It’s being reported that, in 2010, student loans outpaced credit card debt for the first time in history. The total amount of student load debt currently outstanding: Almost $1 trillion (that’s $1,000,000,000,000 for those of you counting at home).
One major reason for the growth: People have been heading back to school in large numbers due to job loss and the thought that additional education will make them more marketable once the economy starts to turn around. Given that many of these new students are out of work, it’s not surprising that they’re financing their degrees with debt.
In the interest of full disclosure, both Mandy and I financed our undergraduate degrees at Lipscomb with student loan debt (about $30,000 between the two of us) and we took out even more loans when she went back to graduate school at Belmont. Fortunately, my employer paid for my MBA at MTSU so we ended up needing to pay back about $60,000 plus interest. Our last student loan was paid off in early 2010 (Thanks Dave).
Seth Godin wrote an interesting blog post recently asking if students are actually buying an education or a brand with all of that money. In it he states:
Does a $40,000 a year education that comes with an elite degree deliver ten times the education of a cheaper but no less rigorous self-generated approach assembled from less famous institutions and free or inexpensive resources?
If not, then the money is actually being spent on the value of the degree, on the doors it will open and the jobs it will snag. If this marketing strategy works big, it pays for itself in no time.
This is a perfect example of why I chose MTSU over Vanderbilt for my MBA degree. I really wanted to go to Vanderbilt and could have, but for me and my career, it just wasn’t worth the money. Vanderbilt’s MBA program is world-class but what you’re really paying all of that money for (and giving up two year’s worth of salary in their full-time program for) is the Vanderbilt name and the alumni network you can now tap in to.
From an education perspective, however, you take away benefits pretty much equaling the effort that you put in to the program. For me, that meant working my tail off for two-and-a-half years while still working a full-time job, traveling quite a bit, and starting a family. (One of my favorite graduate school stories has me having to pay a fee for an overweight bag on a flight to Las Vegas for a trade show because I had too many textbooks tucked in among my dress shirts and slacks.)
I’m confident enough in my work ethic, knowledge, and experience that I know I’d hold my own alongside any of my Owen-degreed counterparts that the additional cost just wasn’t worth it (although I would still love a PhD from Vanderbilt).
Education is a silver bullet for a lot of issues, but I agree with Mr. Godin that the benefits may not offset the costs. If college is about educating people for their future, maybe we need to start with educating people that spending $100,000 on a philosophy degree from an Ivy League school may not be a good investment.