An article in The Chronicle of Education (“Occupy Student Loans”) looks at how many of the signs held up by protesters at the Occupy Wall Street movement include slogans such as “I have $50,000 in student loan debt and my B.A. is useless,” and “Graduated college: May 2010. Debt: $35,000. Jobs in US: None.”
Student loan debt has become a focal point of the OWS movement. The fact that there are no job opportunities available for graduates to help them pay off their loans has made an already problematic issue even worse. While it is unclear how long the OWS movement will be around, many believe that it has had the positive effect of raising awareness about the issues surrounding student debt. Yet other higher education advocates feel that the protests might have the opposite results—all the talk of “worthless” degrees may discourage future students from taking on student loans in order to get an education.
Still others maintain that many of the problems around student loans could be solved if students were educated about loans. Lauren Asher, president of the Institute for College Access and Success, explains that many loan issues are related to mistakes students make when arranging their loans: “much more needs to be done to get the word out about income-based repayment and other ways that people can help keep their federal student debt from harming their financial future.” Robert Applebaum, a lawyer and crusader for student loan forgiveness, reinforces Asher’s point by describing how banks have lied to students by disguising student loans as “good debt,” when in fact, there is no such thing.
Debt is never good if it produces benefits worth less than its cost. In my view, it is legitimate for students to ask “Where is the ROI? ”
Educational benefits, however, can be discussed in more nebulous language, like “broader horizons” and “personal growth” or “intellectual skills” to justify gargantuan loans. These lofty concepts can appear amazingly shallow after you’ve graduated when facing six-figure debt and decades to pay off student loans. In fact, those touchy-feely concepts will seem downright tattered and tarnished, if not nauseatingly glib. Just ask the OWS students.
How should you look at your undergraduate and graduate education and the required expense – whether your parents, someone else, or you are paying for it?
You should examine it as an investment and analyze it before you incur it. Before you apply.
If you are destined for a personally satisfying, but less lucrative field where the return on investment for a degree from a very expensive private school is going to be minimal or negative, then go local and public unless you get scholarships that reduce the cost at the more expensive programs. Conversely, if you intend to enter a profession where you must attend a top program and that field pays well – far in excess of the cost of your education – then incur the debt. Or if you want to go in a direction where there is a big difference in professional opportunity (and salary) based on the school you attend, then again you can determine what level of debt is necessary and prudent. Taking out student loans — intelligently and with an analysis of costs and benefits, risks and rewards — becomes an investment and not a wild gamble, or worse, Russian roulette with your financial future.
Of course this analysis assumes you have direction. For college that is a less valid assumption, because it is perfectly normal for eighteen-year-olds to change their mind about their profession when in college. However, graduate school virtually requires direction and purpose. That purpose must guide you in determining whether it’s worth it for you to once again occupy a student’s desk.
By Linda Abraham, President and Founder of Accepted.com.
Photo courtesy of david_shankbone