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Is A College Education Worth the Student Loan Debt?

By Tracy Scott
October 29, 2018

If you recently completed high school or an associate degree program, a bachelor’s degree may seem like the next logical step. But it’s common knowledge that college is expensive—and growing more so by the year. Weighing the risk of mounting debt against the reward of continuing your education is not only prudent, but it can impact your finances for years to come.

Traditionally, it’s been easy to justify the expense of a college education because earning a bachelor’s degree makes it easier to get a better paying job. But as tuition prices continue to rise, increasingly more people come away from college with debt. All told, 44 million Americans hold a total of $1.5 trillion in student loans, which begs the question: Is a college education still worth it?

The Cost of College

For the 2018-19 academic year, the average cost of tuition and fees for United States institutions ranged from $10,230 for a public, four-year, in-state college to $35,830 for a private, four-year college, not including room and board. Colleges and universities generally expect students to complete their bachelor’s degree within four years, meaning tuition and fees could total between $40,920 and $143,320 by graduation if rates remain the same—which is unlikely.

The exact amount of debt you might accrue depends on the college you attend and how much of the bill you are able to afford without taking out loans, whether from out of pocket funds or via scholarships, grants, or employer assistance. Statistics show the typical amount of student loan debt in 2017 was between $20,000 and $25,000, and the class of 2016 graduated with an average of $37,173 in debt. This could translate into a monthly student loan payment of $280 or more—though the exact amount will vary depending on loan interest rates and repayment plan options.

For some, potential student loan debt may seem like a good reason to nix college plans. Students with college loan debt tend to delay things like home ownership and starting families. And while most people manage to pay off their student debt within 10 years, for some it can take more than twice that long. The rising cost of a college education is becoming a real problem for some, but does that mean a degree isn’t worthwhile?


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The ROI of a Bachelor’s Degree

The benefits of obtaining a bachelor’s degree last well beyond the 10 years it takes many to repay student loans. Adults with bachelor’s degrees typically earn 66 percent more than those with a high school diploma, totaling $1 million in additional earnings over their lifetime.

Higher wages aren’t the only benefit of obtaining college credentials, though. Bachelor degree holders are more likely to leave school with skills most coveted by employers, including leadership, problem-solving, and critical-thinking skills.  Furthermore, research shows that bachelor’s degree holders enjoy:

  • Increased employment opportunities;
  • Lower unemployment rates;
  • Higher job satisfaction;
  • Stronger community engagement; and
  • Improved self-esteem.

They also leave school with a network of former classmates that they can leverage to find new jobs or make connections in their field. Degree holders are in a better position to choose the type of work they want to do and where they want to do it, regardless of their major. The benefits of obtaining a bachelor’s degree are compelling, but you may still be asking yourself: Should I take out student loans?

Alternatives to Student Loans

Student loans are not the only way to pay for college. Federal and state grants, tuition reimbursement, paid internships, and scholarships offer funding options to minimize the need for student loans. Students should first complete a Free Application for Federal Student Aid (FAFSA) to determine eligibility for need-based grants. Your college or state education agency may offer additional grants or gift-aid assistance that may not need to be repaid. (Be prepared to present a copy of your Expected Family Contribution generated by the FAFSA to qualify.)

If you are currently working, your employer may also offer a tuition reimbursement program. Some companies offer this often-overlooked alternative to student loans as a way to attract and retain employees, though details of tuition reimbursement programs vary widely. Be sure to check with your employer to make the most of this option.

If you don’t already have a job, internships allow you to work “in the field” while in college. While work can either be paid or unpaid, internships let you build your resumé while also making professional connections. Select a paid internship whenever possible—since that income can be applied toward the cost of your education—but don’t immediately dismiss an unpaid one. You can still benefit from the experience by using the skills and knowledge gained to beef up your resumé and start building your network.

Lastly, many institutions offer both merit and need-based scholarships to eligible students. These are funding sources that do not need to be repaid. A merit-based scholarship seeks to reward students based on certain achievements, be they artistic, academic, or athletic. On the flip side, a need-based scholarship is awarded based on the income and assets of the student and their family.

Finding these benefits can be difficult, though. A scholarship database, like Fastweb, can help match you to scholarships and internships that help pay for your education. Such databases require basic information to access the system but the more complete your profile, the better the chance you will find funding.

How to Decide if Your Student Loans Are Worth It

Ultimately, the decision of whether or not your degree is worth the student loan debt will depend on your specific situation. Consider the following:

How much student loan debt are you likely to incur to earn your bachelor’s degree?

  • The United States Department of Education recommends that students only borrow what they need after other forms of financial aid such as grants, work-study, and scholarships have been awarded. Even then, you should aim for your monthly payments to represent a small amount of your expected average salary after you graduate.

Does your degree offer a clear career path?

  • If so, what is the average salary for someone holding that job?
  • If not, do you have a sense of how you’d pay off your debt based on the average salary of someone who has earned your degree?

Some degrees command higher starting salaries than others. For instance, graduates in the science, technology, engineering, and mathematics sectors have projected average starting salaries exceeding $60,000 annually. Graduates with a business, humanities, or social sciences degree make more than $56,000 to start, on average.

With those numbers as a jumping off point, try to figure out how long it would take you to pay off your student debt. Is the timeline something you think is worthwhile? Is the debt load reasonable for what you expect your other expenses to be? Think about these issues before making your choice.

Is A College Education Worth Student Loan Debt?

In many cases, it does make sense to pursue a degree, even if you need to lean on student loans to pay for college. An expected 66 percent increase in lifetime earnings for bachelor’s degree holders versus high school graduates makes the return on investment too good to ignore.

In addition to a higher average salary, earning your bachelor’s degree can provide a built-in career network that you can turn to for job opportunities and—depending on the university—experiential learning opportunities. While some people have great financial success without a bachelor’s degree, only around 14 percent of people without a college degree earn as much as those who have one. Whether getting a degree is right for you is a choice only you can make, but the signs generally point to it being a good choice, despite the expense.


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About Tracy Scott
Tracy Scott is a content contributor for Northeastern's Lifelong Learning Network.