Do student loans still have value?

Do student loans still have value?

Do student loans still have value?

I’m a person that paid off a good amount of student loan debt and doesn’t actually work in the profession I have a degree for. I feel like I have a pretty unique perspective on student loans and their value, mostly because I make much more money now than I did in my original career.

I guess the burning question for me and a lot of millennials is this:

Are student loans still worth it?

To put it delicately – millennials are freaking pissed off about their student loans. I can’t tell you how many times I get semi-angry emails from people that have seen this site on Yahoo or CNBC. Most of the time they have stories about $100,000+ of student loan debt that they are completely drowning in and have no idea what to do.

I’ll actually NEVER forget the first one I received, because it changed my entire perspective on student loans. At the time I was still a band director, and a woman sent me a message that read like this:

“I have $250,000 in student loan debt, and can’t afford to make the  minimum payments on any of them. I have no idea what to do; can you help?”

Stumped doesn’t even begin to describe it, because I literally had no idea what to say. I *think* the response I gave was something like: “Don’t give up, you can do it!” :)…which is a totally BS answer.

I wish I could go back, because now I would tell her to research income based repayment options and/or communicate with her creditors about the situation to get organized and stop the collector phone calls.

If she emailed me now I could have actually helped her with good tips and a strategy. *sigh*

There is a misconception about student loan debt and the vast majority of people that have them.

A lot of people would look at the above story and say something about how foolish she was for taking out that much in student loans. I used to be that way – but the reality is that most people are just doing what they thought they were supposed to do when they signed their name on the dotted line.

You can choose to call people like her dumb and brush it off as she’s getting what she deserves, but that would make you an @$$hole (sorry). It’s also completely non-helpful in a situation that may eventually have an effect on everyone in the near future.

The days of parents with student loans helping their kids take out student loans are here, and it should scare the crap out of you whether you have loans or not.

As a teacher, I freaking WATCHED 16 year olds get pushed towards college without any idea how to pay for it. I saw 10 year olds habitually bombarded by college advertisements in the hallways. I excused kids from class to go to college acceptance parties for seniors.

They were about to take on mortgage-level debt while the school gave them cake and celebrated.

“People with student loans made the decision as adults, so they should deal with the consequences”. 

That statement that I see very often would be fine if the majority of people that took out student loans actually made that choice after the age of 18. However, they don’t. If you think the former is the case then you have never been around 17-year olds struggling to fill out a FAFSA form with zero help from their parents or teachers.

But…student loans DO still have value.

With all that said, I still believe in the process. There is nothing wrong or shameful about being educated. However, newer student loan borrowers need to be strategic AF when they take out loans and choose their career with the long term in mind.

That starts with honesty about life from public schools instead of dream-pushing paired with a horrific lack of financial education.

Don’t wait for the problem to fix itself.

College costs have increased exponentially over the past few decades and easily outpace inflation. Instead of waiting for the financial burden to get so out of hand that it literally forces people to opt for community college or trade jobs – we can all do our part to steer young people in a better (and more honest) direction.

As a society, we need to stop telling kids that they can be whatever the hell they want in life while pushing them towards degrees that don’t have jobs at the end of the journey. If you know a young person that is figuring out what college they’re going to – do them a favor and be real with them. 

The next generation needs to hear the reality that the market doesn’t care about their dreams. It cares about how well they can produce. Period. If they can produce while following their dreams, that’s totally cool and they should pursue it (I’m a good example).

Student loans can still be a great investment, but they shouldn’t be presented as the only choice. Right?

Question for you:

  1. Are student loans still worth it?

  2. If you have them, would you do it again?

Live differently. Your bank accounts will thank me later. ~M$M


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29 comments… add one
  • The Grounded Engineer Oct 14, 2016, 8:22 am

    Your are absolutely right that we need to better educating high school students on their options for careers. It is a systemic issue that needs to be addressed so students understand their career options as well as the cost to obtain a degree to pursue that career.

    • Millennial Money Man Oct 14, 2016, 8:28 am

      Yep! Public schools do a lot of great things, but REALLY educating kids about college costs and debt management isn’t one of them (in my experience).

  • Troy Oct 14, 2016, 8:59 am

    High school and college should make it mandatory to take one or two classes on college education cost as well as personal finance. Student loans are still worth it, it is an investment if used wisely. I would do the student loans again, just be smarter and not take out extra few thousands of dollars each year so I can eat good. I would also have gone to a community college first and then transfer to a University for the remaining two years to cut cost.

