The sheer irony of what I am about to say is so contradicting, it's almost hard for me to write this:
But we are actually grateful that we had $300,000 in student loans.
Now, I get it, you don't really relate as to why someone might be grateful for their student loan debt, or perhaps you don't care. Either way, hear me out for the next 3 minutes of your life and I guarantee you will get something out of this article.
My goal is to not only provide you with a unique perspective as it pertains to student loan debt… but to answer the question:
Are student loans worth it?
How do you view your student loans?
The way I see it there are two ways to look at everything that occurs in life:
- You can be indifferent towards something.
- Or, you can embrace it and make the most of it
We are all guilty of the first, which includes not only shoving things to the wayside but also complaining about things we could potentially resolve. I share this perspective because that was me after graduating from college.
From 2009 to 2016 I was indifferent towards my student loans. I didn't care, I had them bad boys on auto-pay and like a crock pot… I set it and forgot about it for 7 years.
If I can be very transparent, I wasn't the least bit concerned about paying off my student loans. In fact, I recently found some quick math on a student loan bill where I divided the amount I owed by 120 (10 years, 12 months per year) to find out the minimum I needed to pay.
However, all of that short-sighted thinking changed when I met my eventual wife. As our relationship progressed, all I could think about was the fact she had more student loan debt than my house was worth!
Which led me to start questioning whether student loans were worth it in the first place. This eventually led me to adjust my earlier stance on being indifferent towards student loans:
Either stay indifferent, our embrace the fact you have over $300,000 worth of student loans or do something about it.
This stance eventually allowed me to realize that not only can student loans be worth it when taken out and used properly, but they can also motivate you to do more with your life.
Does your student loan debt move you?
Have you ever heard the story about the old hound dog at the country store?
In the middle of nowhere, there was a country store where the owner let his old hound dog come to work with him each day. Each day the old hound dog, out of routine, would lay in the same spot where he would proceed to whimper and whine all day.
Out of curiosity one day, a regular asked the store's owner why the dog laid there and whimpered each day?
The owner responded with an unusual answer, “He is laying on an old nail.”
Caught off guard by the answer the regular asked, “Why doesn't he just lay somewhere else?” The store owner replied with,
I guess it doesn't hurt him bad enough”
In my opinion, that is how I see most people approaching their finances, in particular, student loan debt.
The nail on the floor (Student loan debt) hurts, but it doesn't hurt bad enough to do anything about it (Pay off student loans as fast as possible). Not only did I relate to this, but it described me ‘to a T'.
However, once we were married we quickly realized our student loan debt wasn't going to just magically disappear. As we started reflecting, I asked myself:
Are student loans really worth it?
Now, before I tell you my view on whether or not student loans are worth it, I think it is important to point out that I went to college from 2005-2009 when it was still affordable.
The same bachelor's degree that cost me $40,000 in total, is now $40,000 per year. My wife was in school from 2006-2014 and the bulk of our student loans came from her graduate degree.
So when considering whether not student loans are worth it, for me the answer has always been YES.
Even my wife (With over $270,000 in student loans) considers them worth it, but probably not for the reasons you might be thinking.
I can only speak from our viewpoint, but our student loans motivated us to take action in our lives when it came to our finances. Something I will always be grateful for.
The nail on the floor started to make us move!
Had we not had student loans we wouldn't have our careers, our home, and truth be told we would have never met…
But one thing is also 100% certain, we would have been the dog sitting on the nail for the rest of our life if we didn't have the burning desire to get out of student loan debt.
However, times have changed since we even went to college. For someone who is looking at six figures worth of student loan debt just to get an undergraduate degree – the question as to whether taking student loans really depends on a few things.
Unlike the generations before, it is time for the younger generations to start approaching college like an investment, not something to just do.
Treat student loans like an investment.
Recently, I attended high school graduation where I heard this stat (For this particular school):
85% of our high school graduates will be attending some form of college.
I thought to myself, “This number seems really high.”
While 85 out of every 100 high school graduates going to some form of college isn't the norm, I would venture to say the numbers are pretty close across most school districts, possibly around the 70-75% mark.
I recognize that 85 out of every 100 kids going to some form of college isn't the norm, I would venture to say the numbers are pretty close across most school districts, possibly a little closer to 70-75%.
