I know there are going to be some fingers pointing towards me after publishing this post. But my opinion and views are mine and having a blog I just can’t let them die within me.
Yesterday while I was at my day job, I was talking to a guy who must be in his early fifties. We were just sharing the ups and downs of life and just, well, you know bitching about how life doesn’t turn out exactly the way you planned when you were in your twenties. As we were talking, bitching whatever you want to call it, we ended up talking about education and how important it is in todays world to get ahead in the game. As we started talking on this topic I asked him if he had student loans and his answer was, ” Yes, I am still paying for it and I finished college when I was 30.” Just a quick reminder - he is in his early fifties.
This is what he had to say,
You know I was glad when I graduated. It felt like I had wings and I could reach new heights. I graduated from one of the most prestigious universities in US and I was proud. But today when I look back I wish I had just been dumb enough not go to college. My dumbness then would have proved to be the smartest decision at this point in my life.
So what exactly is student loan - a blessing or a curse? Isn’t the whole purpose of student loan to allow you to have a better future? Isn’t education suppose to help you get far ahead in life rather than get trapped in past? Isn’t it supposed to help you not get into debt rather than trap you in it for years to come, in some case even after retirement? Beats me.
I went to school for 5 years, although it was a 4 year course. I have been out of school for well over 2-3 years ( I can’t remember the exact time frame ). I was smart enough not to get a student loan but dumb enough to charge it on my credit card. Even after getting out of school, I find it hard to apply my knowledge anywhere but on the web. My credit card debt, which I only used to pay for school, ran about 15,000 US dollars. That’s quite a chunk and of course I had a full time job. I have been paying about 400 US dollars each month towards my credit card and I am proud to say that I should be done by the end of this year. I will be debt free and I won’t be owing any money to anybody, besides my wife ofcourse. For some reason she thinks I am sitting on a money pit.
Anyways, getting back on topic. The thing that I am trying to figure out is why has college education become so important that instead of helping us secure a better future, it helps us rack up debt? I am not talking about some preppy college hipsters swiping their cards to buy something they want. I am talking about students like me who held a full time job and still had to depend on credit cards and student loan to get by. I remember the nights when all I could afford to eat for dinner was Ramen noodles. I would have to think twice before going to McDonald’s for a hearty launch.
Don’t get me wrong I am not against education. I am all for it. I will be the one to say that without higher education your opportunities are not as well expandable. But education to me, at this point, seems like has become the business of choice. There is money to be made. Credit card companies, loan companies all focus their target on you as soon as you turn eighteen. Slogans and advertisements like ” We are here to help you pay your college fees ” or ” Leave you financial worries on us, go on get a bright future ” are hard to understand as I just can’t figure whether they are talking about their bright future or the student’s.
All in all, I am frustrated after having a talk with the fifty some year old guy yesterday. If education comes at that cost, you might just be better off working in a factory. I would go sweat my butt off and have money for myself than to go to school again and have some corporate job that pays thousands of dollars a month. Education is much needed to succeed in life, but as of today it seems like education has an equal hand in most people’s set backs as well.
Disclosure: I am a firm believer in education. I believe in higher education. I just wanted to point out the fact that education today seems to be the most profitable business for everybody including loan companies, banks, credit companies but the students. The conversation with the old man just compelled me to pour my feelings down. I am not against education. If you are a high school student or a college student, please disregard this post. No matter what, education is much needed. Just watch out for the scams that people and companies will try to lure you in. Save up some cash, work a part time job and give up the brand name clothes and shoes for couple years. There will be time when you will have both hands filled with money, just remember to stay out of the education debt trap.
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It’s not a trap. If you spend yourself into debt you’re your own enemy.
As usual, moderation and ingenuity are the keys. I know people who are quite successful, and never finished a college education, (the most successful people I know actually). On the other hand, I may be headed back for a third degree soon, (they just won’t take you seriously in physics without one).
It really depends on what field you want to go into and what you want to do in life. Of course, that’s hard to know at the age of 18. So… just go to college! Maybe not the most prestigious one if you can’t afford it. There are plenty of great state universities that are quite affordable.
It is interesting how people just have a knee-jerk reaction when people start talking about student loans being good.
Here is a closer look at this issue that I recently wrote abut student loans.
Remember, education is not bad in and of itself, but the routine of our system pushes everyone into similar tracts of study, which is not helpful in serving an individual’s needs. If our education system focused on what individuals wanted to learn instead of what fields of study are the most profitable, we would have a system that serves every individual, from the mechanic to the engineer.
For better or worse, I went the high-price route and have felt that it has certainly limited my options as an adult, but I wouldn’t say that no one should go to college. I would advise any youngster who wants financial control of their life to go to state schools or community colleges or even take some time off to find focus. I wrote a bit more on this here:
http://patrick.snajder.net/blo.....rowth.html
Ideally, you want to encourage all students to learn throughout their lifetime and to pursue the interests that spark their imagination.
I totally agree. Education has become a money making racket to Universities and Colleges and the focus is no longer on students and their needs.
I graduated in 2001 just as the internet bubble was bursting. I had ~$40K in loans. They were completely gone in under 5 years. I think the question as to the benefit or curse of student loans comes down to how you use them. You can view them as an investment if you want… sometimes investments tank, but in the long run, compound interest is a win. (The higher salary means those annual cost of living increases are bigger, for instance.)
You are right on.
