The College Student Debt Machine: A National Disgrace

With so much consumer and mortgage debt having been accumulated in the U.S. over the past 10-20 years, it was inevitable that those who have become addicted to credit would create a separate feel-good category that they like to call “good debt.”  Student loans are often touted as being “good debt.”  In this regard, Mr. ToughMoneyLove believes that our colleges and universities have not received enough of the blame for promoting student loans as “good debt’ and for making students and parents alike feel all warm and fuzzy about going off to college riding on a staggering pile of student loans.

The facts are that our colleges and universities are uniquely and perversely playing dual roles in the entire student loan debt fiasco.  They themselves are addicted to student loan credit because they need it to prime the enormous tuition pump and get students in the door.  Second, they also play the role of credit drug dealer, with massive and energetic student financial aid offices instructing students and parents in all of the different ways they can and should borrow money to attend.  Usually, this “aid” is not aid at all, but combinations of federal and private student loans.  Sometimes the college will sweeten the deal with a tuition discount, similar to a “rebate” offered by a new car dealer.  Anything to keep the customer on the car lot or the student on campus.

The actual data on college tuition and student borrowing paints a clear picture of the disgraceful role played by colleges and universities in the student loan industry.  I have reproduced three charts published by the National Center for Public Policy and Higher Education.   The first chart tracks the increase in tuition and fees since 1982 at our colleges as compared to other components of our economy.  (You can click the images to enlarge.)

As you can see, tuition and fees have shown a relentless increase over time at a rate that is four times greater than increases in the consumer price index and three times faster than increases in family incomes.   Colleges have been called to the carpet on this many times.  I have yet to hear or read any plausible explanation or justification for why this should happen and why it should be allowed to happen.  Colleges expect us just to accept this as the way it is.  I don’t. 

The next chart (labeled Figure 6) shows the number of college students using Federal Stafford loans.   The increase is from 4.1 million borrowers in 1997-1998 to 6.1 million borrowers in 2006-2007, a 50% increase in just ten years. 

Finally, the chart labeled Fig. 7 shows that total student borrowing in dollars as grown from $41 billion in 1997-1998 to $85 billion in 2007-2008, a 100% increase!  


To summarize, colleges and universities have inflated their budgets at a pace that makes our federal government appear almost conservative in comparison.  They have fed their massive budget increases by loading up more and more of our young adults with similarly dramatic increases in debt that has to repaid when they leave school. 

By the way, college graduate and professional programs are just as bad if not worse.  I have in the past written about cash-cow MBA programs and law schools that lure students in with unrealistic expectations and unfulfilled promises of riches at graduation.

Do you think it is mere coincidence that students who graduated from colleges over the past ten years have become so comfortable with debt?  This is what they were taught in college.  Because so many were sucked into this college debt addiction as maturing adults, they think that debt and credit is no big deal.  These are the same college grads (MBA’s in particular) who have been running things on Wall Street, designing all kinds of new debt instruments to leverage then crash and burn.

At least our colleges could offer courses such as “Debt and Credit:  Forget What You Learned Here” or “Budgeting for Life:  Don’t Do What We Do.”   Have you seen any course offerings like this?  Heck, I would volunteer to teach them. 

All of this is just plain shameful.  I don’t know why parents, students, and voters tolerate this.  Parents and students could vote with their tuition money by not attending private colleges that overprice and underdeliver.  Parents and voters could demand that their state’s public colleges and universities adopt and adhere to sound financial plans.  How about we ask colleges to at least not lead the nation in hyper-inflationary increases?  Let the health care industry move into first place.  We will go after it next.

Your turn readers.  Does this not bother you?

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67 Responses to “The College Student Debt Machine: A National Disgrace”
  1. Interesting article, Tough. I haven’t really thought about this aspect of college tuition. I was lucky enough to have a grant for part of my college and my parents paid the other part. My husband worked his way through college never taking a loan. It took him 7 years to graduate because he worked and paid for college as he could afford it. It is extremely rare to see that but now that I read this article, maybe that is a better way to go. I do agree that people should save for their own retirement before saving for kids college tuition. Also, college campuses should not allow the credit card companies on campus to promote their credit cards. I think that is absurd!

  2. Lurker Carl says:

    Higher education is yet another bubble set to burst. A good education is priceless and doesn’t have to come from a college or university, there are plenty of trades that pay as well or better without being saddled with student loan debt.

