University education costs money, and at some prestigious schools it can cost huge sums of money. Many students borrow the money to pay this tuition, and are significantly burdened by student debt. Special rules make this debt much more difficult to default on that other forms of debt, like a car loan.
Here are some reasons why college might not be worth it: A degree isn't necessary for all career paths: While a college degree opens the door to many career opportunities, it isn't the key to every industry. Many careers in the service sector require a certification from a technical school or an apprenticeship.
Going into $100000 of student loan debt for a degree is very risky. Only one in four who matriculate graduate and get a good job. The odds are that you will end up trying to pay off your debt while working for Starbucks. There are different protocols used to determine the amount of debt advisable.
On average, it takes about 10–20 years to pay off a student loan.
What is considered a lot of student loan debt? A lot of student loan debt is more than you can afford to repay after graduation. For many, this means having more than $70,000 – $100,000 in total student debt.
Adults with a postgraduate degree are especially likely to have a large amount of student loan debt. About a quarter of these advanced degree holders who borrowed (26%) owed $100,000 or more in 2023, compared with 9% of all borrowers. Overall, only 1% of all U.S. adults owed at least $100,000.
It's an easy way to look up your intended career along with statistics related to its growth potential, projected need, and average starting salary. Monthly loan payments should be no more than 8-10 percent of expected gross monthly income.
The average student borrower takes 20 years to pay off their student loan debt. 43% of borrowers are on the standard 10 years or less plan with fixed payments. Some professional graduates take over 45 years to repay student loans.
According to the report, 85% of adults – who either stopped out or never enrolled in a higher education program – said an important reason why they weren't currently enrolled is because of the cost of the degree or credential program.
Whether a college educations is required to achieve professional success is also up for debate, as only about 1 in 4 Americans say a bachelor's degree is necessary to secure a well-paying job, according to a March survey from the Pew Research Center.
The median net worth of Americans in 2022 was $192,700. In 2022, the median net worth of Americans younger than 35 was $39,040. The median net worth of Americans between 65 and 74 was about 11 times higher at $410,000. In 2022, the median net worth of Americans with a college degree was $464,400.
College is a good investment
By 2021, the difference had grown to 62 percent (and closer to 90% for workers with graduate degrees). Currently, California workers with a bachelor's degree earn a median annual wage of $81,000.
Student debt by age
Perhaps unsurprisingly, most people with student debt — about two-thirds of them — are between the ages of 25 and 50. This group also owes the most, federal statistics show. That said, the fastest growing group of borrowers in the past several years has actually been older adults.
After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers.
The average outstanding federal student loan debt per borrower is $37,853. 52.6% of indebted borrowers owe $20,000 or less in federal student loans. 32.1% of indebted student borrowers owe $10,000 or less in federal student loans. 15.0% of borrowers owe less than $5,000.
With $50,000 in student loan debt, your monthly payments could be quite expensive. Depending on how much debt you have and your interest rate, your payments will likely be about $500 per month or more. Your potential savings from refinancing will vary based on your loan terms.
Don't borrow more in total student loans than what you think you'll make in salary in your first year out of college. Your monthly payments should be no more than 8% of what you expect your gross income will be. Your monthly payments should not exceed 20% of your discretionary income.
Debt could improve your life
The truth is that debt is often a necessary part of our personal finance picture. Few of us could buy our first homes without mortgages. We may also borrow to purchase cars, get necessary medical care, get married, or take bucket-list trips. Debt sometimes helps us make more money.
Who has the most student loan debt by race? Black adults are more likely to have student loan debt than those in other racial or ethnic groups. They are more likely than white adults to hold student debt at every level of educational attainment.
Later in life, borrowers without sufficient income to pay down their student loan debt are more likely to experience poverty and rely on safety net programs. This debt can even put their Social Security benefits, a lifeline of guaranteed income for older Americans, at risk.
Meanwhile, 1 million people had a federal student loan balance of more than $200,000, up from 600,000 individuals.
For example, the interest on a $30,000, 36-month loan at 6% is $2,856. The same loan ($30,000 at 6%) paid back over 72 months would cost $5,797 in interest. Even small changes in your rate can impact how much total interest amount you pay overall.