Last Friday, my wife and I traveled down to Tucson, AZ for my brother’s college graduation. 795 people in his graduating class from the business college down at the University of Arizona.
Graduation took almost 2 hours, and he was one of the first that walked.
Yeah….it ended up being a long ceremony!
But as those 795 walked across the stage, I couldn’t help but wonder just how much student debt was sitting down and graduating before me.
Using a release from the Arizona Board of Regents, average student college debt in 2014 was $22,609. That was just released in November of 2015, so the data is fairly recent for our state.
Somewhere around $17,974,155 in student loan debt.
Everyone in front of me was graduating, and they were all very happy. Rightfully so!
But in the midst of the happiness and optimism, I couldn’t help but wonder how many truly understood the ramifications of that debt.
Using a modest 5% interest rate over 10 years, that’s an estimated $239 a month in student loan payments.
What about the upper end of the interest rates, 6.8%?
It’s not a big difference but that extra $20 could be a 401k contribution, eating out twice, or an event with friends.
That almost $18 million sitting in front of me really put things into perspective.
Arizona is a relatively affordable state for higher education, and if almost $18 million was sitting in front of me (and that was only ONE college within the university, not the entire university itself), no wonder the nation’s student loan debt is spiraling out of control.
With all that debt, is college actually worth it?
College increases your earning potential significantly, but it does depend on your major. Check out this tweet from The Economist.
Engineering & science-based majors are more likely to see a positive ROI than art majors, and the school you attend also plays a role.
Payscale actually provides a great interactive table where you can check out your school’s ROI.
For most of you reading, you will be looking to see if the school you attended was actually worth it versus doing research for potentially heading to college but it’s still interesting information to look at.
So how can the college debt crisis be fixed?
Well, I’m not going to pretend to have the answer.
Ultimately, the need to go to college has been so ingrained in many of us that we look at it as a worthwhile investment in our future regardless of the cost.
For me, it was just the next step after high school.
Until students start choosing lower cost options instead of taking out massive loans, there won’t really be enough market pressure to incentivize colleges and universities to try to control their debt.
The BEST thing that we can do in the meantime is to make sure we educate future students on the cost of college and what exactly taking out a loan means.
How much money will it ultimately end up costing?
How long will it take to actually earn that money back?
How long will you have to take out loans?
How will I be able to repay my loans?
If we ensure future students have access to the answers to at least some of these question, we’ll have more informed young adults entering university who (maybe) won’t be as bogged down in debt.