    My opinion, there are too many people attending college who should not, the abundance of remedial classes to bring students up to speed before taking college level classes is proof enough. This also speaks volumes about the decline of public education. Colleges and universities have come up with hundreds of worthless curriculums and degree fields so the duller students can overspend for a sheepskin that will not repay their loans.

  3. Beef – Kudos to your husband for doing it the right way. And yes, credit card companies should be banned from soliciting on campus.

    Carl: You must have been reading my mind. Part of the mis-information being spread by greedy colleges is that everyone needs to go to one. Not true. There are many jobs out there being performed by college grads for which a college education is not necessary.

  4. Zach Younkin says:


    I am currently attending a local community college instead of an unnamed private school for the reason you mentioned above, TOO MUCH MONEY!!

    When the college talked numbers and then whenever I saw the debt I would add up, I decided it wasn’t in my best interest to go into so much debt.

    It’s tough sometimes, but, I know I will graduate with a lot less debt than I would have!!

  5. Adam says:

    I came out of school with about $20K in loans, which I am going to start repaying in February. This isn’t a lot, compared to some of my friends, but it is a sizable amount.

    If all goes according to plan, I will have them paid off in three years.

    I think that it is in each person’s best interest to determine whether or not the degree they will receive is worth the cost. To me, it was, so I went into debt to go to school. Now as a professional, I make a decent wage and can easily afford the loans.

    As a side note, the interest rates on my loans is currently less than that being offered by the ING Orange CD’s (although there isn’t much difference). I want to pay off the loans so that I don’t have to worry about them in the future, but I could just as easily make the minimum payments and come out slightly ahead by investing my extra money in a CD instead of of paying down the loans.

  6. My student loans were my ticket out of my small town. My education cost over 200K and I would do it again.

    The Ivies have financial aid today that would blow your mind. I mean grants, not loans. It’s very different today than when I was in high school. For the truly needy (I don’t mean middle class) the aid is there.

    College students aren’t idiots, you act like they are being swindled or something. I knew how much money it was, I knew what I was doing, and I knew I had to succeed. The loans gave me ownership of my own eduction. I didn’t coast by on my parents.

    I don’t see what the alternative to “accepting this” is. Not going to college? Only going if daddy can pay?

  7. Miranda says:

    Great post! I noticed how when colleges give you a statement of how much you “need” to go to school (food, books, rent, entertainment, etc., etc.) they often over-estimate it. While I did use student loans to help (in addition to a scholarship and a part-time job), I tired to avoid too much of it.

  8. Zach: Congrats on making excellent choices for you. Too many students can’t look that far ahead to appreciate the downside of student loan debt.

    Adam: Yours is the justification I hear from many student borrowers. It doesn’t matter what your interest rate is, you still have loans to repay. Imagine how much better your financial position would be if you didn’t have that debt hanging over your head.

    Dog: That’s hilarious. Lots of people leave small towns without paying $200k for the ticket. Sounds like you were overcharged. Sure, a few of the Ivies introduced massive aid programs for middle class students because they were embarrassed by their enormous growing endowments. That may change after what happened this year. For 99% of private colleges, these “grants” as you call them are mostly money transfers from those who pay full tuition to those who don’t.

    Most college students aren’t idiots but they are ignorant in matters of personal finance. Colleges and lenders exploit this. Did you even look at the chart showing how college costs have increased compared to everything else? If that doesn’t bother you, you still have a lot education to absorb. Don’t feel bad, you have lots of company. I hope that some day more people will catch on to what these colleges are doing and some of them will start failing, just like the investment banks.

    There are plenty of alternatives to student loan debt. Read the other comments to learn about some of them. As for Daddy paying for college, I’m not sure what the problem is. If Daddy has saved and invested wisely so that Daddy’s kids can leave college debt free, what is wrong with that? Some parents don’t know how to save and invest. That ignorance gets passed on to their kids. The result: massive student loans.

    Thanks for your comment.

  9. sheri says:

    Last month I paid off my student loans (all federal loans). Many of the loans given out now are private loans, and those are the truly scary ones! Although I also knew I could easily afford my payments, it was still a burden.

    My experience with student loans is why we are footing the bill for our kid’s (public) college education …so he can emerge debt-free!

