What’s Wrong with Student Debt?

I don’t have any student debt, so I did not think much about it – until recently when other people’s student loans delayed or killed 2 deals I was personally involved in the last year.student-debt1

It’s a trap!

A college degree is not the panacea that many in society claim it to be. What else could explain the fact that in the U.S. there are about 17 million college graduates working menial jobs?

Insead of an opportunity, today college is the gateway for many teenagers and 20-somethings to become debt slaves for the rest of thier lives. Consider:

  • College debt per student has gone up since 2005 by $10,000 a year, from roughly $17,220 to $27,500. That is a 60% increase.
  • Because many graduates work low-paying jobs, one-third of them have incomes less than $25,000.
  • How are they going to pay these horrible debts? They can’t.

About a year ago, total student loan debt outstanding exceeded the outstanding balances on credit cards.  I am worried about the future of young people saddled with all this debt. It threatens to turn many bright, creative people into debt slaves and rob them of the options they need to build a better future. A lot of my work is about discovering and creating options. The obligation created by debt is option-limiting.

How did this happen? There are many causes and here are a few:

  • The good job trap. For most of the industrial age, the mantra of “Get good grades so you can get into the best college so you can have a degree that will guarantee a higher paying job” worked. Parents wanted better lives for their children than they had and until recently, good grades>do well in college>get a good job was the path.  Not any more.
  • Easy money.  Loans are easy to get. They generally have some sort of government guarantee. AND LOTS OF STRINGS!
  • Inflation of higher education. The cost of a college education has gone up much faster than the general inflation rate.
  • Treating college as a 4 year party before “real life” starts.

 So what are the alternatives?

  • Remedial skills – Some people get the basics in High School. Advanced placement testing can save half a year or more for those that qualify.  Taking remedial classes in college to “catch up” on what you should have learned in High School is something that should be done as inexpensively as possible (say at a local junior college).
  • Life experience before college – this could take the form of travel or starting work. The key takeaway here is to have a plan that is right for you, not the “one size fits all” plan of “Get good grades so you can get into the best college so you can have a degree that will guarantee a higher paying job”
  • Trade school is less expensive and takes half the time of a college degree.  At the end, you have a skill that is in CURRENT demand in the marketplace.  If a college degree becomes student-debt2part of your longer-term plan, many of the classes will transfer.
  • A personalized work/study program.  School part time and work.  If you have the self-discipline, online college is very well tailored for that.

Why are you college-bound?

If you have a degree how does it help with your current life?


What’s Wrong with Student Debt? — 3 Comments

  1. Pingback: Introduction | Paying it Forward for College

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