Saturday, July 9, 2016

College Ruined My Life...Really?

As the debate continues over college costs, college debt, and the long-term value of a college education, opposing viewpoints move further and further apart. The cover of this month's Consumer Reports suggests college (and on a closer read they actually mean college debt) may actually ruin one's life. In contrast, a recent post by policy expert Andrew Kelly offers evidence that, in spite of college debt college is still the divider between the haves and have-nots.

So which argument is right? Both have excellent points. But comparing them as one argument with opposing sides is the proverbial apple-and-oranges dilemma. One story describes four personal stories of students who took on large debt. The other article emphasizes the importance of confirming that the underlying data is accurate before making a "sky is falling" prediction. Alone, each article addresses part of the challenge. Together they provide a fuller picture of the challenges facing students and families, from what information to trust to what level of debt is workable.

Fact: College is not a guaranteed life-ruiner. Neither is it a guaranteed life-enhancer. 

Evidence suggests education is a key to success. But does that mean any education? How is education defined? What role does quality or relevance or opportunity to use one's education play?

Evidence also suggests that 10% of one's gross monthly income (a debt-to-income ratio of about .7) is comfortable given a ten-year repayment schedule. In fact, federal loans were originally designed with this in mind. More (or longer) than that and there may not be enough money for other expenses let alone emergencies. (See for an example; scroll down to calculate the salary needed to support a specific debt figure.)

Over the next few weeks I'll discuss various headlines, what you need to know, and what to take with a grain (or truckload) of salt.

Happy July!

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