    Besides cost, there is another advantage at many community colleges…the class sizes are smaller (20-50 students vs. hundreds in a University class). My students get what I call a “private school experience” for a fraction of the cost.

    And I completely agree that credit card companies should be banned from colleges…my school has done this, much to the campus’ delight!

  10. Green Panda says:

    I definitely regret the student loans I have. I went to community college my first two years and didn’t have to pay. My last two years cost me, though, and to be honest quality of education did not justify the jump in cost per credit hour. Many of my professors in

  11. Green Panda says:

    I definitely regret the student loans I have. I went to community college my first two years and didn’t have to pay. My last two years cost me, though, and to be honest quality of education did not justify the jump in cost per credit hour. Many of my professors in community college taught at the university. Same quality, $50/credit hour vs $200/credit hour.

  12. You present some interesting statistics on the increasing cost of higher education. To say they’re alarming would be an understatement, but I suspect that very few students will vote with their wallets and refuse to pay those prices. Kudos to those who do.

    On the broader topic of student debt, you’re right in pointing out that it has become widely accepted as “good debt”, although I think many of us would agree that no debt is truly “good”. With that said, I would put student debt in the same category as mortgage debt- it’s preferable not to have any, and it may make more financial sense to do what it takes to avoid it, but there are some things that are worth borrowing money to obtain.

  13. Adam says:

    Yes, I still have loans to repay. However, if I look at the long-term picture, I come out ahead. My salary now is almost twice what it would have been without college, based on friends of mine from high school who didn’t go to college.

    So, I forfeited ten years of income (graduate degree [but that didn’t cost me any money, except the accrued interest on my undergrad loans]), and am $20K in debt. Right now, my net worth would be higher if I didn’t go to college. By retirement, I’ll more than surpass the position I would be in without my degree.

    I also believe I have more job security with a degree than I would without it, which is important in bad economic times.

    Yes, it would have been nice to get out of college without any debt, but that proved to be impossible for me.

  14. doctor S says:

    I echo the same sentiments of many above. IT COSTS TOO STINKING MUCH to attend college these days!! I myself am paying back 100k. I should have known better back then.

    Is there that much of a difference between the schools that you get your degrees from? Maybe… but tens of thousands of dollars different? I think not. Instead of charging tuition to help fund overblown University Endowment Funds, schools should be looking to get the right people in their schools, not the ones that they can merely charge the most!

    I hope the bubble bursts on them soon!

  15. Thanks so much! You have articulated some things that I’ve been trying to figure out.

    I wrote a blog post a little bit ago about my son’s college choice: he picked the free option over a number of “prestigious” schools that gave him SOME merit aid (which just brings the highly overpriced tuition to overpriced tuition). The gist of the post was that we plan to give him the money we had saved when he graduates (bit by bit).

    What do people think of giving students that choice?

    See my blog for more details.

  16. Gritz says:

    Very interesting article. Marc Scheer’s book “No Sucker Left Behind” also makes a strong argument for the questioning the absurd cost of college. Is it always worth it? Worth checking out if you haven’t seen it. If anyone reading already DOES have debt, hopefully our articles at on debt consolidation and other options can you figure out how to tackle it.

  17. katy says:

    I love reading your blog and have learned a lot.

    About the 7.5% deduction for health care; it’s great, a blessing if you don’t use this deduction. For years I used it because I was very sick. I still save receipts ‘in case’ I need it again. And each year I don’t use it I say thank you G-d.

    I’m just sayin.

  18. @ katy: Thanks for the kind words and for reading. I hope that your medical expenses will stay well below 7.5% of AGI because that means good health.

  19. tracie says:

    As for Daddy paying for college, I’m not sure what the problem is. If Daddy has saved and invested wisely so that Daddy’s kids can leave college debt free, what is wrong with that? Some parents don’t know how to save and invest. That ignorance gets passed on to their kids. The result: massive student loans.
    think about the parents who encourage college but are part of the professional working poor (teachers – yes you can’t teach unless you graduate from college and get certified by the state only to be paid peanuts and preachers – the real ones that attended college AND a bonafide seminary – not some joel osteen schmuck on tv) there is no way even w/ saving and investing that they can afford to put kid(s) through college debt free. they’re not ignorant, society just doesn’t value thier ‘skill set’ monetarily so the cycle continues – they borrowed their way through, their kids do the same – only instead of having it paid off by the time they’re in their early 30’s like mom and dad, the kids are STILL paying — public universities no less.

