Student Loans

When college students dig the hole of student loans, where is the dirt? Is the degree they are getting a solid asset that could easily fill in the hole that debt creates? The answer is kind of. Fewer than half of the people who earn a degree work in the field they studied. I have a degree in Bible and another degree in Worship Arts. I started using these degrees, but for the past decade, I have been in the insurance industry. I fit into the category of half the population who went into debt for a degree we’re not directly using. 

Should you go to college? That is the great debate. Is college useful anymore, and if so, is the degree and the income that it promises worth going into debt? It’s time to let wisdom guide our path as we consider whether this debt is secured or unsecured. 

What degree are you contemplating? It is possible to earn a degree in Bagpipe Playing. This ancient instrument is extremely cool, and I’m sure there are many parades that would love to have you march with your droning pipes. But is it worth $120,000 of student loans? If you dug a $120,000 hole, how long would it take to fill that back in based on your bagpiping expertise? What are the opportunities for someone who has this sort of degree? What is the likelihood of a consistent paycheck? And if there is a consistent paycheck, how long would it be before you made enough money to pay off your $120,000 loan? If I had to guess, quite a while. This would be very risky. This loan wouldn’t be very secure. If I were using wisdom and I really wanted to major in bagpiping, I would try to get as many scholarships as possible and would be extremely hesitant to get any loan at all, as this loan would be scarily close to a fully unsecured loan. 

What if you’re contemplating a law degree and, after applying, got into Harvard? Harvard Law graduates who get jobs at law firms can make just over $200,000 on average their first year out of school. From there, their salaries only go up, potentially to over $1,000,000 a year, depending on their career trajectory and field of practice. What if you needed to take out $120,000 in student loans to get this degree? Would you think that it is a different consideration than the same amount of debt for a bagpiping degree? Absolutely! Why? Because that specific education actually has a rather predictable return on investment. Is a Harvard Law degree a 100% secure asset? No. It is not a house. It isn’t something that can be sold at once to fill the debt hole. However, does it provide a more secure path towards filling in the hole? Absolutely. The dirt might not be right beside the hole, but there’s a dump truck full of dirt on its way that will be here in a year or two. 

Again, I’m not telling you that student loans are either good or bad, but I am saying that not all student loans are created equal because the education they provide isn't either. A college degree isn’t a prerequisite for success. A college degree can certainly be helpful, but if it requires you to dig a hole deeper than you’ll be able to reasonably fill in, it is not worth going into debt. 

Many people are shocked that I don’t include paying off student loans as a step on the Fuel Gauge. I want to be clear. I do not know the level of student loan debt that you have. I do not know the interest rate you are paying on those loans. The reason I don’t include paying off student loans is that, for the vast majority of people, it would be a massive target and take time. When you took out student loans, hopefully you did so with the understanding that your income would benefit from the degree and that you could repay the loans over time. Fantastic. If you are paying back the loan and your degree has increased your income, keep it up and continue making payments, knowing you planned for it to take a bit of time. If you’re not drowning in student debt, then keep making progress and keep working your Fuel Gauge at the same time. 

Student loans are not one-size-fits-all. Student loans should be considered carefully and obtained only if you can justify their predictable return on investment. Paying cash for college is always best, so even if you can’t pay cash for all of it, work hard and get as many scholarships as you can. Lowering your debt burden will free you up to run after the beautiful life God has for you. If you have student loans and are making your payments, there is no need to freak out. However, after you have completed all 8 steps on your Fuel Gauge, you should start considering making extra payments to lower your debt load and free up funds toward your financial goals!

Please visit my website at zachsantmier.com/blog, where you’ll find copies of all these articles along with additional resources. You were made for INCREASE.

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Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.