What Your Professor Won’t Tell You About Student Loan Debt.

by Alexis Bonari

Children in the United States are raised on a steady diet of, “Follow your dreams”. We’re individualists. We aren’t content to picture ourselves working a boring, underpaid job until we retire at the age of 70 with a great pension.  Instead, we seek self-actualization. We ask ourselves who we want to be; what will fulfill us.

No experience + overwhelming debt= financial nightmare

While our parents can be forgiven for encouraging us to all become the next President of the United States or the next great artist of our century, creditors also love to encourage our wildest dreams.  Unlike our parents who either worked their way through school or had financial help from their parents, our generation of college hopefuls has access to almost unlimited college financing in the form of private loans.  This is a double-edged sword.  More people are going to college than ever before, but more of those same people are graduating with suffocating levels of debt.  Combine massive student loan debt, very little practical work experience, and top it off with the worst recession since the Great Depression and you have a recipe for financial disaster.

The reality is quite straightforward.  Finding a decent job is contingent upon two factors:

1.    Having a degree.

 

Notice I said a degree, not two or three degrees with minors in five different subjects.

 

2.    Having real-world experience on the job.

 

Too many college students fail to ask themselves what they’ll realistically be qualified for when they graduate.  Science and technology majors MUST pursue an internship during their junior and/or senior years of school to be competitive in the recession economy.  Liberal arts majors should try to work part-time at a company in their field of interest for most of their college careers.

Without experience, the job you get won’t even come close paying the numbers quoted by your college guidance counselor.

The role of universities and professors.

 

Professors also play a key role in the ever-increasing student debt trend.  As a liberal arts major with two separate undergraduate degrees, I speak from experience.  Well-meaning professors encourage students to get more than one undergraduate degree with the idea that multiple degrees will help the student land a higher paying job or will make for a more successful graduate school application.  Multiple degrees leads to massively increased student loan debt.  The extra degree makes little to no difference, and it costs thousands of dollars to achieve.

 

The golden ratio of debt.

 

Very few entering freshmen understand the golden ratio.  This ratio is as follows: for every 10K you take out in debt, you will be paying from 100-150 in monthly loan payments for the ten years after graduation.  When taking your salary into consideration, you also have to consider the effect of taxes.  Student loans aren’t tax deductable.  Your $30,000 salary ends up being $25,000 take-home. A $500/month student loan payment greatly reduces your standard of living.  If more college students were told about the effects of debt in these terms, we would see a substantial decrease in student borrowing.

 

A little education goes a long way.

 

Essentially, every college and university should create a mandatory course for entering freshmen that teaches basic strategies for managing debt.  Realistic salary and employment figures for all majors should also be provided. Students need to go into debt with their eyes open.  The alternative is being a slave to debt for the first ten years of their working adult lives.

 

Bio: Alexis Bonari is a freelance writer and blog junkie. She is currently a resident blogger at onlinedegrees.org, researching areas of online education degrees. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Comments

[Lorraine Lee]

I don't see this essay as being in a similar spirit to your usual digests of the likes of Robert Reich or Frank Thomas. First of all, this author appears to be a shill for the for-profit higher education industry. The link is to what can unambiguously be referred to as an advertising website. Second, while I largely agree with your low opinion of higher education in general, I regard traditional accredited institutions as a LESSER evil than proprietary trade schools and the like. If anything the latter are more of a debt trap than the former. ( http://blog.oregonlive.com/finance/2009/12/students_at_for-profits_build.html )

I don't think distance learning for credit (let alone at private-school tuition rates) is at all the same as being an autodidact. Indeed 'you have to have a degree to get a job' is part of Bonari's pitch. I see the tone of her message as 'yes Virginia, education is SUPPOSED to be a means to an end,' served with a heaping helping of liberal arts bashing, which may be liberal bashing by another name. And of course 'financial literacy' (as prescription for financial crisis) is spin, pure and simple. ( http://sobeale.blogspot.com/2010/03/just-another-phony-rick-berman.html )