“My student loan debt is more than most folks’ mortgage.”
I have a blog post on my personal blog that discusses how much I hated being a lawyer, and offers ways to get out of a profession you hate. The discussion in the comments section is fascinating, and heartbreaking, because so many young people are feeling trapped in a profession they hate, because they must repay huge student loans.
It’s not unheard of for a law student or a med student to amass serious debt, to the tune of $100,000 or so. And that would be OK if they earned so much after graduating that they could repay those loans fairly quickly and move on. But the sad reality is that while college graduates have traditionally earned more than high school graduates, this gap in earnings has remained stable, while college costs have skyrocketed.
Many student loans these days are also dangerously expensive, because more and more students are forced to take private loans. These loans are very different than cheap federal loans, and cannot be considered “good debt.” They are very bad debt indeed and can snowball quickly, just like credit card debt.
College used to be the middle class ticket out of the middle class – a surefire way to ensure you reached your full earning potential. But over the past decade, the ROI on college education has been declining. College is simply too expensive now.
I still raise my own kids, ages 9 and 11, with “going to college” as their ultimate education goal. I still view going to college as a way to help them reach their full potential and make sure they avoid getting stuck in low-paying occupations. But I am being realistic about it. When my younger daughter recently declared, “I want to go to Stanford!” I told her that it’s certainly an option – but that there are plenty of excellent, far more affordable schools in California and we’ll be looking at those too prior to making a decision.
I also fully plan on encouraging my kids to choose a practical degree. Learning for the sake of learning is wonderful, but not to the tune of $100,000. I could be wrong of course, but the way I see it, getting a B.A. in Greek and Latin from UCLA will not have the same ROI in terms of the career opportunities it creates as getting a B.A. in Business Economics from the same school.
I want my kids to be happy, of course – I don’t want them to do something they hate just because it’s practical. But if, when the time comes to decide on a career path and apply for college, they can’t find a degree that combines their talents and passion with real-life career opportunities, perhaps they should wait. Working for 1-2 years and gaining real-world experience and perspective before going to college is not such a bad idea.
I’m not against college – yet. For now, I still encourage my own kids to go. But unless you are wealthy, I just don’t see how a $200,000, four-year college degree makes any financial sense.
If you’re not careful with your choices, college won’t be your ticket to economic success. On the contrary: it can lead to your financial ruin.
David’s Note: My mom could not go to college because she had to work in order to support herself after high school. Thus, the idea of graduating from college was ingrained in our upbringing as one of our primary goals. Though I breezed through college without thinking too much about what I was (and wasn’t!) learning at the time, I was lucky enough to pick a field that included courses that turned out to aid my internet business. I also often reflect on the past, and many little incidents during the college years provided reference and insight into how I am and what I should improve upon as a person. And, perhaps more importantly, I made many lifelong friends, which is priceless.
Without even a tiny doubt in my mind, going to college changed my life for the better. As long as I, or my children themselves, can afford the expenses, they will be highly encouraged to attend the college of their choice.
Is your student loan putting a burden on your finances? Did you know chances are good that you are paying too much? Check out Credible and take a look at the current student loan rates. You can probably refinance through them here and get a better rate, lowering your money payment and improving your cash flow. It's quick and easy to give it a shot. You may be surprised by the results. Click here to get started.