Managing Student Loans

Students loans can be of great benefit to those who want to educate themselves. But the decision to take out a loan that can run as high as six figures must be thought out carefully, to say the least. Even a loan under $10,000 can linger for a long time when the former student needs the money for rent, food, or other necessities or wants. The “trap” is when the student, especially via a sales pitch from a college or university, decides to take on debt that must be repaid and then finds his or her self in a position where he or she is not making more money than if they would not have gone to school.

Only about a quarter of the population in the United States has earned at least a bachelor’s degree. Does that mean it’s totally hopeless for the 75% who does not? Hardly! The risks of earning a degree – and saying earning a degree entails risks is rather unorthodox, but must definitely be considered – are significant. Will you enjoy the career path that your degree guides you to? Will it even start a career path for you? Will it teach you critical skills that are in high demand? A dedicated, mature student who knows what career path they want, what it takes to get there, education-wise, and knows what school will teach them the proper skills is an excellent candidate for a student loan. A drifting high school graduate with nebulous career goals and deciding to enroll in college because they have nothing better to do should sound some serious alarms. A person who decides to live off of college loans rather than work should also sound a serious warning bell. The group of students who are often overlooked decide to earn a degree and then somehow are blocked from using it by the job market, lack of proper training despite earning a degree, or other factors should also raise some eyebrows.

Of course, not everyone who earns a degree is guaranteed a good job or any job at all. The trap is when students become wildly pollanna about their job prospects after college. A business degree would be a good preparation for being a manager, right? Possibly. But what about other factors, including the first screening question from interviewers – what kind of experience do you have? What if too many people are in the job market? Does earning a degree necessarily develop “soft” skills that employers want? Assuming a degree will take care of all of those uncomfortable questions is something a lot of students do not want to hear, but nonetheless must be asked.

Student loan money is generally cheap (in terms of interest rates), but must be paid back. Although the loans are cheap, apparently many students who borrow do not comprehend how large of an amount it can be or don’t care. Some loans are large enough to buy a house! Placing restrictions on who can borrow money for which degrees probably is not prudent, but based on the number of student loan defaults and the type of degrees that students are willing to borrow money for (consider those who borrow heavily to earn a liberal arts degree from an Ivy League school – what would their employment prospects be?), often the choices students make aren’t good for themselves or society, when the money could have been put to better use.

We need educated people to fill many of the jobs that our sophisticated economy needs filled. But careful considerations and more than a visit to the loan office at a prospective university must be considered to avoid resentment on the student’s part and benefit society.