The student loan crisis has many people wondering if college is worth the cost.
As of 2015, college graduates who took out loans walked across their graduation stage with about $35,000 in student loans. We’ve read dozens of articles that weighed the benefits and disadvantages of a college education.
A prime example of an article that lands on the “not worth it” side of things came from USA Today in December 2015. Journalist Brooke Metz discussed the findings of a Goldman Sachs report that said the break-even point for college grads with debt happens around eight or nine years after graduation.
“Goldman Sachs said wages still aren’t cutting it to make up for education costs,” Metz wrote.
On the other side of the argument is a July 2106 study from the White House that reported college grads make $1 million more over their lifetime than high school grads.
We see the point on both sides of the argument, but we wanted to get a more in-depth look at the opinions of those who are in the thick of either helping borrowers with loan debt or coaching students to college success.
College Is Worth It If You’re Willing to Commit
During the research phase for our series on student loans, we ran across an article from The Atlantic that brought up an interesting point – there are all kinds of students out there who dropped out of college and are stuck with student loans they took out for the brief time they were enrolled.
Cappex.com’s Mark Kantrowitz, a financial aid expert who created a detailed history of federal- and private-loan legislation, said dropping out early is the main cause of the student loan crisis.
“We don’t really have a student loan problem, at least not yet, so much as a college completion problem,” Mark said. “Students who drop out of college are four times more likely to default on their student loans and represent almost two-thirds of the defaults.”
“We don’t really have a student loan problem, at least not yet, so much as a college completion problem.”
Being committed to the entire college experience is a crucial way to avoid this, says Carlota Zimmerman, a graduate of Wellesley College and a former network-news editor.
“As a career coach who advises many college students and their parents, I’d argue that, yes, college can still be worth the expense,” Carlota said, “if the student is going to commit to the experience and process of learning, social engagement, social skills and going outside their intellectual comfort level.”
Carlota points to her own life as a testament to how committing to learning, being social and stretching yourself can have a life-altering impact. She graduated from Wellesley in 1996 and went on to get a law degree from Indiana University-Bloomington.
“I myself, while attending Wellesley College, discovered a talent and love for Russian language, culture and history,” she said. “I spent my junior year in a small Russian town and it continues to change my life.”
After she graduated, she found work in Moscow writing for a culture publication. Eventually, she moved on to work as an editor for a local NBC News branch. After eight years of news in Moscow, she decided to return to the United States and went to law school.
“When I got burnt out on TV news and had to remake my life, it was my experience living/working in a foreign place/language that convinced me I had the courage to pursue my own dreams,” she said.
Carlota converted that experience and courage into a career as a life coach. But the interesting thing about Carlota’s life is that her degree wasn’t in news or coaching; it was in history. Normally, we’d say your degree dictates the job you get, but Carlota reminded us that, even if your interests change, you can use your degree as a platform to foster your interest and drive.
“I was a history major at Wellesley, and every single day I use the life, social and educational skills I honed there,” she said. “If you’re going to commit to the fullness of your college experience … yes, it can, and will be, worth the financial sacrifice. You can learn things about yourself that will enrich and inspire your life for decades to come.”
Carlota brings up an interesting point – college is more than just a financial decision…it’s a choice to immerse yourself in a social, cultural and learning experience. And that leads us to our next argument – the day-to-day college experience makes it worth it.
College Is Worth It Because of the Life You Experience
Tony Aguilar is the founder of Student Loan Genius, an organization that works with companies to help their employees pay off student loans through contributions similar to what takes place in 401k’s.
As we talked with Tony about what his organization does, he gave us some insight into his personal life. Tony told us his business cards say he was “blessed” with $100,000 in debt; without it, he wouldn’t have started Student Loan Genius.
We were interested to know his opinion of the value of a college education; after all, if anyone would have the right to throw shade on college, it would be the guy with $100K in debt.
Here’s what Tony said: “Hands down, getting an education is worth it.”
Most people argue against college based on financial reasons, he said, but the argument should never come down to dollars and cents. College is a matter of the day-to-day experience, or, as Tony calls it, “quality of life.”
“The argument about whether or not it’s worth it usually comes down to finances, but that’s not where the discussion should lie,” he said. “There’s more to life than finances. It’s about quality of life. Who do you meet through your school? Professors. Mentors. Some of the brightest people in the country.”
Now, we know that it’s almost impossible to escape the financial side of the discussion, and that’s why we found some interesting insight from Mark Kantrowitz.
College Is Worth It If Your Total Loans Don’t Exceed Your Yearly Income
A lot of the discussions about whether or not college is worth it focus on the overarching yes or no, but they rarely dig beyond the well-known debt stats to make their conclusion.
Mark did just that for us: his philosophy is that you should never withdraw more loans than what you’ll make per year when you graduate.
“The key is to keep debt in sync with income,” Mark said. “So long as total student loan debt at graduation is less than your annual income, you should be able to afford to pay off your student loans in ten years or less.”
“So long as total student loan debt at graduation is less than your annual income, you should be able to afford to pay off your student loans in ten years or less.”
If you remember back to our article on loan forgiveness, the average salary from the top 10 degree programs is more than $50,000. In 2015, the average amount of student debt for college graduates was $35,000. Based on these numbers and what Mark told us, college is actually a good financial choice for a lot of people.
Mark also gave us the following stats to further support the value of a college degree:
- The average college graduate makes $1 million more than high school graduates.
