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Is There Really A Downside to Steering Clear of Student Loans?

It turns out there’s a downside to declining the opportunity to dig yourself into a pit of student loan debt. You probably can’t afford to pay for college any other way. But is that such a bad thing?

At least, that’s what the folks over at Money Magazine say in this article. With a scant 45% of people polled were willing to borrow no more than about $10,000 in student loans, most students wouldn’t be able to cover a single year at many public four-year colleges, even after financial aid is taken into account.

Unfortunately, the article continues,

The problem with not borrowing is that most families do not have nearly enough saved to pay for college. About half of U.S. families are not saving for their children’s educations at all, according to a survey by Sallie Mae. Among those who are, the average amount saved is around $15,000.

That’s a shame given that someone with a bachelor’s degree can expect to make about $1 million more during their working years than someone with only a high school diploma.

But consider the fact that the article doesn’t take into account a few “anomalies” (that’s what we call facts we don’t like to think about). For example:

  • If you graduate from a for-profit institution or technical college such as the ones you see plastered across mass transit billboards, you’re probably looking at far higher educational debt and lower income prospects when you get out of school.
  • Graduating from a college with a lesser reputation doesn’t translate into a top-dollar job.
  • Many majors lend themselves to careers that require graduate school in order to escape the minimum wage future of a position behind a cash register (English Literature majors, I’m looking at job). That means you’re going to need to dig yourself into even more debt.

For those who fit into the “anomaly” category, apparently eve a low salary shouldn’t deter you from racking up huge student loan debt. “If total student loan debt at graduation is less than the annual starting salary, the borrower will be able to repay his or her student loans in ten years or less,” say Mark Kantrowitz, who runs a student loan information site.

That doesn’t seem to be the case for the people I speak with day after day, but I’m willing to admit that I may have a skewed view.

Still, a friend of mine makes a tidy living as a locksmith in spite of the fact that the closest he’s ever gotten to a college is to install a new keyless entry system. That’s to say nothing of the guy I know who cleans toilets for a living – he’s driving a nicer car than lots of my lawyer friends can afford.

So maybe the locksmiths and plumbers got together to get this piece written. It seems like an easy way to get rid of the competition by getting people to go to college.

The problem with articles like the one in Money Magazine is that they give blanket advice without reference to your individual situation. Getting a degree in accounting from University of Notre Dame is more likely to be worth the student loan debt than a similar degree from Alliant International University, for example. And a degree in Computer Science is probably a sounder investment in your future than one in Animal Science (listed as the major with the lowest salary).

In the end, you can’t generalize when it comes to the value of a college education. Look at your course of study, the reputation of the school, and how well graduates fare. Anything less is irresponsible, and will probably land you in a tough spot once the student loan bill comes due.

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By |December 3rd, 2014|

About the Author:

I’ve been a consumer protection lawyer since 1995, working to help people end their bill problems. I’m a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.

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