The (Hidden) Price of a Diploma

Part One of the New Series: No, College is NOT for Everyone, and We Need to Tell Children That’s Okay

You graduate high school and head to your university of choice. You obtain your undergraduate degree, and perhaps go on to graduate school. Then you land your dream job and earn enough money to buy a house and start building a nest egg. This is the standard trajectory. Correct?  

Unfortunately, this plan does not take into account the amount of money it takes to fund this type of education. What if you don’t score that prestigious job as soon as you anticipated, or have difficulty getting hired at all? Could the weight of that financial burden actually be a setback?

Is a college education a hindrance or a help?

Let’s try to tackle this by looking at the major issues with the price of a college education. Then we will do our best to address these concerns by coming up with some ways to avoid student debt or at least minimize the impact. Be sure to read all the way to the end to join the conversation.

For more general information on the topic of college, check out the intro to this series here.

Carrying the Financial Burden of College

According to Federal Student Aid, there is currently $102.9 billion in federal student loan debt. This is held by 7.4 million borrowers under the age of 25. This is likely to increase as the inflation and labor shortage makes its way to college campuses. Some colleges are already increasing tuition, boarding, and meal plan costs.  

men sitting at the table

The cost of education more than doubled from the 1980s to the 2010s. This was due to an increased demand, increased financial aid, lack of state funding, the hiring of more faculty and staff, and more student services. The median amount of student loan debt of adults under the age of 35 in 1995 was $6,100. Now borrowers owe $17,200. 

The increased cost of attending college will especially impact lower-income families since many still haven’t recovered from the financial impact of the pandemic and its lockdowns. 

There are other financial implications of student loan debt. A report by Moody’s Analytics, as referenced in the Wall Street Journal, indicated that the net worth of people under the age of 35 has declined as the student loan debt has compounded. 

Compared to those who graduated college in the previous generation, recent college graduates are saving less often as well as saving less of their income.

This leads to negative savings rates for Millennials, unlike other generations who have recovered from the recession. Compared to those who graduated college in the previous generation, recent college graduates are saving less often as well as saving less of their income.

The Long-Term Impact of a College Education

The unemployment rate of adults ages 25-34 is currently 6.2%, and for those in between the ages of 20-24 it is 10.5%. 

There is no guarantee that college graduates will find a job in their field at a pay level that will allow them to make a dent in their debt over a sensible time period. Millennials and those recently out of college have been hit especially hard by weak job markets. 

person making call while searching for job

The unemployment rate of adults ages 25-34 is currently 6.2%, and for those in between the ages of 20-24 it is 10.5%. 

Student debt does so much more than make it difficult for students to pay off their debt in a reasonable amount of time. Debt is persistent, and it won’t be forgotten.

How many other big financial decisions are put off while under the burden of student loan debt?

It has prevented millions of Americans from moving out of their parents’ home, buying a house, getting married, having children, and contributing to retirement. Millennials’ student loan debt hampers their geographic, career, and financial mobility. In other words, obtaining a college education may cause adults to delay making a life. 

Wait, isn’t that why someone attends college in the first place?

A lack of savings increases the vulnerability of young workers in the postrecession economy, leaving many without a financial cushion for unexpected expenses, raising the difficulty of job transitions and leaving them further away from goals like eventual homeownership—let alone retirement.


Should this just be the expectation for young adults going into college? Has it always been this way? For some history on how the education system in America has changed over the years, head over to this episode of The State of Education Podcast

Increased student debt inhibits the formation of small businesses. The businesses that are most dependent on personal debt for financing are most negatively impacted by changes in student debt. 

Between 2000 and 2010, the number of small businesses (with one to four employees) decreased by 14% when the student debt increased by one standard deviation (Ambrose, Brent W., et al).

person holding white scroll

Does a college diploma put young adults ahead of the pack, or does the debilitating student debt put them farther behind?

It appears that independence and taking the next steps in life, the very reasons students obtain a college degree, can be negatively impacted by obtaining said degree if student loans are involved. 

Is Attending College the Best Use of Time?

Besides the major financial impact, the time spent in college can take its own toll. Spending four years in college means putting off establishing your career, being mentored or gaining work experience, or starting a business. This could be a waste of prime working years as a young adult, especially if college ends up not working out. 

Not only are students not gaining valuable work experience, they often aren’t making any money. This, on top of the already accumulating debt they will walk into upon graduation, means that it will take even longer to catch up. Choosing to forgo college and enter the workforce after high school gives young adults the opportunity to begin building wealth right away and work their way up in their field of choice through experience and build better critical thinking skills. 

Students are either expected to know what they want to do by the time they enter college, or are supposed to use their time in college to find out what their ideal job is. Talk about an expensive way to discover your dream!

As a student, you are trained to attend class and complete requested assignments. Little initiative needs to be taken other than to do what needs to be done on time. Students are not taught to take risks or put themselves out there, even though these are the exact skills that increase success in the workforce.