- 11.5 million of the 11.6 million jobs created during the economic recovery went to people who attended college.
- A college degree has become a prerequisite for getting a good job.
From a financial perspective, it’s our opinion that the college student with the average amount of debt will definitely benefit from a college degree.
“If you’re borrowing to pay for college,” Mark said, “there’s a presumption that you’ll get good enough of a job after graduation to be able to afford to repay the debt.”
Student Loan Hero CEO Andy Josuweit agrees with Mark. Andy said that a college degree is a ticket to much higher income than what you’d get with a GED, but that doesn’t mean you should put yourself in $100,000 of debt to get that diploma.
The big issue is that many college students are buying educations that are simply too expensive,” Andy said, “and this overspending is eroding the return on investment.”
Mark and Andy’s observations lead us to another important discussion: who should go to college and when. The experts we spoke with are pretty clear on both: not everyone is meant to go to college, and if you decide to go, it’s important to know where you’ll go and what you want to do.
College Is Worth It If You Make the Right Choices About Where You Go
Not everyone is a good fit for college, and that’s not a nice way to say that some people aren’t smart enough or disciplined enough to succeed at a university.
In a very real sense, some people are much better off not spending money on college. So, as you make your decision about whether or not college is worth it, weigh your career goals and the skills you’ll need to accomplish those goals.
“I had a mentor who taught me college is not for everybody,” Tony Aguilar said. “If you want to be a mechanic and you want to do that for the rest of your life, go do it. You don’t need to go to school.”
But let’s say you decide that college is necessary for your goals. If that’s the case, take stock of your financial situation. Do you have enough scholarships to pay for the school of your choice? If not, are you willing to incur debt in order to attend your top school?
These are the hard questions every high school student needs to ask before they decide which college they’ll attend.
“Do you need to go to MIT right away, or can you find another program that’s of the same caliber,” Tony asked. “For some people, their dream is to go to MIT. In that case, you’re going to have to take on debt.”
Mark Kantrowitz talked about the very same thing. Some students bank their entire education on getting into one college, only to be buried in debt when they graduate. On top of that, there are cases where students with debt take jobs that don’t pay as much as their degree could net them, Mark said.
“Some students graduate from a more expensive college and pursue careers that are less lucrative,” he said. “But, this is a matter of choice, not necessity. They could easily have attended a less expensive college, such as an in-state public college.”
“One thing students can be really strategic about is how they pick their college,” Kristina said. “A lot of people look at the rankings and want to go to a top-20 or top-100 school.”
However, there’s a growing movement toward measuring a college’s return on investment, or ROI. Make a list of colleges you want to attend and calculate their net cost (overall expenses minus scholarships). Find the colleges that offer the best education at the highest value.
“It’s important to start chipping away at that mindset that you have to go to the best school to have the best life. It’s not the only way and people are proving that every single day.”
“It’s understandable to want to go to the most competitive school, but what will that cost and what do you have to sacrifice? If you knew you could have your dream job either way…at a state school or the most prestigious school, then is it worth the debt you’ll go into,” Kristina asked. “It’s important to start chipping away at that mindset that you have to go to the best school to have the best life. It’s not the only way and people are proving that every single day.”
The Final Word: Is College Worth It?
For many years, it was assumed that college was worth it. A degree was your ticket to a job right out of college. Over the past decade, though, that philosophy has changed.
The effects of the Great Recession disillusioned college graduates who were certain their education would pay off. Jobs were hard to come by and degrees didn’t have the clout they used to. These problems compounded as out-of-work adults returned to college to get degrees that would boost their chances of getting hired when the economic dust settled.
However, there is an overwhelming amount of evidence that points to the fact that a college degree pays off in the long run. The financial side of things, however, shouldn’t be the sole reason you decide if college is worth it.
As Tony Aguilar and Carlota Zimmerman pointed out, college is more than just numbers; it’s a comprehensive experience that sharpens your social, intellectual and relational skills.
But Mario Almonte, a regular contributor at Huffington Post, says there’s more to an education’s value than money.
“There is merit to questioning the cost of a college degree, but, at the end of the day, life is not about how much debt you carry but how well you have lived it,” Mario said. “Studies show that the better educated you are, the better your chances at finding happiness.”
At the same time, though, Mario said there are clear financial and career-based benefits of getting a degree.
“A college degree definitely opens doors to better job opportunities, and there are plenty of great, small schools in the U.S. that will give you your money’s worth,” he said. “But, the real question is: Am I happier because I went to college?”
We believe that all of our experts have brought up excellent points about the benefits of attending college. In order to make the experience worth it, though, you have to be committed to completing your four-year degree. Dropping out puts you at a much higher risk of defaulting on your student loans.
Also, remember that a good rule of thumb for choosing your college is the estimated amount of loans you’ll have to take out in order to graduate. If that total is higher than what you’ll anticipate making per year when you graduate, consider a different school with more scholarship opportunities or lower tuition.
Be clear on whether or not you should go to college, too. The effort you put out and the debt you’ll accrue just isn’t worth it if you’re better suited for a career that doesn’t require a degree.
If you believe college is essential to your career goals, then choose your school wisely. Look for the university or college that gives you the best value at a competitive price.
More on Student Loans:
- The 8 Different Options You Have to Pay Off Your Student Loans
- 5 Simple Tips for Repaying Student Loans Faster & Getting Out of Debt
- Top Student Loan Scams: Obama Student Loan Forgiveness, Money Up-Front & Other Tricks