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Why College Isn't Worth The Money

I spent six figures on my college education, opting for a distinguished private school with a premium price tag instead of the cheaper state option. I cared about the prestige behind the name just as much as the quality of the education. And it wasn’t worth it. At all.

Unfortunately, “good” was often interpreted to mean “expensive.” There was little conversation around the reality of paying for that education. Today, the average student loan debt load for a 2014 college graduate has ballooned to $33,000, which according toThe Wall Street Journal, is nearly double the amount students had to borrow 20 years ago, even after factoring in inflation.

“The growth of student loan debt is being compared to the recent housing crisis because of the significant growth of subsidized lending,” said Bryon Spicer, president of Spicer Wealth Management in Dayton, OH. “Just as the mortgage lending boom pushed home prices up, student loan lending has put upward pressure on tuition.”

Where You Earn Your Degree Doesn’t Matter

My employer could not have cared less where I received my degree — the important part was that I had one. In fact, a survey conducted by Gallup on behalf of the Lumina Foundation found that only 9% of business leaders consider where a job applicant went to school to be “very important.” Rather, the amount of industry knowledge that person possessed was overwhelmingly most important, at 84%, followed closely by the candidate’s job skills at 79%.

However, a corresponding survey of the American adult population found 30% of respondents believed where a degree is obtained is “very important” to business leaders. Clearly, a gap between perception and reality exists. And that’s a major reason why more than 40 million Americans are burdened with student loan debt that totals over $1 trillion.

Does A College Degree Really Mean Higher Earnings?

College graduates with four-year degrees can expect to earn about $1 million more than high school graduates over their lifetimes, according to the U.S. Census Bureau. A graduate degree adds another $400,000.

A million dollars is certainly nothing to sneeze at, but earnings don’t tell the whole story.

 “I believe the core reason families are willing to take on such debt is out of fear that their child will face diminished prospects in life if they don’t keep up competitively with their peers,” explained Colin Drake, a personal finance expert and founder of Drake Wealth Management. “Ironically, saddling students with hundreds of thousands of dollars of debt may be the very thing which diminishes their prospects in life.”

The Real Economic Impact of Student Loan Debt

When you examine the sacrifices college graduates must make in order to tackle their loans, it’s apparent the true cost of college is not the inflated tuition or decades’ worth of interest. It’s in the precious time that is lost and major milestones deferred thanks to that debt.

“People in their 30s are finding that they can’t qualify for a home because of the student loan debt they incurred,” noted Cheryl Fields, founder of the Lifestyle Wealth Group. “They’re graduating from college, and because of the economic woes in this country over the last eight years, are working for wages much less than the ones they had hoped when they got their degree.”

The impact on the economy as a whole is massive. A recent study by the American Institute of CPAs found 41% of respondents have postponed contributions to retirement plans due to student loan debt. Forty percent have delayed car purchases, and 29% put off buying a house. Another 15% have postponed marriage. It’s not unusual for millennials to put off having children or opt out completely for similar financial reasons.

Spicer warned that if things don’t change, we’ll likely reach a tipping point where families recognize the return on education is no longer compelling. “We may see more high school graduates taking more time to live in the ‘real world,’ better discover and refine their career ambitions, and then return to invest in education they more clearly believe will be worth it,” he said.

Unfortunately, it’s unlikely change will come soon enough. The growing student loan debt bubble is due, in large part, to the federal government’s financial interest in student loans. The government pocketed more than $41 billion during fiscal year 2013 alone — a profit higher than all but two companies in the world: Exxon Mobil and Apple. It should be noted that student loan debt is the only type of debt that can’t be discharged through bankruptcy.

Chris Alberta, CEO of Senior Benefits Group Retirement Advisors and president of Alberta Enterprises, Inc., recommended that anyone who does not have a very specific career specialty in mind consider community college first. “The low cost, along with the opportunity to be in the workforce part time, may open some doors and redirect that path,” he said.

Alberta also advised it’s never too late to consider a college education. Starting late can be a good idea, especially if it gives you time to gain valuable real-world work experience while you figure out what you really want to do. ”Folks are getting degrees well into their 40s and 50s, starting a new life and pursuing a passion that they only just discovered,” he said. Just be sure that new life isn’t founded on debilitating student loan debt.


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