    • Millennial Money Man Oct 14, 2016, 9:11 am

      Great comment Troy – I would have been smarter too if I could do it again. I had no idea I would leave teaching to run this site, but even if I had stayed as a band director the loans would have been a good decision.

  • Mrs. Picky Pincher Oct 14, 2016, 9:14 am

    Agreed! The unfortunate thing about the whole “you shouldn’t have taken loans out in the first place” is the shoulda-coulda-woulda mentality. The loans are still there right now; saying what they should have done won’t fix the issue.

    It’s so hard to know that there are alternatives to student loans when you’re bombarded with college messaging starting at the age of 5. I had no idea what I wanted out of life when I was 18, and yet I was signing my name off on tens of thousands of dollars of debt because that’s what I was told to do. I had zero experience in the real world and I trusted my parents to tell me the right thing to do.

    With that said, my parents thought debt was normal. It was normal to always owe someone something, so student loan debt didn’t faze them.

    In hindsight, I still would have attended college, but I would have been smarter about it. I wouldn’t have gone to a private university. I would have taken community college classes during high school summers and transferred the credits for my degree. This would have easily cut my loans in half.

    Mr. Picky Pincher thinks that, if he had been educated about his options, he would have chosen a trade instead of college. Many high schools offer trade programs, but I think it depends on where you are.

    • Millennial Money Man Oct 14, 2016, 9:23 am

      Yeah the parent situation is a little tricky. I think the reality is that most parents want the best for their kids, and college education has been the standard way to ensure that your kids “make it”.

      After teaching at a high school, I can tell you that a lot of parents have just as little information about loans and debt as their kids do. The ones that push kids towards college are doing what they feel is best for their kid’s future, and I still think college education is a great asset.

      The school district I taught in has a trade school, but it seemed like the majority of kids that went that route (it was optional) were doing it because it was more relaxed and easier. Cool concept though.

  • Financial Panther Oct 14, 2016, 9:51 am

    Your’re right that just calling someone foolish isn’t really helpful. Admitedly, I’ve been guilty of doing that. The only thing is, if someone does have hundreds of thousands of student loans and is making no money, what solution really is there? Repayment options can help you get by, but ultimately, they don’t solve the problem. Your loans won’t go away and you’ll make no dent on your loans under IBR (often, you won’t even touch the interest).

    I know for me personally, I took a big risk when I took out student loans for law school. But, I did go in with eyes wide open and an understanding that my chances of the gamble (yes, I’ll call it a gamble…maybe an investment…but probably really a gamble) paying off were pretty decent. But, I also knew that if I didn’t do well my first semester, I would immediately cut my losses and get out of there to avoid accruing more debt.

    So I guess, as a student, we really need to educate people on understanding the risk vs. reward and return on investment type thing. Education is extremely important. No doubt about it. But if you’re taking out loans, you need to be doing so in a way that will make it so you have the ability to pay them back. It’s a totally different world when compared to other types of loans. A bank isn’t going to lend you hundreds of thousands of dollars without verifying you have some means of paying it back. Not so with student loans, since they are guaranteed. If you’re taking out 100k in student loans, for example, you need to be doing so in order to get a job that will allow you pay off that 100k of student loans.

    • Millennial Money Man Oct 14, 2016, 9:58 am

      I think we’ve all been guilty of doing it, I’ve just had enough heartbreaking emails now to realize that the criticism doesn’t help.

      On the income based repayment comment; it’s just a temporary fix. I usually tell people in that situation to get their payments lowered and communicate with their lenders to stop the overwhelming phone calls. It’s about getting organized and cutting down on the anxiety, and then coming up with a plan to bring in extra income or fix their budget to apply more cash towards their debt.

      People with massive debt balances are in a frustrating/stressful situation. Telling them to get organized, cut down on the stress and then come up with a plan when they can think clearly is what makes the most sense to me.

  • Michelle Oct 14, 2016, 11:35 am

    As much as the tens of thousands of debt have caused me heartburn, I would absolutely be willing to take them out if I had to do it over. If anything, I might have worked harder on securing scholarships and grants, or started out at community college to cut costs, because even though I did have a few scholarships AND saved tons on housing and meal plans by living at home, I was still saddled with over $80k in debt. BUT I was fortunate enough to know exactly what I wanted to do in highschool, go to college to get a degree in that field, and get a job straight out of college in that field- and am still in that job 2.5 years later and loving it. It was absolutely worth it to me to have thousands of dollars in debt to land a career I love with a great upward trajectory.

