When Student Debt Makes Sense, and When it Doesn't
Student debt has become the crux of the American education system. Rather than wondering if they'll have debt when they graduate, students are considering how much and bargaining their way through higher learning. Some forgo a degree altogether because the anxiety of a financially constricted future pushes them away. Adults who have started families wonder whether they can even return to school and afford the baggage of tuition for decades to come; adults leave college with some career prospects but not nearly enough annual income to help them reach milestones like getting their own apartment or buying a house.
So, when is it worth going into debt for a degree? The answer depends on your unique situation and what you intend to study. Those two factors will play the largest role in whether you can justify the cost of loans and thousands of dollars in interest. There are also some more practical components that factor into the cost of college that can be modified to give you the same education for half the cost.
You're Financing Career Growth
If earning a degree will increase your job prospects, it's a worthwhile investment. But that only goes so far. In some fields, earning a master's or doctorate degree only leads to several hundred thousand extra dollars in earnings over a lifetime. IF you will likely only see a fraction of that due to the cost of repaying loans, it's not an investment you should take out of obligation. Growth comes in many forms, and when it comes to career advancement, there may be other ways to get ahead without going into crippling student debt. One possibility is additional training. Professional development programs and certifications can sometimes help you advance just as much as a second degree
You Can't Get the Education Anywhere Else
Law school and medical school are expensive. There's no way around it. But should you accept the most expensive tuition based on a school's reputation? While graduating from a prestigious school can lead to greater professional opportunity, a school's name isn't always worth going into copious amounts of debt. Students should always compare three to five different programs before they commit to a school; it's also important to consider whether the cost of attending a certain school will cost more than you'll earn.
If your heart is set on a certain school but you can't justify the cost, there are ways to finance it on your own terms. Scholarships can cover a large portion of tuition and should be explored annually. Private student loans are another option. You can compare offers online, decide how much you want to borrow and have the option of refinancing in the future to keep payments manageable and aligned with your budget.
Your Salary Will Make It Easy to Repay
A good rule of thumb to consider when considering whether student debt is worth it is to project how much a degree is how much your first post-graduation salary is likely to be. If you're taking out loans for $85,000 and only expected to earn $35,000 a year, you aren't looking at a favorable return on investment. Coupled with interest and taxes, you'll earn far less than you paid just to get the job. Some people, like teachers and social workers, understand their jobs come with a lower annual salary but pursue them out of passion for the field. This is a wonderful commitment, but they should ensure they're only borrowing what they can afford and seeking as many opportunities to lower tuition as possible.
How Much Student Debt Is Too Much?
Engineers, doctors and lawyers can expect anywhere between $80,000 to $150,000 in debt, which is proportional to their projected earners. Those who are not in these fields should consider the median salary of their desired job and aim to borrow no greater than $35,000. Amounts that exceed this can quickly become unmanageable, especially if they only have a 10-year or 15-year repayment plan. While some debt is inevitable, it should never throw off someone's entire future. Students may consider living off-campus, working part-time, seeking scholarships and grants to lower costs in addition to private student loans.