Is College Still Worth the Debt?

Is College Worth itLast week I wrote a piece on how student loans and credit card debt can’t hurt your chances of efficiently building wealth using a college degree.

To add to that conversation, I’ve brought in Scott Crawford, CEO of Debt Goal to share his thoughts on the value of education, reasons for rising costs, and what you can do about it. Here’s my interview with Scott.

Why do you think we over-invest in college in America? As a follow up, are there certain colleges or degree plans that are more “worth it”?

I do think we over-invest in college. It may be unpopular to say, but it’s the truth. Our secondary education system in the US isn’t rigorous enough to provide adequate signaling of a potential job candidate’s qualifications so many people look to a degree simply for credentialing.

As a result, there are a lot of people who are genuinely not interested in additional schooling who perceive it as necessary to get ahead.

The logical conclusion to this has been diploma mills and for-profit colleges that don’t really provide a good return on your investment. There has been a lot of Congressional scrutiny in recent months about for-profit education where students graduate with tens of thousands in debt but don’t really increase earnings and have poor job placement records.

As part of this debate, there’s been a lot of discussion about education and debt in general with a higher focus on the return for different types of degrees. Some majors have higher starting salaries and students worried about taking on debt should make sure that job opportunities for recent graduates can support their debt loads.

Unfortunately, many students choose to major in fields that really don’t translate into starting salaries that enable graduates to repay debt.

This is reflected in online polls we’ve done at Over half of graduates with debt feel that their earnings don’t justify the amount of debt they’ve taken on and 70% state they’d do things differently to minimize debt if they could do it again.

Why has the cost of college grown so significantly? Are costs expected to continue to rise at these levels?

One of the primary drivers of cost is the fact that education, unlike manufacturing, is purely labor with no substitution of capital investment to drive productivity, so costs will increase faster than for other good.

The surprising thing is that education costs have generally outpaced wage inflation. Education costs have grown so quickly because it’s perceived as necessary in our economy and there are few natural checks to keeping costs low.

Schools compete on diversity of programs and the “exclusivity” of the school. With schools all trying to offer many smaller programs, there are no economies of scale. When students compete to get into schools there’s little incentive for students to shop based on costs.

Even if it seems expensive, both parents and students feel pressured to “stretch” to get the “best” education possible, regardless of the cost.

What are some ways parents and students can reduce the debt they incur because of college?

There are a few basic things parents and students can do:

  • Look carefully at the costs of education and choose a school that fits your budget.
  • Pick a major that will allow you to repay your debts.
  • Make sure you take advantage of scholarships and stipends.
  • Probably the biggest thing you can do is graduate in four years.
  • Work during school.

There are really no magic bullets. I’m a product of public college and feel that my degree was an excellent value that I continue to benefit from. But many recent grads will be struggling for 15-20 years to repay their student loans and have found that they’re putting off buying a home, getting married, or having kids because their student loans are such a burden.

Image by Valerie Everett

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.


    Speak Your Mind


  1. So I have a TON of opinion on this topic. I graduated college with close to $110k and 3.5 years later I know have $83k left. It is an absolute nightmare. While I do have a job that pays great and is helping me out big time, there are tons of people who went to less prestigious and less expensive colleges than I did. Simply put? The probably paid one fourth of the amount that I did for all 4 of their years! I did 5 years due to the CO-OP program and that is a whole other story!

    My advice, go to a state university and get your degree done quick and cheap. Network your face off, get certifications for your field, join professional groups, and land yourself a job the old fashion way… by word of mouth. Want to take out a big loan for college? Save it for law school and a big time MBA program that will pay for itself after you complete it!

  2. That’s a very tough question. Having a college degree opens a lot of doors, even if you don’t get a job in your “major” field. And it keeps opening doors for many years. And teaches you how to grow up (or at least buys you a few years to mature). But is it worth $50k or more in debt? That could take years to pay off, all while you are earning the least amount you’ll likely earn?

  3. You missed the most important reason as to why a college education has become so expensive — the ability of the student to borrow money. Back in the stone ages when dinosaurs roamed the earth and I was in college, I could only borrow $5000 for my entire college education. The colleges knew what they could charge based on what the students could borrow. In short, not much.

    Now that students can borrow hundreds of thousands of dollars for an undergraduate education, the price tag has grown accordingly. These schools have dollars signs dancing in their eyes. Knowing all that government backed money is available, they no longer squeeze their budgets or look for inexpensive solutions.

    Instead, it’s off to the races building new buildings, landscaping like a Home/Garden magazine spread, supporting computing like a Fortune 500 company, providing dorm rooms that look like Hilton hotels…. Remember the dorms you lived in? Yea, I had two roommates and one was a mouse.

    It’s nice to think that colleges are run by altruistic individuals who care about the students and their ability to afford the rest of their lives post-college, but they don’t. Higher education is a business and only a business. Trust me. I work in the industry.

  4. I disagree with “pick a major that will allow you to repay your debts”, there are plenty of jobs out the that pay big bucks but are completely miserable. Pick a major that you love, work hard, establish yourself and the money will come.

  5. myfinancialobjectives says

    I just posted an article recently about this EXACT topic. Great point, I have felt this way ever since my sophomore year of college. I felt I was paying way too much for what I was receiving. I am indeed one of the 70% that would without a doubt do things differently if I could go back.

    I would add to your list that Community College for your first 2 years (then transfer to a new school) WHILE working through school is an EXCELLENT way to save a L O T of cash!