Are Student Loans Good Investments?

According to nerdwallet.com, U.S. student loan debt totals over 1.6 trillion as of March 2021. This staggering amount has been commonly referenced in the media and by political candidates advocating for student loan forgiveness in response to the declared “student loan crisis”. While student loans are hard to get out from under and the cost of tuition is only rising, this has left many students wondering if student loans are truly a good investment and if they should pursue higher education. 

 

According to the National Center for Education Statistics, the 2011 median annual earnings of young adults ages 25-34 working with only a high-schooled diploma was roughly $30,000, while those with a Bachelor’s Degree were making roughly $45,000.  Considering that the average student debt is $32,000, students will be able to recoup this amount in roughly two years. Of course, there will be living expenses to account for, but with an aggressive debt plan, student loans can be tackled fast and effectively. It is also essential to note that working up into management positions without a college degree can be extremely challenging, as many companies and positions require a degree of some sort. This is because a degree will be able to provide some insight and knowledge that may not be available through a position or workplace, and it will make you a much more informed individual overall in your particular area of study/expertise. If you seek to move up within a company, it is a must to obtain a degree. 

 

It is important to take into account costs and your declared major before jumping into higher education, as your major will play a large part in what you will make after college. Racking up a large sum of student debt becomes a lot more manageable if you are becoming a doctor or pursuing another high-paying profession. Look at it from a return on investment perspective, if you will be making enough money to manage payments and pay off your debt quickly, then it is an overall good investment as it will provide income for a lifetime.