  20. katy says:

    Thank you – and i obviously reponded to another of your posts, on taxes!

  21. Tracie: Don’t get me wrong – some parents are just not in a position to help their children with college costs. I get that, particularly as to professionals like teachers who are limited by what they can earn. My response was to criticism of parents can afford to help their kids and choose to.

  22. Bizzy says:

    There’s quite a variety of root causes for this situation. You could say that the aggressive busniess practices of the colleges and universities are to blame; public schools receive funding based upon their performance, which is derived from their graduation rates, which they inflate by making courses easier.

    You also have the ubiquitous employment standard of having a Bachelor’s Degree which today equates to nothing more than an enormous hoop you jumped through.

    How about the thought that’s drilled into our kid’s heads on a regular basis: you can be/do anything you want, if you put your mind to it. Unfortunately, no, you can’t be whatever you want. Some things will always be out of your reach. Realistic goals are one thing, I’m not against realistic goals. Fairy tale goals do our kids a disservice.

    It’s this Fairy tale “can be whatever you want” that leads to the generalization that “you have to go to college” and “have a degree” to be whatever you want.

    I’m one of those that ate those lines from my parents and guidence councelors all the way through. It wasn’t until too late that I realized that a Bachelor’s Degree isn’t the all-in-one magic pass to a great career that I was sold on. Parents need to stop thinking their kids are going to make intelligent decisions on their career path in a vacuum. I for one will try my best to figure out what my kid is into and get them interested in a particular career early enough to give them the best chances on excelling; not just wait until they pick a major during their senior year of High School.

  23. Bizzy: You are dead on with this comment. There are too many stakeholder parties involved in pushing 17-18 year old kids into making a “go to college” decision without thinking about the best interests of the child. I haven’t even written yet about the horrible graduation and retention rates at most colleges where even if they do graduate, a four year plan turns into a six year plan, adding even more debt to the situation.

  24. G says:

    Should non-profit higher education establishments be run as businesses? Isn’t that what is going on right now? Supply vs. Demand… I think some of the most selective schools offer exceptional examples. Harvard, this year saw a 19% increase in undergraduate applications. Naturally there is a larger pool of graduates applying, but I am trying to figure out if increasing tuition is a way for higher education establishments to deter potential applicants? Either way, I am not sure if what is going on is a bad thing. If the student is intelligent enough to get into an “expensive” school, then they need to be intelligent enough to analyze what sort of fiscal situation they are going to be getting into. I sure did when I compared going to a top 25 private school (no scholarships) vs. going to a respectable state school. My degree was “worth” approximately $9k less per year in the professional world first year out of college—relatively speaking, of course.

    Might I add that if the student is bright and determined enough he or she will seek out multiple scholarships etc. to help pay for tuition. Personally, those are the students I want to see going to top tier colleges and universities. I will use my sibling as an example. She attended a university that would have run approximately $45k/year had she not applied for the scholarships that she did. In fact, when all was said and done she actually got PAID to go to school right out of high school.

    Changing topics a bit, I do agree with Bizzy to a degree about public schools making their courses a bit less arduous, but ONLY TO A DEGREE. I won’t get started on how some of these so called higher education establishments offering degrees in the sciences have ABIT accreditation, but if you attend a reputable state school and earn an undergraduate engineering degree you WILL be working for it and it will be difficult; I daresay the state program will be comparably difficult to a private institution. It isn’t fair to say that state schools are easy and the reason they are so is for more funding Bizzy, but what does an engineer like myself know about how hard a creative writing class is at Florida vs. Cornell?

    Finally, I am a firm believer that parents need to encourage their children to figure out who they are on their own. How are you going to let your kids figure out who they are and where they want to go if YOU analyze them and determine what YOU think they should be doing for their future to “excel”? To add to that I don’t think parents should encourage (potentially force) the child to their way of thinking—I think this breeds for the perfect rebellious child.

    My thought: kids won’t make intelligent decisions until we let them.

    -Mr. ToughMoneyLove,

    What are your thought about my last statement?
    Are there differences in the way you raised your three children, if so what have you learned?
    Would you say, that you were tougher on your oldest, middle, or youngest child?

