Student Loan Debt: Is Borrowing Money to Go to College Still Worth It?


For students about to embark on the college experience, the question of how to pay for college is probably at the forefront of their minds. Educating oneself on the terms of the loans, interest rates, payback time etc. are all things to be considered prior to applying for a student loan.

Federal loans require borrowers to complete entrance and exit counseling to know what the terms of their loans are.  This is a step in the right direction, but when a 17-year-old signs a promissory note to pay back the loan in four years does this kind of counselling do much good? And with the job market as it is does it matter?  

In looking at 2010 Labor Department data the Center for College Affordability and Productivity found that the pool of new college graduates (41 million) was greater than the number of jobs which required a college degree (28 million). The likelihood of obtaining a job to meet a new graduate's financial needs to adequately pay off the loan is of concern.  

A survey by Rutgers University last year reported that half of new graduates said the jobs they have after college do not require a 4 year degree, and only 20% reported that the jobs they had were in their chosen field. The starting salary for new graduates was about 10% less than five years ago; new graduates find themselves underemployed, taking jobs to pay the bills, or opting to go back to graduate school to boost their credentials, hoping to give them an edge in an increasingly competitive market.  

With student load debt surpassing $1 trillion dollars and the market being what it is with job creation at a deep low, the necessity for college for all needs to be examined, as do requirements for jobs in the marketplace. Is it worth going into thousands of dollars in debt to get a bachelors degree ... only to land a job as an administrative assistant? It is not worth furthering that debt to get a graduate degree, yet remain underemployed upon graduation.

Colleges used to be a vehicle for social mobility, and education greatly expanded the middle class. Education remains a great equalizer as it can provide opportunity, but it is no panacea. The jobs in demand and those which require a college degree vary and are more technical in nature in the current market. As income stagnates but the cost of college continues to balloon, measures to forgive debt or debt counseling will hardly matter until college costs are reigned in, not 500% above the rate of inflation.