Finances

Student Loans and Guilt

graduation

Unpopular opinion: I am not opposed to student loans. I see a lot of posts online where people seem to have a lot of regret for taking on student loans. I don’t regret my student loans. I wouldn’t have been able to pay for college otherwise. I lived paycheck to paycheck throughout college and that was without any other sort of debt.

Paying for college out of pocket has opportunity costs. Dave Ramsey recently shared a post on Instagram commending a women for graduating college without debt. I agree that it’s incredible and she should be proud. However, the fine print was that it took her *eight* years to do it. That means she lost 3-4 years of increased earning potential and 3-4 years of compounding interest. Does it make sense to graduate in twice the amount of time for the sake of graduating debt free?

I graduated in 4 years with about $21,000 in debt. With my degree I was able to get a job with great benefits and a competitive salary. I paid off my student loans 2.5 years after graduating. I worked two jobs for about 6 months to aid in the process but honestly, if I had found out about the debt free community earlier, I probably wouldn’t have needed to. I spent the first year after graduation spending money on food and lots of clothes and didn’t budget at all. Getting student loans allowed me to pay for college, going to college allowed me to get the job I currently have, and the job I have allowed me to pay my student debt much faster than the scheduled 10 years. Student loans are a means to an end.

However, there are exceptions. I have an acquaintance that attended an expensive private school and majored in English. This person racked up tens of thousands of dollars in student loans just for undergrad. When they finished their undergraduate degree, they decided to continue their education with a degree in Education (see what I did there?) that they also financed. When that individual was done with both of their degrees they had one setback in their student teaching and never got their teaching certificate. They graduated with about $100,000 in debt that ultimately did not secure them a job. That amount of debt is crippling. Let’s assume that this debt is on a ten year repayment at 6%. That means their minimum payment is $1100. If you work full time at minimum wage, that is basically 100% of your earnings. At $10 per hour, its 68% of your before tax income. And that is why student loans get a bad rep.

All of this isn’t to say that someone shouldn’t major in English or Education. The world needs writers and educators. The point is that your student loan debt has to make sense in relation to your future earning potential. $100,000 might be one year’s salary to a doctor but its two or three years worth of a teacher’s. I think that if you are a responsible person and go to an affordable college, you can reasonably graduate in four years with a minimal amount of debt. And if that gets you to where you want to be in life as it did for me, then I don’t think you should feel guilty about it.

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2 thoughts on “Student Loans and Guilt

  1. Very well stated. Not all loans are bad. Like a school loan, buying a home or an automobile and paying for it with cash is not something most people can do. Yet a home and/or an automobile are both items most people want/need in their life. Therefore, a loan/debt cannot be avoided. If either or both are reasonally priced and within a person’s budget, the loan/debt becomes a great tool.

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    1. I don’t necessarily disagree with you. But I think when people take on debt with ‘reasonable’ payments, they get into trouble. All of your debts could be within your budget, but each one could begin to add up until you are living paycheck to paycheck, if you are not careful.

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