Thursday, September 6, 2012

Is College Worth It?

Ever since I went back and decided to get a Master's in Education, I have struggled with accepting the debt I had to take on in hopes of making more over the long run.

In Georgia, teachers make roughly $4,000 more with a Master's than with a Bachelor's. One would think over the span of a career of 30 years, a teacher could expect to make $120,000 more with Master's. However, considering the rising cost of tuition to go to not only an undergraduate program, but also a graduate program, it makes one think. Especially, since about 54% of recent college graduates are underemployed or unemployed. Some of them take jobs that pay $25,000 a year and with a burden of student debt upwards of $100,000, college is setting them up for a life default and student loan payments instead of mortgage payments. My wife and I are extremely lucky to have the jobs and income we do at only 25, but we feel sorry for our friends that struggle to breath financially because of living paycheck-to-paycheck. Luckily, teaching at an underprivileged school in an area of high need such as math and science, can have $17,500 of their student loans forgiven as long as they teach for 5 years at that school. You better believe I am only 2 years from this and I will apply for that forgiveness.

Back to my thoughts, I paid exactly $31,000 to get my graduate degree. If I deduct the $31,000 from the $120,000 I can expect to make over my career, I will only net roughly $89,000 over my career, not including accrued interest from the loans, which most run at 6.8%. I am not sure if netting $89,000 is worth delaying having kids with my wife for 5 years until we are completely debt free and have $10,000 in a college savings account for our first child that we can afford to continue to contribute to until they are 18. Having children is our dream. We look forward to those years of our lives, but we need to be able to take care of them appropriately. In the state we are in, we cannot afford to do that because we pay almost 60% of our take home pay to debt!

So, back to the question, is college worth it? I am not sure. Of course I wanted to go to college. I wish someone would have told me what life would be like with $90,000 in debt by the time I am 23. I might have second-guessed myself. Or, I would have gone to a school that accepted the HOPE scholarship in Georgia and not a private school in Tennessee that my family said they could pay for, but obviously could not.

I do not regret going to a private college. I had a wonderful liberal arts education that taught me a tremendous amount of information that I now use everyday in my teaching. I met some incredible people and developed lifelong relationships with each of them. I would never trade the memories and experiences I created in college, not even for the $90,000 back. College was without a doubt the best 4 years of my life. However, it set me up for living about 8 years in debt (hopefully less, but realistically 8), unable to travel or have children. I feel like I am going in circles with this and of course there is no true answer and only opinions.

I would love to read some comments on other people's thoughts on this.


  1. I'm similarly working on paying back my student loan of $68,000 with the interest rates (6%). The student loan, unlike the situation with colleges in Europe, is an investment with no cash back guarantees. Nevertheless, if you've found what you love doing and find that you can eventually do what you want to do with the college education you received, this may have been worth your investment. Also, I wonder if you would qualify for the public service loan forgiveness: After 10 years, they will forgive your debt if you work in the public sector (teaching in a public education would qualify).

  2. Good luck on paying back your student loans. I have found something that I definitely love to do, but may not be financially rewarding enough. That is definitely good to know about forgiveness. Thank you for your comment and insight.

  3. I may have a strategy for you to consider as you pay back your loans, although it isn't for everybody. The stock market has been wild the past few years, and with the QE to infinity they are now threatening I cannot be sure where its headed. But... I have been employing a strategy with some success to generate profit which I have been applying to my balance.

    -Save up $10,000 and open a trading account (easier said than done I know).
    -Watch some E-trade videos and learn how the trades are placed in the brokerage system and a little about market strategy.
    -Do your research and find a stock or ETF you think will trade higher over the next quarter, safe growth shoot for 10%.
    -Set your stop loss trade around 5% below your entry point, and your high water mark trade at 10% above
    -If you invest the whole $10K, and if you can clear 10% in a quarter, that's $1,000 profit. Net after capital gains is around $750 unless your already in a high bracket.
    -Do this four times a year, so say you pick two winners and two losers... if your stop loss kicks in twice your out $1000, but you picked two winners and you gained $2000. Your net gain after taxes is $750, which is a 7.5% return. Banks and bonds don't even come close to a 7%+ return in this market.

    So for minimal work (and tying up your capital) as a hobby you could make a little extra money to send to your balance. After a few years imagine how much you could chip away with a low risk conservative investment strategy.

    Disclosure: I am not an investment professional I'm a computer geek with too much time on his hands who saw a former co worker throw a grand at four beaten down stocks in late 2008... three sank (inc GM) but he bought Ford Motor Co @ $1.40 and sold it two years later for $12+

    Ever since then I've been interested in how the market works...

    1. Thank you for your idea! I wish we were able to save up $10,000. However, with our current debt, I don't think it is feasible for us to do that. I am sure that plan would work great though. It is a good idea and has we pay off debt in the coming months, it is something we will look at. Thank you for reading and your comment!