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Student Loans and the Cost of Education: How to Decide If They're Right for You (Financial Friday #1)

Student Loan Debt


While I usually doing the talking on Cosmos Mariners, sometimes I want you to hear from Landon, too. He's got important things to say, so I suggested that he do a short series of guest posts (nothing too dramatic) about his favorite topic: money.

Not that he's some crazy money hungry person or anything. Quite the opposite. In his defense, the posts are actually about how to better utilize your money.

In his job as a banker, Landon sees dozens of people each day who struggle with their money. When he and I got married, we promised one another that we'd be careful with the current debt we had and do our best to avoid incurring any new debt. (You'll get to hear all about that in later episodes of Financial Friday.)




Anyway, one debt type that we both had when we got married was student loan debt. I won't lie--having these loans made us rework our expectations about buying a house, starting a family, taking vacations, and creating savings. As a result of these things hanging over our heads, Landon has found a passion for helping people make the best financial decisions on their educational goals.

So, without further ado, here he is to talk with you about student loan debt!

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Hello, readers of Natalie's blog. I'm Landon, her husband. When I'm not at home with Natalie and Britton, I'm a banker, where I work with people and their financial ups and downs. I'll cover four of the topics I deal with most during my Financial Friday series, but today I'm going to talk about student loans.

College is an important step for many people. While getting a degree can change your life for the better, it's expensive, even if you go to a public university and finish in the recommended four years. Unless you're independently wealthy, or you're willing to work full-time while also going to school, you're most likely going to take out student loans to cover the cost of your education.

student loan debt
Undergrad Natalie ponders her life decisions.
Student loans have become a major part of college graduates' lives. Sometimes these student loans are well worth the cost and burden they put on the borrower, but other times, they are just a burden and don't help the student.



So how do you decide if the major you're thinking about will be worth all of that money you'll have to take out to go to school?

The only thing that I think should be considered is if the benefits and increased earning potential from the education outweighs the cost of the loan.

In other words, don't spend $100,000 to get a culinary degree. Even if you're a James Beard award-winning chef (and that's always a long shot), you're probably not going to be able to pay off that student loan without seriously sacrificing the quality of your day-to-day life after you graduate.

I'm NOT saying to forget about your dream. If you want to be a chef, find a way to be a chef. Go to a community college rather than a private, four-year school. Take a few classes a semester while working as a waiter to gain experience. You'll still have to take out a few loans, but not as many as you could.

In some cases, even if you want to get a degree for a job that doesn't pay much--like teaching or public service--there are ways to get around the staggering percentage of student loan debt. You can take out loans (which will be difficult to fit in your monthly budget if you go to a public university and nearly impossible to fit if you go to a private school) and then have a portion of your loans forgiven through a federal service program. You can also consider looking into the many, many scholarships and grants available to those willing to go into these fields.

If you're getting ready to go to school right now, congrats! Here's how to determine if those loans you're considering will be too much for you to pay once you get out of school.

student loan debt

If you research your field (check out average incomes here but always find specific examples in your area before making a final decision on loans) and you are comfortable with the monthly salary you'll have remaining after loans, congrats! You're investing in yourself by going to college.

If the margin after a potential future loan payment is too small, you'd be wise to consider other methods of financing your education or finding another related major that could bring in more money.

But what if you've already gotten those student loans? How can you make them more manageable or get rid of them outright? Find out in next week's Financial Friday.
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I hope you learned something from Landon--when it comes to bettering your finances, knowledge really is the key to everything.

Financial Friday will run each Friday between now and the end of January. Check back each week to read more tips on how to make better decisions with your money!