  25. G – I agree that you should let your children find their own way through the college student process. On the other hand, if you know your children well (as you should), you have a good idea when they are about to make a terrible mistake and perhaps a costly one. For example, allowing your son or daughter to choose a college based on where the BF or GF is going is a terrible idea. Allowing your son or daughter to get in extreme debt by attending a private college for no reason other than a brand name is also, in my opinion, a terrible idea. I learned that each of my sons had different strengths and weaknesses. I tried to influence their decisions to take advantage of the strengths and minimize the effects of their weaknesses. It doesn’t do anyone any good to allow a child (even a young adult child) to make what you know will be a terrible decision without trying to prevent it.

  26. Travis says:

    I had to take out loans for college totaling around $17,000. Having my mom and dad pay for it was never an option, and I would hate to put my parents in a position like that in the first place. They’ve worked hard for their money and they’ve already paid my way for 18 years, no need to take advantage of them for anymore than that. I take responsibility for my debt and will have it paid off as soon as possible.

  27. wanzman says:

    tracie said:

    think about the parents who encourage college but are part of the professional working poor (teachers – yes you can’t teach unless you graduate from college and get certified by the state only to be paid peanuts and preachers – the real ones that attended college AND a bonafide seminary – not some joel osteen schmuck on tv) there is no way even w/ saving and investing that they can afford to put kid(s) through college debt free. they’re not ignorant, society just doesn’t value thier ’skill set’ monetarily so the cycle continues – they borrowed their way through, their kids do the same – only instead of having it paid off by the time they’re in their early 30’s like mom and dad, the kids are STILL paying — public universities no less.

    My father has been a school teacher for over 30 years, and over that time my mother was a stay at home mom, a charity worker, etc.

    They were smart enough to live below their means and put both my brother and I through college.

    You seem to be casting very broad statments and attempting to pass them off as fact….trying to act like an expect, and coming off as a very bitter, uneducated person.

    Anyone whose dad pays for college is spoiled…

    Anyone who has a teach for a parent grew up poor…

    What in the world are you talking about…you are ignorant.

  28. Andrew says:

    It’s really just a matter of supply and demand. The baby boomers’ kids have been swamping secondary schools for the last two decades and then going on to college. The number of college applicants will peak within the next couple years.

    In short, there were a lot more high school grads applying for college seats over the past 20 years than before. The massive increase in demand meant that colleges could charge more for their product.

    The increased revenue wasn’t going to go to waste, of course. Colleges’ operating budgets have similarly gone through the roof.

    The real issue is what will happen over the next couple decades when the number of applicants drops and colleges can’t fill their seats at the tuition they’ve become acustomed to charging. Tuition rates will fall, and, unfortunately, a lot of colleges will probably become insolvent.

  29. SP says:

    Colleges students aren’t idiots, but some are immature and they give you a chance to make mistakes that can affect the next 20 years of your life. If parents aren’t financially savvy and helpful, you’ve got 18 year olds making huge decisions. Some of them are wise, some aren’t.

    I wasn’t really financially away, but I lucked out with scholarships, grants, and about 20k in low interest loans for a good degree from a state school. This is not because I was astute and did the math and picked wisely. Really, I just stumbled into it. I don’t regret it, they were a great investment for me, but I can see how it could blow up in people’s faces.

    I think this is a really good article. The “loans are good debt!” is true only to a point. It isn’t black and white.

    People talk about the ivies having such great financial aid, but that doesn’t mean they will take every bright student that comes along. It is not that simple people! Not that you shouldn’t apply, but… People say that if that is the solution “Just go to an Ivy league school!” Right.

    Anyway, thanks for talking about this. I suspect we will be hearing more and more about student loan mess in the coming years.

  30. Kat says:

    Some of the comments act like students are just being stupid. I attended college and got a Bach. of Arch. and reasonably intelligent. I received 50k in scholarship money. Almost half of that I begged, and I do mean begged, my school for. The rest of my education was paid for by loans. On paper my parents made too much, never mind their horrible financial issues.

    As an 18 year old going off to school and being told by the school AND your parents not to worry about the payments on the loans, you will make enough to cover them, you believe them. They have your best interest at heart, right? Wrong. I will pay back over 100k over the next 26 years(I have 4 years of on time payments). I am currently out of work due to the economy and am discovering all the safe holds of loans are not true. I can’t put them in forbearance because I have a co-signer. I can’t defer them because they are private. I can’t go back to school because of the cost and my lack of need. I can’t get unemployment deference because they are private. The only debt I have is student loans and they are literally a strangle hold on me.

