I'm going on record as stating that WHATEVER the returns might be, they will be grossly offset by any student loans the graduate has to pay back.
First, let's establish that colleges don't loan money. Colleges often have nice grant money that one does NOT have to pay back, but they don't usually loan money longer than the term the student is enrolled, meaning the money is paid back by the end of the term or the student cannot enroll for the next term. Student loans are not the fault of any college.
But our US government has guaranteed money for banks to loan to students. That means that the bank doesn't have to pay back the money they got from the government to loan to the student if the student defaults on the loan. (Does this sound like the foundation for the current housing loan crisis?)
Most banks won't loan to a student without a co-signer, which means that a parent is usually responsible if the student can't meet the payments, but the good news is that most students feel obligated enough to establish their good credit and they do pay back their student loans. Most of them. A student who defaults, becomes ill, or dies can bankrupt the entire family with those loans.
Student loans have a long payback period, often 30 years. Students who have achieved a Master's degree or Doctoral degree are going to have a student loan payment equivalent to a mortgage on a decent house.
Yes, you really need to think through the implications of a student loan, and if your college education is worth the payments you'll be making for that education after college.
Here's why student loans are evil:
1. College graduates need to be able to go to where their new job opportunities are going to take them, to be able to apply those newly learned skills. If they have a loan equivalent to a mortgage, they aren't going to be able to buy a house when they get there. Many of these expensive college graduates end up living at home with mom and/or dad until that college loan is significantly reduced. Then they have the freedom to move about, but that can be years after graduation.
2. Student loans may well be one of the reasons for the rise in college costs. Banks love to loan money, the more the better. If college costs go up, so what? That means the return the banks earn will be greater. There's no reason for colleges to curtail costs if students can get the loans to pay for them. This is probably the reason that college costs in recent years have risen far faster than inflation.
3. Who would want to marry $40,000 - $100,000 or more in student loans? Love isn't the same as money, and a warm feeling won't pay the rent or a mortgage. Debt obligation can limit a choice of spouse, or your own debt obligation can limit who will choose you.
4. Women with significant college loans may well have to choose between staying home with a family and work. If her loans are equivalent to a mortgage, then circumstances are going to require her to work. If she wants a family, then the burden of the loan payback becomes the wage-earner's burden in that family. If the wage earner also has student loans, the wage earner may well be paying both husband and wife student loans as well as the mortgage. If your mortgage is 1/3rd of your income, and husband and wife student loans are both equivalent to that mortgage, then you don't eat. If you want one parent to stay home with your kids, then don't take out those loans.
5. Student loans (as well as mortgage loans) make you a slave to someone. You will be obligated to the job that pays those loans back. If there's a cause somewhere in the world to which you would like to lend your assistance and expertise, then you're stuck paying those loans back instead. If God would like to use you somewhere else, you will be unable to go.
6. Your student loan will make someone rich. Over a 30 year period at 5%, you could well be paying that loan back almost twice. You'll pay back the full amount of the loan, and the interest you will have paid will amount to about 93% MORE than your loan. If your interest is 7%, your payback will be about 139% MORE than your loan. Couldn't YOU use that money?
In general, an educated population is a tax-paying population. It's in a government's interests to encourage education and research that not only makes life better for its citizens but also protects those citizens (military). Tax payers in countries such as ours, where the government is by the people and for the people, need to decide how much education is worth, and need to discern if we're getting the return we expected, or are just getting a population burdened with unnecessary debt. Debt will immobilize a nation, as we're seeing with the current loan crisis. Debt can even obligate one nation to another. The US may well be the biggest lender to other nations, but that CAN change. Keeping American citizens out of debt is in our national best interests.
If your college education will guarantee you 50% more income then it may be worth it to do that. ('Guarantee' is a funny word in this context!) But you will have more flexibility and more choices after college if you have no loans. You can take some time and see the world. You can use your education to help folks in out-of-the-way places. The money you earn will be yours to do as you please. But if you take those loans, you may well be stuck with a job that earns your loan payment and leaves you with little else.
Don't do student loans!
