Quote:
Originally Posted by Baraka_Guru
Furthermore, student loans—for the most part—aren't considered bad debts; they're good debts, especially since they got you an education (and therefore a higher income), plus the interest you pay on the debt is tax deductible and usually at a lower interest rate than most bad debt.
The alternative? A much lower income for 40+ years of a working life. Do the math.
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There was a program on NPR that I listened to some months ago that highlighted the disconnect between higher education and higher paying jobs. Basically, the argument was that universities are doing a disservice to a certain segment of the enrolling students, and that the segment was larger than anyone anticipated. The intention of higher education is to add value to the potential employment and pay level of the student. But there are a number of big IFs along the way. IF the student entering a program actually finishes it, a certain percentage never do. IF the student matches their major to areas where employment will be available. IF the student doesn't accrue so much debt as to negate the positives of higher pay after graduation.
Obviously, this doesn't take into account the other, less tangible benefits of furthering your education. Better job satisfaction, increased flexibility in job opportunities, social networking all can be increased by attending university. But from a purely fiscal responsibility standpoint, it is not the best option for all students.
As part of the NPR program, they interviewed a licensed electrician who ran his own small company. He started working right out of high school. Now he hires other kids right out of high school too. No experience needed, just a desire to work and learn. Apprentice electricians start for him at a pay rate of $35K per year. Not great, but not too bad for a 17/18 year old. Pay rates for licensed electricians are more like $50-70K and that can be accomplished in 5-8 years from starting. Then, if you are like the guy being interviewed and start your own electrical service company, you have additional income potential.
Yes, I agree, if you run the numbers, you will probably do better with a higher education IF you can predict the right area for maximal employment etc. If you are a fiscally responsible person, you can probably do quite well for yourself starting work right out of high school, setting aside a portion of your income for investment, and letting that investment compound from the very beginning.
I think that there is a bias among those of us who have a higher degree to assume that ours is the best way to ensure economic security for ourselves. I'm not so sure that it is always the case.