GREENSBORO, NC -- Sometimes, there is just no getting around student debt. But instead of just thinking of a blank check to pay for your degree, finance expert Matt Logan says you need to think of it as an investment.
"The cost of getting a college degree has gone up significantly faster that the median household income." Check out the chart, you'll see there is a big dip in 2007 when the median household income goes well below the cost of tuition. The two never really meet up again.
Total Student Debt Also Skyrocketing
"This chart is staggering. Look at the total student debt. In 10 years it has quadrupled from $260 billion to $1.1 trillion. That is why there are so many people talking more about the growing student debt problem. Many recent graduates are saddled with debt."
Is Higher Education Always Worth It?
In looking at this next chart, it shows how much education you have and compares it to the unemployment rate as well as the income rate. It does show that further education does increase your income. This is a pretty powerful chart to tell kids to further their knowledge as far as they can take it as it raises the chances of having employment as well as the amount of income you can earn. One Solution: Look At Student Debt As Investment
This is an investment in your future. To that point as with any investment you would want to look at the expected return. While it is no guarantee, it will give an idea of what sort of path you could expect. Look below at the college degrees and how much they earn.
While many of us expect those highly technical engineering degrees to earn higher, it is good to look at this no matter what your degree may be so that you can have a better understanding of the impact of your student debt and the ease or difficulty it may be to pay it off. Some people recommend never allowing your student debt to rise above half of your expected first year pay coming out of school. Another benefit of looking at your education as an investment is that by doing so, finishing school in four years becomes a much higher priority as the added cost of that 5th year can add to your student loan debt by 25%.
Can College Freshmen Understand Debt?
One problem that exacerbates the student loan debt falls on the borrower. Simply put many 18 year olds do not usually have the capacity to understand the magnitude of the long term nature of student loan debt in most cases. If you combine that with the relative ease in which someone can access the debt, you can have a situation where there are more funds than should be chasing around college education. In a way, there are almost too many ways to access funds for education with relative ease and that creates a higher demand for the education. The result is higher costs for education. Could we really be looking at a case where that is pushing costs up more than a healthy amount?
Feel free to visit my website at www.mattloganinc.com or email me at matt@mattloganinc.com if I can be of any assistance. Also, I would love to hear about ways that you and your significant other handle financial disagreements.
DISCLAIMER:
Matt Logan is a Representative with Matt Logan Inc and Summit Brokerage and may be reached at www.mattloganinc.com, 336-808-0126 or matt@mattloganinc.com.
Matt Logan Inc is an independent firm with Securities offered through Summit Brokerage Services, Inc., Member FINRA, SIPC. Advisory services offered through Summit Financial Group Inc., a Registered Investment Advisor. Summit Brokerage Services, Inc., its affiliates and Matt Logan Inc. do not give tax or legal advice. You should consult an experienced professional regarding the tax consequences of a specific transaction. These are the views of Matt Logan Inc, and not necessarily those of Summit Brokerage Services, Inc. and any of its affiliates and should not be construed as investment advice.