    • Millennial Money Man Oct 14, 2016, 12:43 pm

      Yeah that is a perfect example – I still think for people like you that really go after a career that they love and have a good idea of what they want from college that it’s a good investment! If I could go back I would have worked harder to cut back on costs too – live and learn right?

  • Gary @ DebtFreeClimb Oct 14, 2016, 12:49 pm

    I think I would encourage my future children to take out some Student Loans because I feel it was an essential part of me getting my personal finances in order and learning self-discipline. I see my friends that had support from parents that graduated with 0 debt are less disciplined. They buy brand new cars, $1500 month single apartment rent, eat out every day, accrue credit card debt, etc.

    I graduated college (I think we went to the same school btw, UTSA?) with $55k in Student debt. I can’t recall any guidance from any HS teachers or professors about the risk/reward of taking out loans. At the time it seemed like the norm, every semester the financial aid office was packed out the doors with students in the same situation as me. All my college friends were taking out loans, so I didn’t feel bad about mine at the time.

    I was lucky to have my sister tell me about Dave Ramsey which sparked my interest after graduation. I was also fortunate to land a job with decent pay. If not I could have been struggling on IBR like many other millennials. Now over two years later I can see the light at the end of the tunnel.

    I debate if I were to go back in time and change things how would I handle college. Going two years at a local community college would make more sense (not sure if I would enjoy that tbh) and I would test out of most of the core courses (KLEP testing). I would start a side hustle and possibly live at home, etc.

    I think for me taking out loans was inevitable, but I would never accrue as much as I did. $55k for an undergraduate degree is way too much for anyone. I think having 10-15k in loans is a manageable amount and I would recommend as it’s a price most people could pay off in 1-2 years and will teach some financial responsibility.

    • Millennial Money Man Oct 14, 2016, 2:01 pm

      It was really inevitable for me too – I just had no idea I would quit my job to do this instead haha! I could have easily had a great career as a band director and the loans would have been well worth it. I STILL have a degree and could fall back on band directing (hopefully) if this whole thing blows up for some reason.

      On using loans to teach financial lessons – my first thought was to disagree, but as I sit here I’m thinking about how valuable my student loans were for that same reason. They are also the main reason people actually read this site! 🙂 Very interesting concept.

  • Catherine Oct 14, 2016, 3:03 pm

    I have dental school loans and if I went back I would do it all over again the same way. I love Dave Ramsey and I am doing his plan but there is no way I could have saved enough for dental school .
    I do wonder if I want to pay for my kids college . Having student loans to pay has made me uber responsible . I drive a 10 year old car, still cook more than I eat out, live way below my means .
    There is a great messing in this struggle for sure

    • Catherine Oct 14, 2016, 3:05 pm

      Also , autocorrect hates me . Just saw all my typos in my comment!

      • Millennial Money Man Oct 15, 2016, 5:39 pm

        Haha no biggie! It gets me all the time too 🙂 I wonder about the kid situation too – hopefully my income will be high enough to where it isn’t an issue, but who knows?

  • Doctor In Debt Oct 14, 2016, 4:50 pm

    I was lucky that I didn’t start adding to my student loan totals until medical school. Even then the message was borrow as much as you can, you will be a “rich” doctor soon. I have married classmates with over $500,000 in student loans between them. That’s more than the average mortgage.

    One option would be some form of free public college, in the same way that public school is free. This gives people who couldn’t otherwise afford college an opportunity at a higher education. It would have to be bare bones. We are not talking about multimillon dollar Rec centers and football teams, etc…. It would be pure academics.

    Of course the current system of private colleges would exist for those willing to pay. The Ivy’s are not going anywhere.

    • Millennial Money Man Oct 15, 2016, 5:38 pm

      Jeez $500k in student loans. I always forget the type of debt that doctors have to take on to get through college. The problem is that schools need those multi-million dollar facilities to compete for student interest now, so we would essentially be subsidizing luxury style living for college kids. Definitely not an easy solution to that one!

