Every year it seems the price of tuition increases. The average cost of a bachelor’s degree in 2016 is around $40,000. Very few families can pay for their kid to go to college out of pocket, which leaves the student with only one choice; student loans. Is taking out student loans to attend college worth it?
In some cases, debt is not a bad thing. Debt allows you to enjoy material things today, and pay for them over a specified time period. Without debt, the majority of people would not have a nick house, reliable car, or other big purchases. When deciding if whatever it is you want to purchase is worth going into debt over, really think about if this item or service is worth carrying that amount of debt. When it comes to home mortgages, most people feel that living in a nice house, in a nice neighborhood is worth paying a note for thirty years. Also, people believe that going into debt for 6 years in order to drive a safe, reliable vehicle is justified.
Due to the price of a four year degree, most graduates exit college with debt. The big question on everyone’s minds is that is taking out student loans worth a college degree?
When is it worth going into debt to attend college?
If you have just graduated high school and have your sights set on a four year degree, listen up. Say you have a $40,000 loan for tuition and books. If your school costs $5,000 per semester (which is cheap), you will start paying interest on that $5K as soon as you write the check (or interest will be building and deferred). Interest builds on most student loans as you go through college. When you graduate, you will have to start paying principal and interest payments on that money. If the student loan was over 15 years, you will have easily paid over $20,000 in interest by the time you have paid the loan off. This equals to a four year degree being around $60,000.
So, is taking out student loans worth it?
If you are going to college to earn a degree with a very high unemployment rate and low salaries, taking out a student loan is a very bad decision. However, if you are borrowing money to graduate with an engineering degree, going into debt may not be such a bad idea. If you choose to take out a loan to go to college, do not waste that money by not graduating. Set yourself up to get the best job possible before you even get out of school. Some positions, mainly medical, will pay off your student debt if you agree to work at their facility for a certain period of time. Just be sure you will make more money after graduating and not be stuck with an over-priced piece of paper.
There are federal programs that forgive student loans, but do not plan on that for much longer. If you are going to go into debt for a degree, be prepared to pay it back after you graduate. Before taking out the loan, research all of your options. Factor in the interest that will accrue while you are in school, and be prepared to start paying the loan down after you graduate.
Is a finance degree worth it?