-David Bianchi

Uber Debt

"Too much debt is never a good thing"
The other day, while I was in Boston, I hailed an Uber car with my iPhone app and within minutes a black Mercedes SUV magically appeared to pick us up. It is terrific technology.

One thing I have learned from riding in Uber cars is that the drivers are almost always interesting people; polite, well educated, entrepreneurial and happy to engage in conversation. This driver was no exception. Within minutes I found out that he was 24 years old, working multiple jobs and was $150,000 in debt because of student loans. $150,000 in debt because of student loans!

I asked him how he thought he was ever going to pay off all that debt and he said he didn’t know but “I will just keep working and do the best I can.”

What does it say about our society when we claim to have one of the best education systems in the world but are burdening our students with unimaginable debt if they want to avail themselves of what our colleges and universities have to offer? It is a broken system that needs to be fixed now.

In 1976, when I graduated from Tufts University in Medford, Massachusetts, the “all-in” cost of tuition, room and board was about $7,500 per year. I remember thinking that “some day” the costs may rise to $10,000 a year. It seemed like an unimaginable number in those days. I never dreamed that by 2014 the “all-in” cost to go to Tufts would be more like $65,000 a year of after-tax money. In round numbers one has to earn $100,000 a year just to have enough left over after taxes to pay for one year of college. Unbelievable.

Now imagine that you have two kids who want to go to Tufts; or 3 kids or – even worse – 4 kids. And Tufts is by no means unique. There are many schools that cost as much as Tufts and some cost even more. The cost of a college education is out of control and unsustainable and I mean unsustainable. It cannot keep going like this. 18 year olds and their parents cannot keep borrowing truck loads of money for an education. It cannot continue.

I don’t pretend to have all of the answers but one thing I do know is that life is getting more expensive all the time and knowing how to make money, save money and invest money is more important than ever.

No one should be bashful about focusing on this simple fact of life: we need a “money smart” society and anything we can do to better educate our young people – those who will bear the burden of supporting our economy in the years to come – is a good thing. “Blue Chip Kids” is an attempt to start the education process.

-David Bianchi