Are Student Loans Worth It? How Colleges are Hiding the Cost

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I get super bummed when I hear news about student loan debt. I’m in college, and no matter how hard I try, college loans are unavoidable. According to the New York Times, there are more than $1 trillion in outstanding college loans in this country, and about two-thirds of people with a bachelor’s degree have borrowed money to attend college. Whew! At least I’m not alone.

The truth is this topic is a dark cloud over parents’ peace of mind as their children approach college age. Many families simply don’t have the money to cover their child’s tuition in full. Should parents take financial responsibility for their children’s continued education, or leave the kids on their own? Should you put your retirement at risk, or let your kids graduate tens of thousands of dollars in debt? Are student loans worth it?

I was shocked to read about the sky-high debt some students amass just to graduate with a bachelor’s degree. One student interviewed by the New York Times will be graduating with $120,000 in student debt. Her mother, who co-signed on the loans, took out a life-insurance policy on her daughter to protect herself against her daughter’s debt if something should happen.

For most people, starting out in the red is just not a good idea. On paper, $120,000 is a horrifying amount. I can’t grasp how I would even begin paying all of that back. So how much debt is too much? Wouldn’t you take one look at the hefty cost of tuition and think it’s not affordable?

Well, not exactly. The price of college isn’t as straightforward as one might think. You have to maneuver a maze of financial aid, grants, loans, scholarships, and who knows what else, just to figure out the actual price for tuition. Financial aid offices don’t make the process easy. Students are encouraged to imagine scholarships and grants that might be awarded, but in reality aren’t produced.

In addition, students aren’t educated about the risks of debt. College loan counseling usually consists of a brief online course, while debt counseling is virtually non-existent. I personally had to take out federal loans to cover the tuition costs of my bachelor’s degree, and received little advice. Getting the money was easy enough; I just had to sign a few forms and complete a 15-minute debt-counseling course. What did I learn from the course? Absolutely nothing.

So, how can you avoid large amounts of debt? In a culture where college degrees are highly valued, is skipping college a realistic option? It’s important to look at the type of college, the cost, and the eventual payoff. Does a private or for-profit college have much more to offer than a public institution? Does your student really need to go to an expensive out-of-state school when there is a comparable in-state one? Is a private liberal arts degree really going to get them that much further ahead?

Also, consider what your student will realistically be able to earn with their degree. Many schools, especially for-profit ones, over-promise with their degrees. Often these institutions exaggerate student job prospects and are misleading about cost. College decisions are being prompted by salesmen who use an arsenal of football teams, extra-curricular organizations, pricey dorms, and an array of degrees that may not be worth very much. Will your student be making enough at graduation to justify the debt?

Be sure to make an educated, reasonable decision about where to get your degree. It’s always important to live within your means, and college really shouldn’t be an exception. If you’re a student paying for school yourself, it might be best to consider an in-state public college over an out-of-state or private one. Ultimately, education will have a huge impact on your future finances, and educating yourself is essential to making the best possible decision.