    I didn’t take any more out in loans than to cover the cost of tuition. I worked 30 hours a week to in my future profession to cover my rent, food and supplies for classes. I didn’t own a car. I didn’t take vacations. I didn’t go out and party. I didn’t shop. I didn’t eat out. I worked and studied. And even with that saving and scrimping, I can’t make it.

    People need to educate high school students about the horrors of student loans and the effect they will have on the rest of your life. Not once they get into college, but before. And people need to educate parents that if it takes more than the 4 or 5 years a program calls for, it is okay.

  31. Mat says:

    As a Phd I’d like to add one small point. These universities don’t exist in order to provide quality undergraduate education at an affordable price. Undergraduate education is the cash-cow. It provides research grants, the FMRI I use for my research, the academic journals, and my salary. I was also paid while I was a graduate student (not well, but still I was paid for not producing anything). I wasn’t charged tuition as a grad student, and none of my grad students pay a dime. Part of this may come off as a scam, but truly it provides the investment needed to further our understanding of the world around us. I understand the frustration, but higher education is not career prep. alone. It’s designed to support academic research.

  32. Seth says:

    I’ll jump in a say a few things since I work at a public university.

    Arguments supporting increased tuition:

    State funding for our institution has decreased dramatically in the last 5 years.

    Increases in food and energy prices hit universities hard due to the cafeterias and heating and cooling entire campuses.

    On college campuses, technology is expected to be cutting edge students expect wifi everything, and professors rely on technology for most classes. Cutting edge technology is expensive and will always remain so due to the nature of the industry. Example.. Complete campus Wifi coverage will cost over 4million not counting service contracts for on gear and increased staff to support thousands of new devices.

    Arguements against tuition hikes:

    I see allot of waste on campus. Expensive office furniture, wizbang technology such as video billboards, etc.

    Anyways just me 1/50 of dollar.


  33. Anastasia says:

    I teach in higher education and it seems to me that students pay for so much more than just classes when they are in college. Everything from housing, to meals, to health care, to entertainment can become part of the college expenses, and hence part of the college loans.

    It’s worthwhile shopping for college like you would for any other major purchase. Look for the things that are essential to you, then consider carefully if you really want or need all of the “extras”.

    Second see what you can to do mitigate your expenses during school. When I was paying a health center fee as part of being a student, the health center on campus was the first place I went when I needed medical care. If a university has an agreement for a cheap bus pass, then see if you can use the bus for all of your transportation needs. And do what you can to add to your cash flow – get a work study job during the semester, and a full time job in the summer.

  34. Lou says:

    I taught in hospital-based, community-college-based and private 4 year college based programs in (x-ray technology, radiography, medical imaging, CT scanning, ultrasound and angiography) for 30 years.

    Here’s what I know about health-care careers – a growth area for job opportunities:

    *there are still a few good hospital-based nursing and medical imaging programs and there are hundreds of community college programs.

    These nursing and medical imaging programs are the great education bargains of today, even though their grads get less money as entry-level practitioners than 4 year BS degree holders make. With the 2 year (or 30 month) associate’s degree, you can get an entry level job with excellent health care benefits and, usually, tuition re-imbursement benefits.

    If you are focused enough to start working full-time AND continue part-time (employer-paid) study towards your BS degree, you have minimized education cost, maximized salaried employment time and started preparing yourself for the time when your body can’t handle staff work any more.

    If you or your child is considering a health-care career, and you want the most benefit for the least cost, this is the way to go.

  35. Griffin says:

    I’ve been both encouraged and discouraged by financial aid departments about loans.

    I come from a *very* destitute background, so if student loans didn’t exist I wouldn’t be able to go to college. I’ve looked at it from all sides and consider the trade-off to be worth it for me, even though I’m looking at at least $150’000 in debt once I get my doctorate.

    And Med School? Fugheddaboutit! Most of them walk away with way way way more debt.

  36. I hate feeling like I whiner, but I can’t help but feel a little hopeless because of my student loan debt. I was 17 when I signed the paperwork that stripped me of $40,000 with nearly nothing to show for it. Will I get a degree out of it? Yes. Might that degree be worth something? Maybe.