  • Ryan Johnson Oct 14, 2016, 8:47 pm

    Spot on with the comment that the market doesn’t care about your dreams. I think college education and house ownership are similar in a way. Both have a lot going for them and can be good decisions but they AREN’T the be all and end all that society makes them out to be!

    I feel really bad for people that have crippling student loan debt, it’s like you said, they were just doing what they thought was right.

    Where I’m from in NZ we are lucky enough to have interest-free student loans, but they are still a problem. People run away overseas to try to avoid them! I would tell any teenager thinking about going to college to make sure there degree will increase their earning power!


    • Millennial Money Man Oct 15, 2016, 5:41 pm

      Haha thanks! That’s one of those ones that I’m not sure where I came up with it.

      Interesting on the NZ loan thing – why in the world do people run away overseas to avoid it? Just to not pay them back?

  • Julie @ Millennial Boss Oct 15, 2016, 10:32 am

    Hopefully the way the education model is changing will make a difference in the long-term but in the short-term, I think colleges should be encouraged to cut back on spending, new construction, etc. For-profit colleges that have low graduate rates and loan repayment problems need to get shut down. The government needs to stop shelling out massive amounts of student loans and put a cap on borrowing. Yeah, ideally every student should be able to go to the college they want to go to and shouldn’t be priced out of a college but that the government access to money is fueling the fire. Price people out so they make cheaper choices (which I don’t believe are worse choices) and drive down the cost of schools.

    • Millennial Money Man Oct 15, 2016, 5:44 pm

      ^^^Lots of great thoughts in that comment. As long as government backed loans are guaranteed, I don’t see any reason for colleges to cut back on tuition prices or new construction. There’s too much money being made by both the colleges AND the government right now to entice the whole thing to slow down.

      We’ll probably see some type of bubble down the road (I’ve always thought it would be a longer and slower drag on the economy vs. a burst like we saw in 2008, but who knows).

  • Ten Factorial Rocks Oct 15, 2016, 12:29 pm

    I don’t think big student loans have value in a world where you can get the world’s best teachers teaching outstanding classes beamed right to your computer wherever you are in the world. In some years, I think many employers will use a customized ‘entrance exam’ (like SAT or GRE or GMAT for colleges) to determine the employability of applicants. Expensive Degrees may not matter. What you have mastered will only matter. Competence-based employment rather than pedigree-based, not that radical an idea if you think about it.

    • Millennial Money Man Oct 15, 2016, 5:46 pm

      Interesting thoughts – not sure what you are referencing with the classes on a computer though. Sounds pretty cool!

      • Ten Factorial Rocks Oct 15, 2016, 9:10 pm

        I was referring to Coursera and EdX type of sites where you learn from the best lectures of top professors sitting right at your home. You can assemble a curriculum of lectures and fulfill the learning requirements of a degree practically free of cost without actually paying for it. You pay big money only to get that piece of paper called Diploma. Even that, I suspect, may not be valued in the future if companies resort to a customized ‘entrance exam’ for employment eligibility as I mentioned. These are disruptions that can totally change how college will be in the future. This is the type of hack that can shake up higher education and make it affordable to most people. Student loans may largely diminish at that time. Some universities may have to shut down too but that’s not a bad thing.

  • Finance Solver Oct 15, 2016, 3:50 pm

    I think student loans are still worth it but 6 figure student loans are a bit overboard. My school’s in-state tuition was only like 10k a year and it was a phenomenal school (some of my friends ended up making high six figures straight out of undergrad as a 22 year old). If my scholarships didn’t pay off my education, I certainly would have taken on debt because I was getting a fantastic education at a huge bargain.

    Great perspective as always!

  • Love My Budget Oct 15, 2016, 4:59 pm

    People also need to consider getting an education they can afford. I knew I couldn’t afford getting a BS degree. My husband (IT degree) and I (Finance degree) both went to a technical college, graduating at age 21. I worked 3 part time jobs, he worked 2. Getting assistance from our parents wasn’t an option. We both paid cash for our education and graduated with no student loans. We are both 35 years old. Many of my high school teachers told me that an associate degree would be worthless, and that a technical college wasn’t a “real school”. Considering our household income is $160,000, working in our field, I think we did just fine. So, no. Student loans aren’t worth it.

    • Millennial Money Man Oct 15, 2016, 5:35 pm

      The problem is that schools don’t help kids differentiate between good degrees with high likelihood of job placement and “BS” degrees. Congrats on your hard work!

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