Poorly Educated Part I (The Value of A College Education)
I don’t think anyone would argue that times have changed.  In generations that have passed, all you had to do is graduate from high school and you were going to get a job that could take you all the way to retirement while earning a pension and allowing you to retire respectably.  But as advancement has taught us, the proverbial bar has been raised.  In this day and age, pension plans are few and far between and even having a college degree doesn’t guarantee anything!  If you want to make your mark in a given field, you almost need an advanced degree.  Having these advanced degrees definitely open up opportunities that would be closed without the extra knowledge and training, but it comes at a price.

 

This proves there is a certain value to education we cannot ignore.  It pays to be educated!  And just like everything that has value, getting an education cost!  And it cost more than it ever did before.  As tuition, books, room, board, and fees continue to rise, I can only see it getting more and more expensive in the future.  But what value do we place on education?
The cost of an education depends on few things.  Some of which are the schools where the degree is being earned (as some schools are just more expensive than others), the degree, itself, and the job market related to the degree.   But before we deal with those topics, which we discuss in subsequent articles, I want to take the time to contemplate the most prevalent method of paying for an education (the use of student loans) and how it affects the wealth of graduates.  See the following:
  • Americans owe over $1.3 trillion dollars in student loan debt.  Student loan debt is the second highest consumer debt behind only mortgages. (Forbes, 2017)
  • The average Class of 2016 graduate has $37,172 in student loan debt and 59% of millennial graduates say they have no idea when their student loans will be paid off. (US News, 2016)
  • The average monthly student loan payment (for borrowers aged 20 to 30 years old) is $351. (Student Loan Hero, 2017)
The income of graduates is being used to pay off debt rather than build their future.  Our graduates are gaining an education,  at a much greater cost than anticipated because it is mortgaged against their future earnings (i.e. their wealth building tools).  “How so?”, you might ask.  Let’s assume an average 23-year-old graduate is paying $351/ month for student loans for 10 years, which is the average to repay their debt.  If there was no debt, instead, that money every month is being put into a mutual fund investment.  Now let’s say after 10 years when the graduate is 33, they decide NOT to add anything else to the investment and is content with it doing nothing but gaining interest over the years.  When the graduate reaches the age of 65, with just average returns, they will have over $750,000 in that account!  Again, that is assuming they did not put a dime into the account from age 33 to 65!  If the graduate never stopped adding to the account, they easily could be a millionaire!  But instead of building wealth and securing a financial future, that money is paid to money lenders and banking institutions and they are making billions on top of billions from servicing debt!

 

Education is important.  I believe in education and I encourage everyone to seek it.   But we have to be wise in our pursuits.  We can’t get so enamored with the thought of getting an education that we just do what everybody else is doing.  Isn’t that the definition of average?  Didn’t God create us to be better than average?  Of course He did!  Remember, you are wonderfully and fearfully made (Ps. 139:14).  It’s time we start taking the road less traveled so we can reach our full potential.  There are alternates to loans such as scholarships, grants, work studies, internships, apprenticeships, and the most overlooked alternative of all, work.  All of these options might not be applicable; but they should, at least, be vetted.  Remember, Jesus warns us to count the cost before we make a commitment (Luke 11:28-31).  Now we see how expensive an education can be when it is paid for with student loans.  So let’s really try to avoid student loans if possible so we can get the most out of our money and build wealth for ourselves and not for the financial institutions.
[1] Friedman, Z. (2017, February 21). Student Loan Debt in 2017: A $1.3 Trillion Crisis. Retrieved June 18, 2017, from https://www.forbes.com/sites/zackfriedman/2017/02/21/student-loan-debt-statistics-2017/#2be279e85dab
[2] Powell, F. (2016, May 9). 10 Student Loan Facts College Grads Need to Know. Retrieved June 18, 2017, from https://www.usnews.com/education/best-colleges/paying-for-college/slideshows/10-student-loan-facts-college-grads-need-to-know
[3] A Look at the Shocking Student Loan Debt Statistics for 2017. (2017, May 17). Retrieved June 18, 2017, from https://studentloanhero.com/student-loan-debt-statistics/
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