Five Questions To Ask Before Going Into Student Loan Debt
The question of going to college or not is something put into more debate now over ever. It is expensive. It isn’t something people always really know is worth it. It’s also something which isn’t really a promise to a better life in the changing economy. Getting a white collar job taking coding or graphic design boot camp classes or programs is now a perfectly real and viable path over a four year degree. Even careers in marketing, SEO and more are examining skill over just diplomas. So this concept of going $10,000, $25,000 or even over $100,000 in debt might be obsolete.
Looking at that and looking at how getting a great job or career has other options versus the status quo of college or bust many were raised with leads me to make an article on five simple questions people should ask themselves before looking to go into student loan debt for a degree.
Question One-Is this really much better over a community college degree?
If the answer is “No”, I want all readers to just stop reading this article now and go enjoy another piece on our site or checkout our main page for a career match,
If anyone is answering “No”, just go to community college and avoid the debt. Despite what movies would suggest of the classic college experience, community colleges are cheap, have normally great courses and can provide people skills needed to go forward. A lot of people choose to just ignore them due to pretty vein reasons. They see higher income friends or maybe higher tier classmates from high school go to all these different colleges and just look down on community college grads. Truth is in the grand scheme, no one really cares. By the time a person is 27, going to a community college, a private college or state school is barely a real bragging right with people.
Obviously this doesn’t apply if accepted into a top 25 school, but if not in the best, just stick to community college if the course is much better.
Question Two-Would I be better off if I had $200,000 in a 401k account?
This one is more of an out of the box question, but not a bad way to look at school,
Say I offered $200,000 to not go to college, have it sit in a 401k account until they are 50 years old collecting interest and they can do anything else with their life. Go get a job and progress from there. Go to trade school instead and work a part time job to pay for it. Go apprentice or whatever. Point is no college, but $200,000 sits in a 401k gaining thousands in value yearly. And to put it into perspective, on a 4% interest rate, from age 22 to 50 would be $599,000. Enough someone could off interest alone make on a conservative 2% fund about $12,000 from yearly and more over social security pays on average. Keep the $200,000 until age 65 and that person would have 1.2 million dollars in cash by retirement.
For readers, just think of that and remember student loans cost way way more. If a degree is $200,000, the cost on interest alone would likely add $50-100,000 into what a person pays into it.
The average college student could realistically opt to not go to college, live at home for four years and just save the money they’d make while going to school and at age 22, build up a mint of $100,000 for themselves. That’s $300,000 by age 50 or half a million at 65. So just putting in the years 18-22 and living at home building heavy savings and afterwards just investing $1,000 a year into that account would secure someone a strong chance of a net worth close to almost a million dollars by age 65.
While this scenario is clearly a big one, it’s just something real to think on. If the endgame to life goals is personal financial gain, just using the college years for heavily savings based work and making a 401k of $100,000 could be of far more value.
Question Three-What’s the job after college?
A really basic one, but a simple one. Go to college. Spend $100,000 or more on a degree. What’s next?
It’s obviously a tough thing to ask at 18, but should have an answer before heavy debt hits.
For this one… Community college for a year or two. Taking time off from school to pursue other projects. Getting some internships on a one year plan.
These are easy, cheap and fun solutions to think about pre putting a permanent debt on very vague career ideas.
Question Four-Is this about my career or just life experience?
For this one, it’s a cold truth. Everyone wants the college experience of meeting tons of new people. They want to go have some fun, enjoy life, party and live.
Problem though is that’s just for four years. And going to school for fun can build some pretty unhealthy habits with physical or emotional health from it. Many being worse over the heavy debts earned in these schools. Debts which while they might make a very fun early 20s and late teens can easily ruin a 20s or 30s.
If a person wants to have fun, remember that traveling and experiencing life isn’t that expensive. Go get a job. Get a roommate. Go to bars on Friday nights. Go save some money and travel. Go do that over frat parties or whatever.
Plus, getting a degree at a cheaper university option, a job paying $60,000 a year after, a boyfriend or girlfriend splitting rent and clear financial planning can make a solid 20s. It could be having a $100,000+ total household income at age 24, no debt and the ability to go spend two weeks in the Caribbean or visit China or go on a cruise. It makes life has options. And yes, crazy Friday night parties are in those.
Question Five-What does my life look like at age 30?
Let’s ignore planning retirement. Let’s ignore age 50. Let’s just focus on a tangible age which is 30.
Are there kids?
How much money is the salary goal?
Where is the dream residence?
Marriage happening or not?
What are the career goals?
This is where student loan debt really comes full circle in the short term. $50,000 in debt and paying thousands yearly in fees could realistically stop a house from being bought, a kid from being born, the of goal of at age 28 becoming a film director from happening and a lot of other awesome opportunities from not existing.
And truth is, unless the college is truly an exceptional school or a specialized one to career goals, it likely won’t add much more if any income over a community college degree or no degree at all.
College can be awesome. It’s a chance to experience life, get big companies to take a resume more seriously and it can even teach a thing or two here and there. However, there’s a fact. It’s not for everyone. Many people can make just as much if not more with other options and being a 26 year old with a degree they weren’t prepared for with a job they could have gotten out of any community college, but with $80,000 in debt isn’t ideal.
With that, im Succeed.com founder Charles Peralo. I’m a proud person who didn’t go to college and we are a Career Site, not a job site. Check us out and good luck deciding!