I've posted on this more common debt clock before. It's pretty scary. The national debt stands at $14.4 trillion. It was “only” $10 trillion as recently as October, 2008.
This newer debt clock hasn't gotten quite as gigantic as the other one, but it's more directly troubling for many young Americans. Currently, $922 billion is owed on student loans. This month, for the first time, more was owed on student loans than credit cards. That's a significant and unfortunate milestone.
Laws in 2005 made it more difficult to discharge student loan debt. Under more and more circumstances, graduates (or non-graduates!) with debts for their educations are stuck. Even if they fall into tough financial times and need to declare bankruptcy after exhausting all other options, their student loan debts could still be waiting for them after all of that if they couldn't demonstrate enough financial hardship to satisfy the means tests.
Should you go to college?
After reading the previous paragraphs, is that a loaded question? Maybe. It probably should be. It's not as easy a question to answer as it was twenty or even ten years ago. With flagging job prospects accompanying the rising debt loads, a college degree is not only not the slam-dunk it once was, it might just be a technical foul.
If you're going to need any substantial student loans to fund your education, then a cost-benefit analysis is absolutely essential to avoid saddling yourself with debt that will be difficult to pay back with your post-graduate employment. Excessive student loan debt could limit your options on the marriage market as well, as it's something that cannot be wisely ignored.
Here's a list of pondering points:
- Consider your commitment level. Are you going to college with the intent on graduating, and do you know how to get to that point? If it's just to get away from home, and you're not serious about studying, you're already in trouble.
- Consider what your major will be. You can major in English if you want, but you'll need to look at what the expected jobs, salaries, etc., will likely be available for someone with an English major. What is the starting salary level for someone with your intended major? (You can check here.) Can you get these same jobs without a college degree? If so, why are you wasting four years and going into debt in the five- or low-six figure range?
- Consider what you want to do afterwards. Are you already the successful entrepreneurial business type? Then you probably would end up behind if you left your income stream to go to college, no? Keep your momentum.
- Consider whether you want to do an end run. Loopholes are present. You can get a four-year degree by age 18, without having an Albert Einstein or John Nash cranium. Here are some useful Evernote presentations by a guy who did it. (There are links there to how he did it.) The cost is placing out of a couple of years of your college courses with good grades on CLEP exams and the like, as well as living at home rather than living on campus — that is, not “having the college experience.” But this costs less than one semester's worth of college paid the typical way, and you have the paper to get college graduate-level jobs.
Students (and parents): Give your college payment strategy serious thought, and don't just listen to the guidance counselor. Question what you think you know about a college education, because what you don't know could cost you for the rest of your life.
(Thanks to Prairie Ecothrifter for including this post in the Carnival of Personal Finance!)
This is a really important question. I think that education is very important, and I have a pantload of student debt to prove it. However, I will be coming out with two terminal degrees and decent job prospects (depending on specialty, but even the worst of them aren’t too bad). I will encourage my daughters to go to college, and I hope that it leads them to fulfilling careers and much happiness… but depending on the major, there is no insurance for a good job sometimes.
Jerry
While I personally believe college isn’t for everyone, unless you’re looking to be an entrepreneur or a part time dead end job, you’re going to need a BA at the very least. I’ve been out of work for 7 months with plenty of work experience, but no degree. Many of the jobs I’ve applied for, even entry level, require a BA.
It’s a hot topic of late, no doubt. I do think college is essential in this day and age, almost like a high school degree was a generation ago. Really.
That being said, I think that it’s VERY important to look at WHICH college a student goes to as a very important investment decision. There are many people who take out massive loans for private schools that end up no better off than others who attended less expensive public schools.
Totally agree that it’s not just a matter of listening to the guidance counselor. Not in the least. Rather, a kid and parents/guardians should really look at the costs and benefits, looking at this as a monetary outlay with an expected ROI.
While college is of course much more than that, people really need to look at the value of the investment more. It’s not just a matter of attending the highest “rated” school and figuring out how to pay later. The whole analysis should be done up front as much as reasonably possible.
Jerry: You might want to check into the last point for your daughters. (end run)
20 And Engaged: Keep the blog up. See how far you can grow that.
Squirrelers: Right. A third-rate private school is just an expensive third-rate school. By the way, when you say “college is much more than that,” what specifically were you thinking?