A while back, Kevin at Financially poor had an article about the decision on whether or not to go to college. I’ve been thinking about this since I read The Total Money Makeover about a week or two ago (yes, it was the first time I read it). Dave Ramsey make a lot of points in his book, but one that does not get nearly enough press or praise is the one saying people don’t NEED to go to college. It’s unfortunate that this point gets little to no press, but I’m not that surprised.
Ever since I was a little kid, all I heard was “you’re going to college, you’re going to college” and there was to be no questioning the decision. I can’t really argue with the logic, either. Both of my parents lives were greatly enhanced by the fact that they went to college, and they wanted the same for me. Disclaimer: I would like to make it clear that I have no problems with college or attending college, I have a problem with the blind faith that people put into it. That being said, it’s not a cure-all, nor a guaranteed ticket to a better existence. It can be, but like everything, you need to be careful with it.
Recently in many major news outlets, there have been articles talking to students who have insanely high debt loads because of college. There is this one from the New York Times talks about a girl who got herself 100k in the hole from going to college and is continuing to defer her loans (while interest piles up) because she’s in night school. There’s also this one, also from the Times, about a man who is 400k in student loan debt and aspiring to be a lawyer. After passing the bar exam, he was denied admission to the New York Bar because of his debt level. As if this is some sort of competition, there’s this story from the Wall Street Journal about a Doctor in Ohio (who is 41) and owes almost 550k total off of an original debt of 250k.
These sort of debt levels are absurd, and when are parents are saying “you’re going to college, you’re going to college” is this really what they had in mind? Owing some bank thousands of dollars before you’ve gotten a job? This is the part of the college decision that I don’t think many people are thinking about. Are they are taking out loans to give themselves a better future, or are they really sacrificing their future by taking on crushing debt levels?
Many people view student loan debt as “good debt” because it is an investment backed by your potential (in other words, your future earnings). History and other people tell us that while we may start out at a lower salary, as we continue to advance in our career, our salary will go nowhere but up (sounds like a bubble, doesn’t it?). Given this seemingly guaranteed future return on this investment, it makes some sense to borrow against it. Unfortunately, the reality is different. For some people, a guaranteed salary increase is in the cards (I’m thinking accountants and those lucky enough to get into the federal system) and will make the initial debt load bearable. For others (I hate to pick on you, theatre/creative writing grads) securing a job is not a given, much less an ever increasing salary, but the same debt load is taken on by each student.
However, there is something fundamentally different about student loan debt than other types of debt. Student loan debt is very rarely discharged, no matter the circumstances. In fact, according to the Federal Student Aid Website (here) these are the main reasons that you can qualify for student loan discharge:
- Death
- If you become totally and permanently disabled after taking out the loan
Well, that’s nice of them, isn’t it? They are willing to let you off the hook if you’re dead or permanently disabled. It makes sense, if you think about it. The is in effect a secured loan, and it’s secured by your ability to work and earn money. You have to be alive and able to do work and earn an income. You cant do either of those things if you’re dead.
In my mind, the potential debt level that some take on is not the right thing to do, and could be stunting the growth of our generation (We won’t know for sure for 10-15 years). Many live at home (like this kid) and are unable to purchase a home of their own until much later in life than their parents did. Even at my age (mid twenties), my parents were married with 1 kid and were nearing buying a home of their own (or had already done so). I’m none of those things, partially because I was in school longer, partially because times have changed, but also partially because my debt level was equal to greater than my first year’s starting salary!
Is the extremely high (and rising) cost of college worth it?
Would you do something different?
Are the Millenials stunting their growth, or will it not matter because we are transitioning to a more “mobile” society where people wont want to buy homes?
What do you think? Leave some answers in the comments.
{ 3 comments… read them below or add one }
This is a thought-provoking post!
Personally, I went to college because I wanted to be a journalist, and I couldn’t do that without a college degree. It wasn’t until I added up my debt that I realized I wouldn’t be able to pay off my loans, even in 10 years, with the kind of starting salary a journalist in our area makes. So I resolved to take a higher-paying administrative job right after college, pay off my debt, and then pursue the interests I had in the beginning.
I think parents need to stop blindly pushing college as an option. I can’t say college is a bad thing – I mean, even if I don’t use my degree, it’s there. It’s something I can use to my advantage when I need it. But I think parents, school administrators, etc. need to caution kids that college is going to put you in loads of financial trouble if you’re not going into business or accounting. I’ve only met one kid who put off college after high school. He said he was working full-time until he had the money saved up to go. Smart kid! Plus, there’s the camp that believes college is wasted on the young (kind of like youth!) because the freedom is too much for them to handle. My husband dropped out of undergrad as a 19 y/o because he couldn’t handle it all at once. Now he’s 30 and going back – he has a 4.0 GPA! So I think there’s something to the idea of saving up for college before going, being on your own a bit before you throw challenging classes into the mix.
Also, as someone who chose a more “artsy” path, I would never discourage someone from choosing to major in what they love. There’s little point to college if the end result is getting a job you hate every day for 40 years. Those of us whose degrees don’t have as much earning potential just have to be realistic about how we’re going to pay off the debt.
Red recently blogged about Link love- Love is in the air edition
I also went to college – Twice (I have a masters) and my problem with college is that it gets pushed blindly as the end all, be all of success. Graduating in May 2009, I was fortunate to climb into the teeth of the newly found recession. You’re also right about the financial side of things – No one really explains the cost – It’s just go, take out loans, worry about it later. As we are finding out now the “worry about it later” problem is really coming to a head in all facets of our lives.
I also think that college can be wasted on the young. Many dont work hard enough (myself included, for undergrad anyway) and mess around the whole time, all while racking up rather large expenses.
In my mind, it needs to be seriously thought about and all the possible situations need to be explained before applications to schools be sent. Many dont even consider what could happen if they dont make the GPA at the beginning.
Thanks for stopping by to comment — Im hopefully going to send your book this afternoon.
i agree everything should be explained good before you agree with anything
{ 1 trackback }