    All I know is that every financial decision for the rest of my life is influenced because of the one I made when I was 17. Student loans seemed perfectly normal when I signed those papers. Isn’t that how everyone pays for school? Isn’t it worth it to get a degree?

    No one bullied me into it, but no one took a second glance at it, either. I wish someone, anyone, had second-guessed that decision for me at that moment. But $40,000 in loans seemed perfectly reasonable for an art degree.

  37. urib says:

    I have over $175,000 in debt for attending an Ivy League undergrad program that told me this was the way I could pay when I was eighteen years old and didn’t understand the first thing about what kind of crippling weight debt can be. (And my parents were pre-conditioned to think “school = good, debt = acceptable.”)

    Yes, I feel more than a little ripped off.

  38. Done that too... says:

    to #13 read #30 and #31 and remember that if you make a calculation with risk premie YOUR life income is worth about 6 – 10 years salary after taxes.(so a large portion of that was spend before you ever made anything, thats a chilling revelation) And yes I spend my time in university to not knowing…..
    They only teaches you in the last year to make the real investment calculus, and by then most of your education investment is sunk cost:)

    so the ten years pay that YOU forfeithed is giving you a half salary now (not)….

  39. Travis: I like your attitude and I wish you success in paying down your loan ASAP. Some parents are able to help their children with college and are glad to do so if it will keep their kids out of debt.

    Wanzman: I think you are being a little hard on Tracie. I think her point was that some parents, including those who are quite successful in life, simply cannot afford to pay for their children’s college education.

    Andrew; I agree with you about supply and demand. However, I am concerned that the colleges even now spread disinformation about the benefits of borrowing for college to create an artificial demand.

    SP: I like that you used a variety of strategies to obtain a good education at a fair price, including choosing an affordable public university.

    Kat: Thanks for talking about your personal experiences. I think a lot of parents are like yours and truly believe that student loan debt is a good tradeoff without realizing what their kids are being set-up for. It would be nice if the college financial aid offices and/or high school counselors would be more forceful and accurate in explaining the long term costs of borrowing to attend college.

  40. Em. says:

    As someone recently out of undergrad, most of which was completed at an institution nearly famous for its arbitrary increases in tuition (most recently to buy Segways for the campus safety department), I find this article particularly revealing. I included it in my link round up for the holidays. Nicely done.

  41. Em:

    OK – I gotta know – which college bought Segways to ride around campus?

  42. Roger says:

    Overall, I’d say that my student loans were worth it. However, that might be because:

    a) I emerged from college with relatively low student debt (about $15k). Due to my high SAT scores and excellent grades in college, I was able to attend four years tuition free, and only had to take on debt for room and board.

    b) I was able to refinance the loans at a very low (under 3%) rate, and thus expect the ‘real’ value of the loan to be slowly worn away by inflation.

    c) Because of the technical nature of my degree, I was able to get a job paying $40,000 right out of college (albeit, after a very long job hunt). This is at least $5000-$10,000 more than I’d expect without the degree, and would, if I put all the ‘degree premium’ toward student repayment, allow me to pay off my loans in two years (or less), assuming the economy hadn’t caused me to lose my job.

    If any of these points (low debt, low interest, plenty of extra funds) related to my students loans weren’t true, I’d be much more upset about my situation.

    That said, the fact that people find themselves so overwhelmed by student loan debt is just a disgrace. That tuitions are rising at such an incredible rate is shameful. And the fact that answer from most every corner is to make student loans more available, encourage students to work while attending college, and hope your parents saved to help you out, rather than make college more AFFORDABLE, just makes me sad.

    (And while we’re ranting about the college system in the US, the fact that so many of the degrees offered by our colleges are all but worthless in the real world job market is a disgrace, as well. How many people with degrees in subjects like Medieval French Poetry do we need working jobs that pay just over minimum wage?)

  43. conny says:

    Roger so just by reading your numbers I conclude that you studied at least 3 more years. So just use that as a base you owe 15 k that you can see and 3x(30k or 35k) = 90 k to 115 k in lost income due to studies. that is payed in full in about 9 to 21 years,using your income expectations .so in 11 to 24 years from now your investment is starting to pay off. If we then hit this income stream with a risk premium, it’s getting worse but I stop here…
    And you consider yourself the lucky one….

