September 10, 2018
Other Voices

College loans are a worthy lifetime investment

Rhona Free

A national alarm is sounding about the level of debt faced by recent college graduates, particularly in Connecticut.

This was accentuated in a recent story in the Hartford Business Journal, which reported, "Connecticut's college graduates in 2017 had the sixth-highest average student loan debt in the U.S."

This is something of a false alarm, however, because — although the numbers at first glance may appear concerning — one must consider the lifelong advantages that a college education brings. The bottom line is: College loans are an investment in the future.

Numbers alone seldom tell the whole story. In Connecticut, the number is $35,494 — the average debt for 2016 college/university graduates in Connecticut (at the University of St. Joseph, it is $29,028, still decidedly in the ballpark). And yes, to many — myself included — $35,000 is a lot of money.

But, as we in the academic world like to say, let's take a closer look — not just at what the number is, but what it truly means.

For starters, unlike car loans and mortgages, college loans don't need to be repaid immediately, but only once the education is completed. The car loan analogy is interesting, because the average price of a new car ($35,530) is commensurate with Connecticut's average student loan debt.

But new cars only last for a few years; the money borrowed to pay for tuition, room, board and books is one of the best investments made over a lifetime. Students are not just getting the short-term use of a shiny new machine, but a degree, an education, and an experience that studies repeatedly show will pay off in the long term with higher incomes and better qualities of life.

And let's compare student loans to what is usually the biggest investment of one's life — a home mortgage. With rare exception, people take on a substantial monthly mortgage payment to buy a home. They do so willingly, even gladly, because a mortgage is considered "good debt" and an investment in the future, despite the hundreds of thousands of dollars that must be paid back.

An investment in the future is exactly what college loans are, only they are paid off much faster than a 30-year mortgage, and their value continues to grow as the years go by.

Evidence abounds that, throughout a career, workers with college degrees are likely to earn more than those without. In 2015, median earnings of full-time workers over age 25 with a bachelor's degree were $61,400, while those with an associate degree earned $46,000 and those with a high school degree earned $36,800. From 2010 to 2014, for workers age 22 through 24, those with a high school diploma earned $21,752, compared to $32,094 for those with a bachelor's degree.

Beyond higher earnings, the College Board recently found those with college degrees have lower rates of poverty and unemployment and are less likely to be obese or receive public assistance. They are also more likely to vote, exercise vigorously, volunteer, engage in educational activities with their children, and have health insurance and retirement plans.

Finally, there is plenty of support for students dealing with college loans; many institutions now educate prospective students early about college costs. Students can get advice from their college's office of student financial services on minimizing costs, receiving grant aid, and other financial options. There are also online resources that offer debt calculators and guidelines on appropriate borrowing.

So, consider all of this — a literal lifetime investment. And now — as we college educators often say — take another look at that $35,000 figure. It doesn't look quite so daunting, does it?

Yes, $35,000 is a significant amount of money, and as someone who has paid off a college loan, I empathize with those facing that challenge. But when college loans are viewed for what they truly are — an investment in a brighter future — it should make the issue a little less "alarming."

Rhona Free is the president of the University of St. Joseph.

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