While many discussing the student loan crisis will point out that student loan debt has ballooned to $1.6 trillion, it is important to note the number of borrowers has also increased to 40 million plus.
More degrees = more borrowers.
More borrowers = more student loan debt.
The simple understanding of how supply and demand works pretty much answers why there is a student loan balloon. There is a high demand for a college education, so the price rises because of the demand.
Which is why it might be time to treat a degree like an investment, not a right of passage. Like any sound investment, college is no longer something only a select few can get their hands on, (Which is both a good and bad thing), so college should be viewed differently.
Borrowers need to make sure their investment is sound, which starts with knowing what to first invest in… aka your degree choice!
The bad: Unfettered lending doesn't incentivize colleges to keep tuition costs low, instead, it has become quite the opposite as college compete in a college amenities arms race.
The good: Education has never been more available, just about anyone can get student loans and has a shot at getting a degree.
Be strategic with the degree you pursue.
Prior to ever going to college, it is important to point out that what people major in does matter. It matters to…
- Them and what they pick
- Their finances in the future
- How much they can make in the future
- And lastly, to their parents (But we will cover that one)
Most high school counselors and teachers wont say it, but I will:
Just like there are dumb questions, there are also dumb degrees.
Some degrees are worthless when it comes to actually leveraging them to make money. If you're super passionate about something that isn't a typical high earning field and you think a degree will help you land a job for your passion, think again.
Let's say you're really good at playing the jazz guitar. If you think getting a degree in music will help your chances of landing a career for music, you're probably going to be disappointed after college.
This is the fine line of “Doing what you love,” but also setting yourself up to be financially successful. It is important to always do the right research before settling on a degree.
Depending on your major – student loans can or cannot be worth it.
Don't go to college for your parents.
Don't pick a degree because your parents want you to do something. I know this can be a tough pill to swallow, but don't take out student loans and major in something you don't want to do.
If you're going to college just to please your parents or you're going to pursue a medical degree because they want you to – welcome to a world of long term unhappiness.
Always remember that it is you that will pay your bills, you that will live your life, and you will that live with any choice you make – even if that choice is greatly influenced by your parents.
This is a hard pill to swallow, but if you're going to college because your parents are making you – and they're not paying for it – then taking out student loans to please them might not be worth it.
In this case student loans are not worth it.
Go to community college first.
This is the most viable option if you're stuck considering whether or not student loans are worth it.
College has become more than a way to get a degree, it has become a four year party for many. However, sometimes it is shortened to a one year party for some, or even a one semester party.
In other words, they realize they have no clue what they're doing or maybe they're not ready and they come back home.
Here is how to counter this – go to community college. The pros of community college are endless:
- Affordable classes
- Can work as you learn
- Can get prerequisites done
- Most community colleges offer guaranteed in-state transfer admittance.
- Learn different subjects with no pressure to choose major
- Can cut college costs by 50%
In the case of community college – student loans are worth it.
Live below your means.
Whether you go to to a community college or a four year institution, here is what you need to know. No matter what you do, you will need to live below your means.
Student loans can be worth it when you figure out how to live below your means.
If you can't live below your means, then taking out student loans to help fund your lifestyle is not worth it. See if you can figure out how to live below your means and save enough money each summer, that way you can only use student loans for tuition each year – nothing else.
If you can live below your means, student loans are worth it.
Be Aware of For Profit Colleges
According to a Forbes article discussing whether or not student loans are worth it, almost half (48%) of for-profit student loan borrowers go into default compared to 12% of public college attendees.
The fact that one in two can't pay their for-profit student loans means that student loans are not worth it when it comes to for-profit colleges. Not to mention depending on the degree type, sometimes they're not viewed as valuable in the workplace.
For profit student loans – not worth it!
The Verdict – Are student loans worth it?
The road is split. Statistically speaking, roughly 1 in 2 will tell you college is still worth it.
Chances are if you ask someone who landed the job they envisioned and they have student loans, they will tell you it is worth it. On the other hand, ask someone who can't find work, yet still has a degree – they might have something else to say.
At the end of the day, whether you thin student loans are worth it is really up to you and your personal needs.
For us – it was worth it. We have our higher education degrees and we have great careers that provide a great lifestyle. However, looking back it is hard to say if we would have chose the same route.
The choice is yours ultimately, just make sure it is a sound financial choice!
Question: Do you think student loans are worth it?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