Lack of student loans prevents entrepreneur from getting a loan

Drowning in debt, some skip college completely

Lack of student loans prevents entrepreneur from getting a loan
Having an understanding about the costs associated with a start-up, Jacob Tippet had a hard time justifying college’s price tag. (Source: Jacob Tippet)

WILMINGTON, NC (WECT) - A North Carolina college student graduates with an average of about $26,000 in debt, according to the Institute for College Access and Success.

Across the country 44.5 million Federal student borrowers owe a collective $1.5 trillion.

Unlike most consumer industries where demand slows down as prices rise, higher education has continued to grow in both attendance and price tag. Yet signs are showing that younger Millennials and Generations Z may turn the tide as stories emerge of those boldly disrupting the system by skipping college entirely.

Jacob Tippet is one such example. We found him on a Tuesday afternoon at Pioneer Labs in Wilmington. The co-working space allows professionals office and conference room rentals with the added perk of collaborating with other entrepreneurs. Taking a seat at a spontaneous brainstorming session up front one would quickly ask themselves, ‘Who’s in charge here?’

Lack of student loans prevents entrepreneur from getting a loan

Based on his age, Jacob looks like he may be the office intern or perhaps a new grad hire. But with the dry erase marker hot in his hand it’s clear that he’s in charge of the meeting – one that involves people clearly older than he is.

Jacob isn’t just the boss at Pioneer Labs, he’s the owner, and he’s 21 years old. Not a single diploma hangs on the walls.

“I know people see college as a time investment but it really is four years off,” Jacob explained.

To be clear, it wasn’t that Jacob couldn’t get into college, it was quite the opposite. By grades and test scores alone he had his pick of the lot. It was expected he would be offered a full ride from at least one school.

His parents, Mark and Ovella Tippett took him on the obligatory campus tours but nothing clicked. The campuses were nice, the students friendly but Jacob had been working for years and for himself. When he considered what he could fill the next four years with, he had far more interest dedicating it to his own business than a list of prerequisite courses.

Moreover, already having an understanding about the costs associated with a start-up, he had a hard time justifying college’s price tag. That amount of money could transform his career now, while the classroom had no guarantees.

“When I told my parents I didn’t want to go to college, I think it was one of the most emotional conversations I had with them,” Jacob said. “The sad part is, I wasn’t the one that was emotional! My mother took it brutally.”

Both Mark and Ovella collectively have enough degrees between them to donate one to each of their five children. For them, college was a privileged their own parents struggled to provide. Getting their degrees was a major accomplishment - one they had assumed each of their kids would pursue.

Ovella found herself defending Jacob to family and friends. She was quick to point out that Jacob had been working since he was 12 and had a larger income than she did since 13. After graduating from Hoggard High School, Jacob’s friends sent in tuition deposits while he gassed up his car. He had found an apprenticeship in California and drove cross country to accept it – by himself.

The experience made him an advocate for mentorship over course credit. Even as friends visited during the holidays for the next few years with stories from campus, Jacob could see his self-created experiences were putting him ahead professionally. He knew he was missing out on the social opportunities of campus life but made up for it during school breaks and summers when his former classmates came home.

Over the four years he would have otherwise spent in school, Jacob grew his one-man graphic design business. His friends, grew more into debt. Whenever questioned about his decision, Jacob pointed to what’s known in the investment world as a “runway.”

“You take your seed capital and you spread it out over the time it will take you to actually make a return,” explained Jacob. “You see how much runway you have before your plane takes off or crashes into the fence on the other side of the airport.”

The idea highlights one of the major criticisms about higher education. Families invest tens of thousands of dollars on the front end but after graduation, there are no guarantees.

“Back when we graduated, you did get a job,” Ovella pointed out. “You were able to come out and get a job in the field your degree was in. Which is quite different from today.”

At 21, Jacob has a collection of ventures, a portfolio of clients and projects and several volunteer trips abroad. Financially, he’s way ahead of all his peers and yet ironically he’s also disadvantaged by it.

While he has the savings to purchase a home and a history of responsibly managing money, he can not get a loan. Lenders demand pay stubs (a history of income) from an employer and most want to see some kind of repayment of other money loaned. Jacob doesn’t have debt – there’s nothing to pay back. Had he chosen to taken on sums of debt and repay it piece by piece, he would have had an easier time finding more debt to take on.

“What it does to me is it says you don't think what I do is real,” Jacob said. “You don't see my job, my line of work as valuable. So you're telling me I’m less valuable because I didn't jump into a salaried career. But it's not true.”

With college costs and interest rates rising the next generation of high school graduates will be the ones to watch. Jacob believes his story will not be the anomaly for much longer.

Community colleges are seeing a re-birth as enrollment increases to address the industry demands. Able to turn out professionals in two years, not four, they are becoming a less expensive option that is results driven. Employers are also softening to the idea of demanding a degree. Companies like Google and Ernst & Young no longer require college for career consideration.

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