The Truth About Student Debt
We made a snarky comment yesterday, and readers called us on it.
If you recall, we quoted a rather ignorant comment about the economics of business made by a young girl. We said we hope she didn’t pay for that sort of education.
If she did… she got ripped off.
We hit a bit of a sore subject.
We heard from readers who clearly are not happy with today’s education system. They’re not happy with what’s become of our colleges. And, most of all, they’re incensed that a college degree now comes with a lifetime of debt.
Debt With No Value
The student debt crisis is no secret. Today’s graduates owe a collective $1.5 trillion – that’s more than the nation’s credit card and auto loan debt.
With decades’ worth of compounding ahead of them, our youngest generation is being crippled by this debt at the exact time when their money could be working hardest for them. Instead of putting money into savings, they’re writing a check and paying for college.
Many are still paying decades later.
In fact, a recent study showed that nearly half of all college borrowers still owed roughly $10,000 a full 20 years after starting school.
But here’s the part that will make you want to grab a pitchfork and come out into the streets to join us in our little protest…
None of it matters.
That’s right. It turns out that what college a person attends – and how much they pay for it – has very little bearing on their ultimate earnings rate.
No Matter Your Alma Mater
Listen to this. Stacy Dale and Alan Krueger are a couple of economists who think like we do. But as economists, they needed proof… they wanted to know for sure that this whole thing is one big scam.
That’s why they tapped into a huge data set of high school students and tracked their every move.
They measured things like what colleges they applied to, where they went to high school, their grades, their family background… and ultimately their income as adults.
They wanted to prove that having an Ivy League education (and Ivy League debt) was actually not an indicator of future success.
So they tracked students who were accepted to Ivy League schools and then measured the folks who ended up going to those big-name schools versus the folks who ultimately went to cheaper, more mundane schools.
The cultural hypothesis would be that of course the expensive, big-name degree would pay off.
Turns out… the idea is flat-out bogus.
Remember, these two groups of students had nearly identical academic careers. They were all capable of going to an Ivy League school. They had the same grades. They had the same academic background. And they all had the same levels of drive and ambition.
And yet some paid huge amounts of money for a degree worth bragging about, while others saved their pennies and cheered for the local football team.
Just as we guessed, the long-term results of the study proved that it’s not where you get your degree or what you study that determines your success. No, the Ivy League kids showed no difference in overall salary and career success.
Do You Want It?
The study proved that it all hinges on – our jaw certainly isn’t dropping – drive and ambition.
In other words, kids who want to succeed… will.
The name at the top of their diploma has no bearing on their success. To think anything else is simply giving in to mainstream myths.
So should our youngest generations go into massive debt to pay for the best and most expensive college?
We’re certainly not buying it.
It’s merely another sad – and oh-so-effective – way to take wealth from the pockets of the average American and give it to the government’s chosen corporate partners.
P.S. Instead of paying off their student loans, our nation’s college graduates should be putting their money into this little-known program. Dubbed the “1531(b) program,” it has the power to put an extra $7,190 in any American’s pockets each month. And best of all, the income stream is expected last another 22 years. Click here to see how you can get started in the program.