I have been gone from this blog for a while mostly due to my work and family, but there are so many things I want to write about and haven’t had the time for.  Today I read an about a young  woman named Cortney Munna the same age as me who has nearly $100,000 of student loans.  The article basically tries to chronicle how the woman got so much debt, and whose fault it is that it got so big.  Here are some of my thoughts on this matter.

First of all, many commenters berated Ms. Munna and her mother for choosing an expensive school they could not afford, and then choosing a liberal arts major that has very little career prospect.  I think the major that she chose isn’t the problem, but the real issue that both she and her mother chose to pay for an expensive school they really knew they could not afford.   Even if she were an engineering major, she would be a lot better off if she went to a cheaper school because it would take less time to pay off the costs.

In the housing bubble, many people started to regard their dwellings as investments and disregarded the fundamentals of affordability. There is a parallel here since many people believe that a  prestigious degree is an “investment”. Speaking from experience, having a degree from a highly ranked  engineering school does get your resume to the top of the pile so in these times of economic distress it is worth it to have that extra credential.  However, once you are experienced enough and have proven that you can do a certain job competently, then where you got the degree does not matter as much.  Another aspect of the “investment” is that you build a network in college that could offer you opportunities in the future, but you could really do that at any college and later on at work.  Also, having a degree from a top school usually means a paycheck that is slightly above average, but the difference is not that great once years of experience are added.  Basically, there are definitely benefits in holding a degree from a prestigious school, but I doubt it is worth a lifetime of debt.

Another similarity I can see in these student loans stories and the foreclosure stories is that these people were paying for a “dream”.  Many people sought the “American dream” of home ownership at any cost, and similarly, many young students get accepted to their “dream schools” and try to attend at any cost.  Although dreams are worth pursuing, I think  borrows and lenders need to get in touch with reality.

One thing I do think is unfortunate is that most of those who rack up piles of student loans come from middle class families because they .  In many of these cases, they might have thought that going to a prestigious private school is the way to upward mobility, but find the opposite to be true after graduation.  The solution here is once again to pick a school that is affordable.

Personally, I never had student loans since but if I had to pay for it on my own I would have wiped out the entire four years’ cost in my first year of work.  I consider that to be a very affordable school.  Basically, I think that these students and parents really need  to sit down and think about things rationally before taking out huge loans.  Four years of education should not end up being a lifetime of indentured servitude.  I don’t believe that student loans are “good debt” at all, and I am glad that I never had to deal with them.  In 17 years my son will be choosing a college, and I will definitely explain the financial aspects of each college offer to him.  If he chooses a school that we as a family could not reasonably afford, then I would have failed as a parent.

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