Conventional Wisdom & Student Loan Debt

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Student loan debt, second only to mortgage debt, accounted for $1.5 Trillion of the total debt held by Americans.  As most of those burdened by such debt will adhere to traditional and conventional means of repayment, they’ll spend years, even decades, perhaps their entire working life paying off those loans.  A few of the misconceptions they labor under include the following:

Student Loan Debt can be Avoided by Working Your Way Through School

What once may have been true remains so no longer.  It hasn’t been true for years, perhaps decades.  Trends in wages and tuition rendered this strategy impossible.

The Greater the Student Loan Debt, the Heavier the Burden

A six-figure student loan debt can be a heavy burden.  A few students graduate with such a debt load, but those are few and far between.

Typically, students with such debt are those graduating with degrees in medicine, law, or some other professional designation, including those earning PhDs.  Such degrees provide earning potential that will more than offset the debt incurred.

Statistically, those most likely to default and most likely to suffer multiple financial setbacks are those servicing less than $10,000 in student loan debt.  Defaulters tend to be older, to be African American, and to attend for-profit institutions.  Almost half never earn an undergraduate degree.

Student Loan Debt is a Youth-Centered Problem

Not necessarily.  While millennials do struggle with such debt, baby-boomers are overwhelmed.  Boomers likely still pay on their own student debt, have taken on school debt for their own children, are addressing financial issues faced by their parents, and “hopelessly” face an improbable retirement.

According to the AARP, Americans over 50 owe almost $290 Billion of total student loan debt.  While a good portion is tied to their own school debt, growth has occurred through parents and grandparents incurring debt on behalf of their children and grandchildren.

A College Degree Just isn’t Worth the Student Loan Debt Incurred

While parents and students truly may feel this to be true.  It may indeed be true should the degree be earned in a low-wage field.  However, earning a degree in a high-wage field, even just finishing the degree, increases the odds that a college degree will pay off.

Decades ago, a high school degree meant you could find a good job, support your family, and retire comfortably.  In today’s reality, the college degree has replaced the high school degree.  Studies show that those with a college degree will earn roughly $1-$1.5 Million more in lifetime income than those with just a high school degree.

Unless your child is an exceptionally-gifted individual, whether it be academically, athletically, or artistically, the dream of a “full-ride” undergraduate education likely is highly unrealistic.  More likely, based on the ever-increasing annual cost of attendance, school loans, whether student or parent, will be utilized to help cover the expense.

Rather than settle on a college or university based on “sticker price,” consider engaging our services.  We will assist your family in identifying the best school at the best price for your student, based on academics, institution size, geographic location, and family budget.  Moreover, we’ll show you how to save for the expense in the most efficient manner possible for your family.

We look forward to hearing from you.