  44. Paul Morales says:

    I agree, the cost of a college education is now extremely high. I’m working on doing my best to maintain a full-time job, go to school full-time and work on multiple sideline projects for more income. I’d rather not wait till after college to start paying my school debt off.

  45. Roger says:


    I’m not sure I agree with your math. First, you’re assuming that I made no money during my college years, and thus that I missed out on $30k-35k a year. In fact, I was working at my university, making something like $10k a year (or more, I don’t have the numbers in front of me). If we take that away from the total ‘lost income’, we’re down to a ‘cost’ of $80k-100k for my four year college degree, 4X($20k or 25k).

    (It’s probably even less, as I was just guessing at the ‘degree premium’, the additional starting wages as a result of my degree. It could easily be a $20k-25k a year difference, compared to my pre-college job at McDonald’s, which would cut the lost income down to $20k-$40k. But let’s use the $80k-$100k figure, under the assumption that I’d have learned a trade or otherwise boosted my income above what I was making at McDonald’s, regardless of whether I went to university.)

    Second, you’re forgetting expenses, which I’d pay whether I was at school or not. My student loan debt is entirely from room and board costs. If I had been working, I could easily have spent $15k-20k a year (or more) on room, board, and other living expenses that were otherwise provided via my student loans (and by means of work-for-rent agreements with my college during the summer). If we go with the $10k figure, my ‘lost income’ is down to $20k-$40k (4X($5k or 10k) for four years of college.

    Using a ‘repayment’ rate of $5k (a very modest ‘degree premium’), I come up with a pay-off times ranging from 5 years ($20k) to 11 years ($40k), which is considerably faster than you seem to be implying. And again, I’ve tried to err on the conservative side with this; there could be an even smaller difference between my actual student loan debt and my ‘lost wages’.

    (I don’t know what you’re getting at with the risk premium comment, so I didn’t take that into account.)

  46. Atkins says:

    I think a relevant question here is whether there is a payback for going to the more expensive schools. I may have missed it, but I didn’t see such a comparison.

  47. conny says:

    Hi Roger, this was NOT a criticism of your choices. And I m only using your numbers as a base for the calculus and that was bad enough.
    I guest 3 years I admit to that, more time just makes the equations worse.

    To point out that education isn’t a good financial investment choice for most people.

    I didn’t use the risk preemie ( the price to put on a transactional outcome in the future) 1 dollar today is really more value then a might be 10 dollar some time in the future. inflation among other things makes it so,the risk that you never receives it at all i another risk to account for and so on.
    And of course there are a lot of other streams of capital that has to be accounted for but as a fast rule your life earning given to days value is around 10 years salary for a person of twenty something in age and some of those were spent before the ever made a dime.

    My point is that most people don’t know the cost for their education, and is therefore probably taken advantage of. The we (or somebody else) pay you later is one of those …


  48. Roger says:


    Not to worry, I wasn’t taking it personally. I was simply pointing out that when trying to compare two possible outcomes, there are a lot of variables that must be considered. Even my rebuttal probably didn’t take everything into account.

    You made some interesting arguments, though, and I definitely had thing harder about the ‘worthiness’ of my college education as a result.

  49. SJ says:

    Hrmm… This is really interesting, I just found this blog recently and noted it…
    I guess I never thought about my decision to get my ugrad degree in engr; went to a public school; got some small (~5k loans), scholarships, really well paying internships, and mooching off parents (which i suppose I’ll have to pay off someday =) ).
    I think going to school was a GREAT investment for me. (I ended coming to grad school; not sure if this is that great an idea lol -___-, but I had some nice job offers after my junior year)

    However, I wonder about some other people who I met over the years, in “fluff” majors (to put it politely…) and wonder why they would make such decisions.

    I read an article awhile back how it seems our present system is f’d up. Honestly, people use their degrees and end up in generic jobs, where their degree studies had zero relevance; Of course, w/o the degree they could never get the job… funny and ironic.

    Our society is getting education inflated? And the need for education is increasing, the payoff decreasing, honestly it looks like some kind of re-design has to be done…

  50. Cheryl Scutt says:

    Disgrace with a double capital D. Having 3 great-nephews/neice in college, ad going the cheapest route possible, it is depressing to think of their financial position upon graduation. — Cheryl S.

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