I listened to the mantra of parents, teachers, guidance counselors who all said “go to a great school, major in a great subject, and you can get a great job”. So I just went to the best school I got into.. which meant I graduated as a below average kid from a top school with $50K in student loans.. when I could have been an above average kid at a regular school with a full ride.
Now I’m in a job I hate, but it’s the highest paying one I can do. So anyone who will listen to me, I tell them that college degrees open doors at the top, but school loans close doors at the bottom.
[…] read the full article […]
I graduated at 30, a little over a year ago. I have a fair amount of loans, but I majored in something that allowed me to get a relatively high paying job - Computer Science. Nursing seems or seemed to be hot now. They have 2 year programs if you already have a bachelors degree. You have to do something you like, but you also have to do something that will pay the bills. You can’t expect to have 10’s of thousands in debt and pay it off with a BA in fine arts or philosophy. p.s. I love the notify by email checkbox!
20 years to pay off college debt? That is the part of the story that is bothering me. Even attending a prestigious private institution it strikes me as wrong.
It strikes me that a better conclusion from this situation is that either your co-worker has more important priorities for his money than paying off his student loans or he has made and stuck with very poor-paying employment choices.
The only other reason I can think of that would take 20 years to pay off student loans is if he had a major financial disaster in the interim - and the story had no hint of that.
I’m a third-year college student, and I recently tried to get a student loan from Chase. They offered me $27,000, which was perfect — it allowed me to pay off my Federal Direct Student Loans, get the laptop I need for classes now, and invest a little bit to put towards my capital when it came time to pay back. 10.5% loan origination fee, basically means I’m paying back $30,000, right? I was told that borrowing with that kind of loan origination fee would give me a lower APR.
Wrong. I was offered to pay back at 11.49% APR, which comes to a payment of $375 every month for the next 240 months. 20 years of making that payment, to pay back a grand total of $90,000.
I’m still looking for something halfway decent.
Before I start replying to comments, I would like to once again make it clear that I am not against education at all. I am against the fact that education is getting out of reach of general population.
@ College Guy: I am not sure how many people can really afford to go to college without sinking in debt.
@ Hamilton: I see your point. There are a lot of good state universities and community colleges, still the cost is outrageous, at least that’s what I think.
@ Steve: Thanks for the link. That was an interesting read.
@ Pat: Personally I feel like colleges have become a business of choice for most. Once again, I am not against college education. And I am not trying to discourage anybody from not pursuing higher education. I am just trying to point out the truth behind college education that I see from my point of view.
@ Anja: I agree. Seems like the focus have shifted from educating to making money.
@ Charlie: Putting money on educating yourself is certainly a good investment. If education has become an investment that takes 5-20 years to pay off, that for me is a high risk investment.
@ Brian: “So anyone who will listen to me, I tell them that college degrees open doors at the top, but school loans close doors at the bottom.” Well said.
@ Josh: You are right Josh but then again most education firms seem to charge by the course of your choice as well.
@ Exjackly: May be I didn’t quite explain the situation but yes the guy I was talking had other financial obligations as well like mortgage, credit card bills, car payments. And due to all these obligations there were times in his life when he had to choose what to pay and what not to. He decided to put off the student loan payments. But then again, as time passes by I guess we all fall into these financial obligations. It’s the harsh reality of life. If I take out a college loan, the college loan wouldn’t be the only thing I would have to pay, there are other bills which at that particular time might seem to be of high priority.
@ Joe: I am sorry Joe. Like I said just keep looking and there will be an option available. Most college students get so excited that they fail to reason rationally. You are on the right track
I am a student again in my late 20s. I’m on loans after my employer reimbursement and military discount.
I’ve done the math; my net worth will be less for a few years, but if I kept our take-home equal once my husband retires from the military, I will still be paying the loans off faster than required, or we can pay the debt off as it’s set up and be a lot better off month to month. And that’s if my husband isn’t working–unlikely, as he’s also working on a degree which he’ll complete before retirement.
Debt isn’t the end of the world. The tragedy only comes when the payoff is less than the debt in the long run.
Sorry–keep, not kept, of course. I shouldn’t post when tired.
What’s ridiculous is that student loans are so often considered part of a college student’s financial aid package, and rapidly have replaced actual aid for most students. As a parent with 3 children earning less than $40,000 a year when my daughter started college she was eligible for practically NO financial aid. That’s absurd.
The best bet for most students who aren’t awash in scholarships is to go to low cost community colleges for the first couple years of school and then transfer to a 4 year program for the last couple years.
“Of course, that’s hard to know at the age of 18. So… just go to college! Maybe not the most prestigious one if you can’t afford it. There are plenty of great state universities that are quite affordable.”
That’s what I did, but I would NOT recommend it. It didn’t give me much in the way of new life experiences, but instead amounted to more like four additional years of high school.
I would have been better off moving somewhere (with roommates if need be), getting a job, establishing some financial independence, and yes - getting out from under my parents’ thumb. Face it, even with a degree you will still be starting out in entry-level jobs where you won’t use that degree anyway. Don’t feel like you have to rush it.
I spent all that money on school and didn’t even major in the right thing. I picked accounting because I was broke, overly focused on making money, and simply didn’t know what my other options were. I hated it and had to go back to school for another degree later in life just so I could find a job where I didn’t want to stick a fork in my own ear on a daily basis.
If you aren’t going to school for a specific reason, get a job and some life experiences instead. You’ll eventually figure out what you want to do for a living.