Here's a piece from MSNBC where they're trying to make something from not much. In this case, they are attempting to highlight the evils of college debt. They start with this ominous section about college students' post-graduate debt:
Nearly two-thirds have outstanding loan balances according to the latest Postsecondary Student Aid Study, published by the U.S. Department of Education. While these balances average just over $19,000, 25 percent of the students owe nearly $25,000 and a tenth were expected to graduate owing in excess of $35,000. And, this excludes any borrowing done on credit cards or by their parents.
But soon thereafter, they admit that college is a good deal:
Over a working lifetime, even after the cost of attending college and forgoing several years’ worth of earnings while in school, most graduates can expect a financial payback. But the payback often lessens with the amount of debt carried to finance the degree.
So you make more plus it's likely that you're more fulfilled (doing something you like.) So what's the big deal?
The big deal is the extreme end of the spectrum -- people who borrow a ton of money and end up picking a career that doesn't make much. That's certainly a financial burden for them for years to come. That's why I suggest matching your debt with your potential post-college earnings.
The rest of the piece does advocate something I believe in -- getting the best education you can while borrowing the least you can. They go on to list several money saving tips, most of which I've covered. (If you want details, check out Best of Free Money Finance: College and Education Posts.)
In the end, college is a good financial deal. yes, you spend a lot of money and time (four years or more) to get a degree, but you usually end up earning a ton more money which pays for your education and a lot more. For detailed discussion of this issue, see these posts:
So what I think you're saying is that if you go into huge debt becoming a doctor and then, after graduation, decide to chuck it all and work road construction, that the money wasn't well spent? This is an extreme example, but it illustrates the point that spending a fortune for a degree that doesn't get used isn't a good investment.
Mike
Posted by: Mike | August 23, 2007 at 11:33 AM
I got a liberal arts degree - couldn't afford to go to law school - and earn minimum wage. That was an absolutely atrocious investment.
Posted by: Minimum Wage | August 23, 2007 at 12:12 PM
My wife did something similar to what Mike illustrated, just not so bad. She went to school to be a Surgical Tech, and after graduating, decided that she didn't really like the surgical field. I would say that money was wasted, but that's one of those 'we don't talk about that' subjects.
Anyway, 10 years later, she's happy being a stay at home mom, which I actually like better.
Posted by: CreditWithdrawal | August 23, 2007 at 01:11 PM
If it made you a better person and you can afford to pay the money back, then it was a great idea. There are more important things than money.
Posted by: plonkee | August 23, 2007 at 03:07 PM
But I couldn't afford to pay the money back and got into deeper debt trying to start a business to make enough money to pay it back.
An extended illness and hospitalization wiped out my business, ultimately I returned to work at a minimum wage job and couldn't repay the added debt and a debt collector sued me.
I have just received official verification of an out-of-court settlement which guarantees that unless I can increase my income, I will be broke for the next three years. (And then they will sue me for other old debt.)
Now if I had never gone to college, I would have started out with $4,000 of childhood earnings and savings (approx $20K in today's dollars) and no debt, plus I would have had excellent employment opportunities at the time.
Posted by: Minimum Wage | August 23, 2007 at 05:39 PM
Your comment about matching debt and potential earnings. A friend of mine once taught at a private college. He mentioned once that he was bothered to see some of the students racking up thousands in student loans to get a teaching degree there, when his state had 2 public universities that had better teaching programs and cost a third as much...
Posted by: Lin | August 23, 2007 at 06:26 PM
I heard a talk show host argue in favor of charging higher prices for "soft" degrees that don't have a specific career track (like, say, engineering degrees).
I suggested that many of these degrees should cost LESS than engineering and business degrees because humanities instructors are a dime a dozen while engineering and business profs are expensive.
The LOANS, on the other hand, should be more expensive for humanities degrees because they entail much greater risk.
Posted by: Minimum Wage | August 24, 2007 at 12:45 AM