My Child or Student Has Decided to Attend College. What Can I Do to Reduce the Financial Impact?

Tony Aguilar is the CEO and co-founder of an app called Chipper. This app helps students determine how to best repay their federal and private student loans. He is dedicated to finding long-term solutions to the student debt crisis.

Aguilar himself took out student loans to pay for his degree and was six figures in debt after graduation. After his own experience, Aguilar asserts that the best way to avoid this problem is to not borrow money for college in the first place. 

Narrow Down the College Search Based on Finances

Students are often encouraged to apply to their dream schools, or schools in idealistic locations. Getting emotionally invested in a particular school can lead students to do everything they can in order to attend it, including taking on larger loans. 

One of the best ways to avoid student loans is to narrow down the college search based on one’s financial situation. Affordability is a major factor when choosing a school, and should not be an afterthought. Students should be encouraged to keep an open mind and realize that there are many good schools.

Consider community colleges. These are usually much more affordable than state or private universities. Attending an in-state school is also less costly than out-of-state tuition. 

High school students can also look into taking advanced placement and dual enrollment classes. This will get some credit hours out of the way, so they will have less to complete at the college level. 

When I transferred schools during my undergraduate program, I was able to take one or two CLEP tests in order to complete the credit hours for a couple general education requirements. The College-Level Examination Program (CLEP) offers exams that allow students to test out of certain introductory-level courses, so they can move on to higher level courses more quickly. Unfortunately, this is something that only one person mentioned to me, and is not recommended by professors or guidance counselors very often. 

Avoid Debilitating Debt

Students who keep borrowing money to finance their education find little chance for appeal or support. There is no accountability for administrators if students are not able to find work after graduation.

crop businessman giving contract to woman to sign

Most students who sign student loan agreements don’t fully understand what they are getting into. Handing a 17 or 18 year old 700 pages and saying you “informed” them isn’t consent.

Before signing on the dotted line, be sure you understand the loan’s interest rate, the length of your repayment term, and the total amount of debt you take on. 

Colleges do not publicize to students that they can negotiate and appeal for money to be taken off of their out-of-pocket expenses. 

Be sure you are aware of all of the grants and awards available from the school. Often when students receive their financial aid package, they think that’s it, and there is nothing more they can do. This is not the case. Ask for more money at the school’s financial aid office. Many schools have funds not being used just because students don’t ask. 

That feeling of relief you get just for being accepted to college? That is the exact emotion that colleges rely on. They expect students to be grateful for their acceptance, and know that it is very difficult to ask for money. 

Colleges do not publicize to students that they can negotiate and appeal for money to be taken off of their out-of-pocket expenses. 

Beware of Parent PLUS loans. These are federal loans that parents can take out for their child. Parent PLUS loans are often automatically included in financial aid packages. What most people don’t know is that you can opt out of these. 

Parent PLUS loans have interest rates up to 7.9% currently. These loans can quickly get parents of college students into debt since they have to start paying immediately. Students can tell the school that they do not want their parents to get PLUS loans, and ask to have them put under their own name.

Contrary to what most people believe, students can start paying back loans while they are in school if they are at all able. Doing this also reduces the amount of interest that accumulates over time. Apart from federal subsidized loans, most loans begin to accrue interest the day the school receives the funds. 

Teachable Tales: How Did They Do It?

Even famous figures in the public eye have struggled with student loan debt. Alexandria Ocasio-Cortez, the youngest woman to be elected to congress, was still paying off her student loan debt as of 2019. Because of this, she is looking for ambitious solutions to end the cycle of student debt. She recognizes that since adults are so focused on repaying student debt, out of necessity, they are not buying homes. This has significantly slowed down our economy.

It was literally easier for me to become the youngest woman in American history elected to Congress than it is to pay off my student loan debt.

qtd. in Hess

black laptop beside black computer mouse inside room

There are also many prosperous professionals who have avoided accumulating debt during college. Clint Proctor, who writes the blog Wallet Wise Guy, attended a private university with tuition totals over $30,000. But he graduated debt-free. How? He took night classes so he could work full time during the day. 

Jocelyn Paonita, founder of The Scholarship System, also graduated with zero debt. She made sure to attend an in-state university since it was much more affordable. She also worked flexible jobs that she could schedule around her classes, including working as a teacher’s assistant and as a waitress. On top of that, she applied for numerous private scholarships and received over $100,000 in aid. 

Higher Education: Is It Worth the Price Tag?

If you attended a college or university yourself, you may have faced a similar dilemma if you needed to finance your education. Are there certain things you felt you had to delay because of your debt? Has your college debt impacted your life, or is it still a part of your life today?

Are we supposed to just prepare our children and students to accept debt and its ramifications if they want to attend college? What kind of financial advice should we be giving our students and children? Share your thoughts. We would love to hear from you in the comments!
Stay tuned for upcoming articles in our college series. To receive these posts straight to your inbox, don’t forget to subscribe to the blog. And in case you missed it, check out the first article in this series here.

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