How much debt for a degree makes sense?
Cha-ching, cha-ching . . . millions of dollars in college debt was put on the books again as graduating seniors walked across the stage for their degrees this spring. For many of them, interest on their loans started accumulating as early as Commencement Day.
A few weeks into summer . . . and some start to wonder:
“Was it worth all the money (plus interest) I’ll owe over the next 10 or 20 years?”
“Well, Maybe. It all depends.”
Hopefully is probably be the best guess anyone can offer. Whether degrees pay off or not, depends on many variables, such as college majors, types of degree, the job market, the competition, supply and demand, etc.
Take a look at a few variables
If a student’s heart is set on earning a living as a brain surgeon, college professor, criminal defense lawyer or any of the other professions not open to people without degrees, the answer is, “Yes.” That’s a no brainer. If a degree is required, a degree is needed. Otherwise, it’s a toss-up.
The answer depends on the odds of getting a job with enough income to put college bills to rest. Students should do the math before taking out their first loan. In most cases, it doesn’t make sense for a university grad with $120,000 in debt (plus interest) to be headed toward a $38,000 a year job. If a career can be launched without a four-year degree, young people should think twice before committing themselves to hefty, multi-year monthly payments.
What are the prospects?
While doctors, dentists, attorneys and educators can’t enter their fields without the right degrees, it pays to do some research before making college plans in other fields. Someone with entrepreneurial dreams to start their own business, for example, doesn’t really need an M.B.A. Think Mark Zuckerberg, Bill Gates, Steve Jobs or almost any movie or music star. Their talent took them where they wanted to go, so they opted out of college degrees.
Other Americans earn six-figure incomes on skilled trades they learned in high school or in a two-year program at a community college. Only some college degrees lead to wealth, so students need to know which ones pay a good return before racking up insurmountable amounts of debt. Some degrees aren’t worth the price.
Changes in the wind
Rapid technological change, along with rising costs of higher education, have made the traditional college path increasingly unpredictable and risky. Debt incurred in pursuing four-year degrees is often not outweighed by future earning potential. Changes in the job market continues to outpace knowledge and skills, so many degrees no longer are reliable measures of expertise. “The most in-demand occupations or specialties did not exist 10, even five, years ago,” according to a recent World Economic Forum report. “Sixty-five percent of children in elementary school will end up in jobs not heard of yet.” The result: Job security won’t lie in expensive degrees earned right out of high school. Instead, work opportunities will be more about lifelong learning, gained in nontraditional ways.
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