Putting Student Loans in Perspective

flickr Demitri W PhotoJosh Mercer posted a story below about Mark Cuban and student loans, so I thought it only fair that the opposite argument should appear here.

Full disclosure: In order to write this post I’m taking a break from trying to figure out how the next fiscal year budget will stretch to meet my department’s needs at the college I work for. So consider this post “the college counter-argument” if you must.

Also, let me be clear: Student loans are too high; they should be lower. This hits large families especially. As I said before, if I win the lottery, the first thing I will do is endow college scholarships for struggling Catholic families.

But let’s start with a quick reality check, to put the “crushing” student debt in perspective.

  • The average student loan debt is $29,400.
  • If you pay that off in 10 years, your monthly payment is: $280
  • In America, the average monthly car payment is: $460

So when we talk about student loans, we are talking about an extra car payment for 10 years.

Now, I am fully aware that an extra car payment is no small thing. But four years of college is no small thing, either — and college has always been an expensive proposition. For a National Catholic Register article I searched the New York Times’ archives to demonstrate this.

  • “Colleges Stress Rising Costs Increase … Protests on Many Campuses” said a 1946 headline.
  • “School Costs Up 119% in 12 Years” — 1953
  • “Tuition and other costs may appear prohibitive to many parents,” —1955
  • “Relatively few people can accept or cope with the spiraling costs of [college] education” — 1966
  • “Heavy Burden of College Debt Raises Anxiety for Young Families’ Future” — 1987

Maybe it really is true this time, but this boy has been crying wolf for a very long time.

What is different now is the language. Now, we don’t just say “college is expensive” we raise the specter of the dot-coms in 2000 and the housing market in 2008 to point to a “higher education bubble” brought on by easy government loans leading to inflated college prices.

But remember: A bubble only happens when prices rise disproportionately to real value. The bubble is only true if the cost of college degrees does not deliver value.

As I put it in the Register article:

A February 2014 Pew Research Center report on higher education suggests that attendance at a four-year college (public or private) is a better economic bet than it has been in decades. Polling data showed that those who have earned a ‘bachelor’s degree and more’ make an average $15,000 more a year (using constant 2012 dollars) than ‘two-year degree’ community-college graduates. But those community-college alums have only a $2,000 average advantage over high-school graduates.”

… So that “extra car payment” of $280 a month will make you, on average, $1,250 more a month over the course of your career.

If you go to the right kind of college, it might also save your soul.

Even Mark Cuban should agree that this is not a bad investment at all.

I agree that student loans are a problem: I wouldn’t pay them at all for many universities in America. But if you’re going to a good college and you can keep your loans close to the average, then college loans are truly worth the sacrifice.

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Categories:Economy Education

10 thoughts on “Putting Student Loans in Perspective

  1. Jea says:

    Check what the average student loans are for people who go to private colleges. They’re way higher than government colleges. For example Catholic University of America in Washington, D.C. is $39,200 just for a year not including room and board. While CUA is more expensive than many private catholic colleges I think any private college student without a scholarship will pay $29,400 in just a year instead of in 4 years.

    1. Tony says:

      Jea, each college will have its own cohort loan average. While your comment that student loans for people who go to private colleges are “way higher” than government colleges, this can be misleading to insinuate that this is the case with all schools. There are private schools that have a loan average in line with 4-year public schools. I can make this statement because ours is such a private college. We have an NCAA Division I school within 100 miles of us and we are right in line with their averages. So we should be careful when making blanket statements that may have a negative impact on those to which the statement does not apply.

  2. Donna says:

    Well said. It took us 14 years to pay off one son’s student loan to a faithful Catholic college, from which he graduated. He has only a shread of faith. However, if he had not attended this college, I am quite certain he would have no faith. Thusfar, a good return on the money. Another son has opted to put 1/2 his paycheck against his student loans from another faithful Catholic college, (including completion of his degree from a secular university.) He will have lived at home for 1 year after graduation, and plans to be debt free. All the usual things such as a future marriage, the used vehicle… are in this plan. His soul is in good shape. Money well spent.

  3. Bob says:

    My minimums are $800 per month. And, interest over 10 years will equal nearly $30,000. We can’t afford a home or a family, let alone to replace our 18-year-old car. Our retirement savings is almost non-existent. And, we’re already well into our 30s! But this is all mere chump change to the Catholic Church, I suppose.

    1. Tony says:

      Bob, I am sorry to hear of your circumstances. The “chump change to the Catholic Church” comment seems inappropriate. Everything we use today costs something and is a choice each of us makes. When it comes to college costs, parents and students must decide which school will be right for the student (1) academically, (2) socially, (3) spiritually, and (4) affordably. All of these factors should be considered when making the decision, and in today’s society, #4 is at the forefront of the process. Issue #4 becomes the investment the student/family makes to attain the benefits of #1, #2 & #3. It is usually hindsight that makes us evaluate whether what we got from the first three was worth the investment. God Bless and I pray your situation improves.

  4. Michael S says:

    The one thing I cannot fathom is the percent increase that state colleges require each year. Locally, the state colleges are asking 5% for next fall, a $1200 increase for a full-time student. If you spread that over the student body who is full-time, the amount, at least locally, would be $36 million per year. Now that is a lot of money for operations. For some reason that doesn’t compute.

  5. Will says:

    My daughters both have jobs that they would not have without their college degrees. They both worked and received scholarships.My wife and I were able to help. They went to an in-state public college and graduated debt free. One daughter paid for her master’s degree in education while teaching full time.

  6. Raynia says:

    Why only help struggling Catholic families? Why not help the families who are struggling the most?

    1. Tom Hoopes says:

      Fair enough!

    2. Jea says:

      Because Catholics are our brothers and sisters spiritually. We should take care of our family first.

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