Is going $100,000 dollars in debt for a college education a good investment?

No

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by Robyn Keyster

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We've all heard the horror stories: college students graduating with staggering student loan debt, unable to pay it off and with nary a good-paying job in sight. Given the current economic downturn and sluggish job market, these stories seem to be growing in both numbers and intensity. Unfortunately, though, student debt has become a necessary evil, one crucial to obtaining that coveted college degree. With higher education more expensive than ever, it makes sense that most students will have to borrow at least some money before graduating. However, going into massive debt - taking out tens of thousands of dollars or more - is rarely a good idea for anyone, let alone young adults just entering a shaky workforce.

If one were to go anywhere near $100,000 in debt for an undergraduate education, the result would likely be financial catastrophe. On its own, $100,000 is extremely difficult to pay off; once interest is tacked-on, the amount explodes into downright impossibility. Moreover, current college graduates are finding it tougher and tougher to even obtain jobs, let alone the six figure salaries that could go up against a debt of $100,000. Consequently, today's students should definitely seek to minimize debt as much as possible.

Of course, there are students who plan on entering traditonally high-paying fields, such as law, engineering, or medicine. Going into deep debt might not seem a bad idea for these individuals, as they anticipate a big payoff in the near future. However, few students who enter college graduate with their original major, and the high-paying areas of study are no exception. Given that these fields tend to be extremely rigorous and stressful, their retention rates don't justify huge amounts of debt. These prestigious fields also tend to be highly competitive, so success is no guarantee.

If these types of students do decide to take out lots of loans, and then decide that maybe law or medicine just isn't for them, the consequences can be ruinous. Their credit may be ruined, and since employers often take a quick glance at a prospect's credit report before a final job offer, they may find themselves in deep financial trouble. Additionally, if someone in a lucrative field decides to change their major to something more do-able, they may be so bogged-down by the stress of debt that they may drop out altogether. Finally, students who take out massive loans might force themselves to stick with a high-paying field, just because they have to. Since one of the keys to career success is genuinely liking what you do, these students might not progress in their not-so-chosen field anyway.

For those in any major, there are a host of other reasons not to go too deeply into debt. In today's chaotic economy, more students than ever are taking time off, switching schools, changing majors, or transitioning from full-time to part-time. Any one of these changes can alter a student's repayment plan, which may result in students being forced to pay off loans before they even have their degree. Also, undergraduate educations are becoming somewhat less prestigious, and graduate degrees are often needed in order to start making a sustainable salary. If students "max out" their loans too early, graduate school might be out of the question. What students must avoid at all costs is allowing their debt to impede their ability to advance educationally. Unfortunately, unless one is incredibly careful, most debt does, to some extent, hinder one's ability to move forward.

Perhaps the most important reasons huge student debt is a bad investment is that it is simply not necessary. Despite the bleak economic outlook, there are a variety of college financing options that don't involve too much debt. Students can attend community colleges, cheaper state schools, or schools close to home (eliminating the cost of room and board). Students can pursue scholarships, work while in school, and gather additional forms of financial aid, such as grants or low-interest federal loans.

The accumulation of debt is often a symptom of desiring instant gratification, and student debt is no exception. The harder students work before and during college, the less they'll have to work to pay off debts later on. Since the college experience is, at least in part, about developing maturity, why not teach students early on postpone gratification until it's all paid off?

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