Student Loans: A Conscious Conservative View

     One of the many things I do is provide training/consultation to new hires at a local employer.  A disturbing trend I am seeing is that many of the new employees are beginning with a student loan debt of about $200,000 (many positions require a graduate degree).  According to the loan calculator available at http://www.practicalmoneyskills.com, these employees would have to make more than $275,000/yr. to be able to afford this debt.  The new employees make 1/8 of that.  The senior manager of the organization makes 1/2 that salary.  The expected monthly loan payment equals 2/3 of the average new hire's monthly take home pay and is 1 1/2 times the average mortgage payment in the area.
     This situation is abhorrent.  There is currently a system where a $1.5 trillion dollar industry uses an army of guidance counselors to hoodwink unwitting students with the backing of government.  A major part of what causes this crisis is the improper transfer of information.  New students are given inflated salary information, often given "average" salaries which include senior people in a given profession and people who have a degree, but work in different, more lucrative field.  The monthly student loan repayment schedule is usually not discussed at all, or downplayed.  It has caused a problem for everyone seeking higher education.  The dumping of $1 trillion dollars into the system has caused tuition pricing to become non-competitive.  Tuition at the local public university has increased 30 fold in the last 20 years.  If the same happened to gasoline, it would now be $30-$35 per gallon.
     This leads you to two questions which you should consider.  Should I or my children use a student loan to attend college?  Re-read the first paragraph.  I think you will have trouble deciding on any answer except, "NO!" Should I or my children attend college?  That is more complicated.  If someone has the desire and ability to become a doctor, attorney, engineer, social worker or any other licensed professional, then the proper degree is required to enter the profession.  However, realize that you will not gain an economic advantage.  I've spoken to many physicians and attorneys who have been disappointed that even though they make large salaries, they cannot live the expected lifestyle because of their student loan burden.  For the majority of people, finding something they like to do, getting good at it and managing their money well will leave them wealthier in the end.  Think about this.  Somebody who goes to school for eight years and becomes an attorney begins life $240,000 in debt.  Somebody who works at minimum wage and saves 10% for those eight years now has $ 12,000 plus gains in savings.  Who is wealthier?