Student loans investment, require research and analysis


    Friday’s article on student debt did not cover the entire story concerning student debt and the profitability of a college education. Just to clear a couple things up, you do not have your entire life to pay off student loans. Most student loans are required to be paid in a period around 15 years. So unless you plan on being ready to retire at around 37, then you may have a problem with that calculation. It is also obvious that most 18-year-olds do not do a lot of analysis on how they will profit from their education after graduation.

    Making education a good investment requires research like any other good investment, such as real estate, stocks, bonds, etc. Not every degree is going to pay off the same, and some degrees may make a person’s satisfaction less than if they had never been to college. Now, I admit the statistics you see in the news make the decision easy. The news anchor says, “On average, over an entire lifetime, a person with a college degree earns $200,000 more than someone with only a high school education.” So what does this actually mean?

    Well, first of all it, says on average, which means that obviously not everyone is going to experience these payoffs. It also says over an entire lifetime, which means your earnings could fluctuate, and these gains may not be realized perfectly over a 40-year work life. Finally, it makes the comparison between a four-year degree and a high school degree with no mention of the returns to two-year degrees, technical degrees or other types of education.

    The idea that an expensive four-year college education for all will make society perfect and everyone happy is a flawed plan. With the costs of TCU tuition increasing 8 percent each year, it does not take a college degree to see that without increases in grants, the increasing burden of debt that future students will incur will not always be less than possible future earnings.

    The main point I hope to convey is that imperfect information about the benefits of a college education, with increasing tuition costs and a lack of new grants and other non-loan-based financial aid, means that future students may wind up incredibly educated but broke at 30.

    An investment in college education should be tempered with the knowledge that past returns do not guarantee future earnings.

    Our higher education system is on its way to pricing out most of the population. If we are not careful, education may once again be only a rich man’s pursuit. The solution is not to just send every high school senior to college. We must find training alternatives and other ways to provide people with meaningful careers. If everyone has a four-year degree, then the degree becomes economically worthless, which makes a society of overeducated customer service reps with loads of debt.

    Lane Smutz is a senior mathematics and economics major from Richardson.