When I was 18, I believed that going to college was my only option.  I had naively thought that I would spend the rest of my life flipping burgers if I didn’t go to college.  Since my parents earn middle-class incomes, they couldn’t afford to pay for my education, but I was too “well off” to qualify for any assistance other than loans.

I was young and naïve, and I believed my parents when they told me that student loans were good debt.  It would be worth it, I thought, because I would make a lot of money after college.  Then came the recession.  A few years later, I finished grad school buried in massive debt with a low-paying job.

I no longer agree with the idea that student loans are good debt.  In some ways, student loan debt is actually the worst kind of debt to have.

*This post contains affiliate links.  Read our full disclosure policy here.

The ROI is often minimal.

The best argument for student loans being “good” debt is the idea that getting a degree will help you to land a higher-paying job than you would have if you hadn’t gone to college.  This concept is referred to as the return on your investment.

You’re spending an absurd amount of money, but you’ll make a lot of money after you graduate, so it’s worth it, right?  This type of thinking explains why people are still continuing to enroll in college despite the insane cost of tuition.

There are two problems with this argument.  The first issue is that making more money doesn’t really matter if you also have more debt.  Law school graduates frequently finish school with $100,000-$200,000 in debt.

Lawyers can earn high starting salaries, but with that amount of debt, many of them are still struggling financially.

The second problem with this argument is that many degree programs offer a very minimal ROI.  How many people do you know who make six figure salaries (right off the bat) with degrees in Communications, Psychology, Philosophy, or any other useless (sorry) majors?

Here’s my advice: if you’re going to take on student loan debt, don’t.  Just don’t.  Do what my friend Neva did instead.  The ONLY time it makes any sense to take on debt is if you take on a minimal amount and major in something practical (that will make you a lot of money right after you graduate) like engineering or another STEM subject.

The interest is killer.

It’s often the interest – not the principal – that keeps people from being able to make a dent in their loans.  Interest starts to grow as soon as you take out that first student loan – it will continue growing during your four (or more) years of college and during the six month “grace period” after graduation.

If math isn’t your strong suit, you might assume that someone with $75k of student loans and a 6% interest rate will pay $4,500 in interest on their loans.  In reality, they will pay tens of thousands of dollars in interest.  Why?  Compound interest.  Interest on student loans compounds – this means that the interest itself collects interest.

This interest also accrues daily.  If you have any periods of forbearance or deferment, interest continues to collect during this time and it is capitalized (added to the principal), when you begin making payments again.

You can’t get rid of it.

Student loan debt, unlike most other forms of debt, cannot be eliminated during bankruptcy.  Because there are so many income-based repayment options that allow you to lower your monthly payments, it’s hard to argue that you can’t “afford” to make your student loan payments.

Generally speaking, public student loans can only be discharged in the event that the borrower dies or becomes severely disabled.  If you stop making your monthly payments, the lender will garnish your wages until the balance has been paid.

Considering that the balance will continue to grow substantially due to interest, it may be a very, very long time before the loans are paid off.

An Alternative to Debt

Student loans are often viewed as an okay debt to have because educational loans are considered “good” debt.  While going to college might increase your future earning potential (depending on what you major in), you don’t have to go into debt to pay for your education.  Believe it or not, you do have other options.

Here’s what I recommend – work for a couple of years to save up the money for a two year degree at a community college, get your two degree (while working at the same time), take another break to work for a few years, then go back for your bachelor’s (at a public school) when you can afford to pay cash for it.   Depending on what field you work in, you may not even need a bachelor’s degree.

Whatever you decide to do, don’t believe the lie that student loans are “good” debt.

Do you have student loans?  If so, do you feel your loans were “worth it”?


Other stuff you might like:

My Personal Finance “Aha” Moment
Why I’m Grateful for My Student Loan Debt
How to Ditch Your Student Loans With the Debt Snowball
5 Dumb Things We Did With Our Student Loans
7 Things I Wish I’d Known Before I Started Grad School

Personal Finance Resources:

The Total Money Makeover by Dave Ramsey
YOLO: The Roadmap to Financial Wellness and a Purposeful Life by Jason Vitug
Smart Women Finish Rich by David Bach
It’s Only Money and It Does Grow on Trees by Cara MacMillan

Blogging Resources:

How to Blog for Profit Without Selling Your Soul by Ruth Soukup
365 Blog Topic Ideas for the Lifestyle Blogger Who Has Nothing to Write About by Dana Fox
ProBlogger: Secrets to Blogging Your Way to a Six Figure Income