Is College Debt OK?

On my facebook page, I received a great question today regarding an article I wrote about debt.  Here is the question:


“So if I may ask, what are your thoughts on students taking out loans for college? A lot of students are forced to do this because of the high cost of college. It is very frustrating having young adults ruining their credit because they want to further their education but upon receiving a degree there are not many job opportunities to pay for the expenses racked up in the 4 years it took them to get that degree. I’m not saying debt is good, I’m just asking if you have any alternate solutions to the problems people in debt, or people who will go into debt, are facing.”


This week I wrote an article where I said that two types of debt are ok:  student loan debt and also home mortgage debt.  Please realize that although I believe they are ok, that doesn’t change the fact that ANY debt sets you up for potential financial ruin should you lose the capacity to pay back the debt.  In other words, it’s a calculated risk that has more potential positives than negatives.


As this question asks, tuition is one thing but what about expenses associated with college.  Books, food, lodging, and the many other living expenses that must be paid while being a full time student don’t go away because you’re investing in your future so is this kind of debt ok?


The short answer to this is no.  I know that I sound cold and uncaring by saying this but let’s look at the longer answer.  When you graduate from college you will have to live within your means and find ways to save money in order to stay out of debt.  It isn’t easy and the only alternate advice I have is to educate yourself.  Read articles from sites like mine and many others, read books, listen to people like Clark Howard and Suze Orman, and probably most important, learn that you are only entitled to what you can pay cash for.  I want to make you a promise that if you stay out of debt, you will feel much more wealthy than you actually are.  Read the following two articles for a few ways you can do it:


20 Ways to Save Money During College


How to Save Money During College


The not-so-fun truth is that now that you’re out of your parents’ house, you have to live within your means and while in college, your means is often limited and boring.


Are there expenses that can’t be avoided?  There are far less than most people think but most of the time, you can get a larger student loan for those expenses.  Avoid debt at all costs even when it is associated with college. 


I always say that nobody cares about your money as much as you do.  Let’s say that you’re right and you don’t get a job right out of college.  Do you want to worry about paying your college debts as soon as you graduate and still unemployed?

On a side note, for those of you just entering college, I’m am in agreement with those that say you should major in something that you love to do.  The only thing I would also say to this is that your first priority is to learn a marketable skill.  You probably love more than one thing.  Major in that and do that other thing you love on the side.  Maybe you love basketball but the chances of you being in the NBA are slim.  Do what you love but make sure what you love is marketable.


I hope this answer helps you.

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