Should Students Incur Debt for Education?

College education has long been considered a stepping stone to success, but the cost of higher education has skyrocketed in recent decades. This leaves many students facing a critical decision: Is taking on student debt worth it? How much debt is too much? Does the value of a degree justify the long-term financial burden? And are colleges exploiting students by raising tuition, knowing they can rely on federal loans?

This blog will explore these questions and help students and families make informed financial decisions about higher education.

The Growing Cost of College and Student Debt

Over the past few decades, college tuition and fees have risen faster than inflation and wage growth. According to data from the College Board, the average annual cost of tuition and fees (not including room and board) in 2023 was:

• $10,560 for in-state students at public universities
• $27,020 for out-of-state students at public universities
• $39,400 for private universities

With such high costs, many students turn to federal and private student loans to finance their education. As of 2024, the total U.S. student loan debt stands at $1.75 trillion, with the average borrower owing about $37,000.

This raises an important question: Is taking on debt for education worth it?

Does the Value of a Degree Outweigh the Debt?

Higher Earnings Potential

One of the main arguments for taking on student loans is that a college degree leads to higher lifetime earnings. Studies show that college graduates, on average, earn $1 million more over their lifetimes than those with only a high school diploma.

However, this varies widely by field of study and career choice. A graduate with a computer science or engineering degree may earn six figures soon after graduation, while a fine arts or humanities major might struggle to find a well-paying job.

Thus, the value of taking on debt depends on the expected return on investment (ROI). If your degree leads to a high-paying career, taking on some debt may be justifiable. But if you’re entering a low-paying field, excessive debt can become a long-term burden.

Loan Repayment and Financial Burden

While student loans provide access to education, they come with long-term financial consequences. Many graduates spend 10-20 years repaying loans, delaying major life milestones like buying a home, starting a business, or saving for retirement.

For example:

• A graduate with $50,000 in student debt at a 6% interest rate could pay over $550 per month for 10 years.
• If the salary after graduation is only $40,000 per year, a significant portion of income goes toward loan payments, leaving little room for savings or investments.

Rule of Thumb: Many financial experts suggest that total student debt should not exceed your expected first-year salary. If your starting salary is $50,000, borrowing more than that could be risky.

Are Colleges Taking Advantage of Students?

The Role of Federal Loans in Tuition Inflation

A major concern is that colleges keep raising tuition prices because they know students can access federal loans. Unlike other financial decisions, where people weigh costs against benefits, student loans are easy to obtain with no credit check and no consideration of future earning potential.

This creates a cycle of tuition inflation:

1. Colleges raise tuition because they know students can borrow more.
2. Students take out larger loans to cover higher costs.
3. Government continues issuing loans, fueling further price increases.

This benefits colleges more than students, as institutions collect tuition upfront, while students are left repaying loans for decades.

Luxury Campus Upgrades

Colleges often justify tuition hikes by improving facilities, building luxury dorms, fitness centers, and dining halls to attract students. While these amenities are nice, they don’t necessarily improve education quality—yet students pay higher tuition to cover these costs.

A student today may be paying more for unnecessary campus perks rather than investing in actual academic improvements.

Lack of Transparency About Loan Consequences

Many colleges do not adequately educate students about loan repayment or the risks of taking on excessive debt. Unlike other major financial commitments, students often sign loan agreements without fully understanding the long-term consequences.

Some institutions even push students toward expensive private loans (with higher interest rates) instead of helping them explore scholarships, grants, and work-study options.

How Much Student Debt Is Too Much?

While every student’s situation is different, here are some guidelines to determine a manageable level of student debt:

1. First-Year Salary Rule – Try to keep total student debt below your expected first-year salary after graduation.
2. Loan-to-Income Ratio – Monthly loan payments should not exceed 8-10% of your gross monthly income.
3. Consider Return on Investment (ROI) – Degrees in high-demand fields (STEM, business, healthcare) tend to offer higher salaries, making debt more manageable.

If loan payments will overwhelm your finances after graduation, it may be wise to consider more affordable options like community college, trade schools, or online education.

Alternatives to Student Loans

To reduce student debt, students should explore:

1. Scholarships and Grants

Unlike loans, scholarships and grants do not need to be repaid. Many organizations offer merit-based, need-based, and career-specific scholarships.

2. Community College & Transfer Programs

Starting at a community college and transferring to a four-year university can save tens of thousands of dollars while still earning the same degree.

3. Work-Study and Part-Time Jobs

Working part-time while in school can help cover living expenses and reduce loan dependency. Many universities offer work-study programs that provide flexible jobs for students.

4. Employer Tuition Assistance

Some companies offer tuition reimbursement for employees pursuing higher education. Checking with an employer before taking out loans can provide significant savings.

5. Trade Schools and Alternative Education

College isn’t the only path to success. Many trade schools and technical programs offer high-paying careers without the heavy debt burden of a four-year degree. Fields like plumbing, HVAC, and tech certifications can lead to lucrative careers with minimal or no student debt.

Final Thoughts: Is Student Debt Worth It?

The answer depends on the cost of the degree, the earning potential of the field, and the amount borrowed.

• Good Debt – If student loans help secure a high-paying career in business, healthcare, or technology, they can be a smart investment.
• Bad Debt – Borrowing excessively for a low-earning career or an overpriced private college could lead to decades of financial stress.

Students should carefully consider their options, minimize borrowing, and ensure that education is a financially responsible investment, not a lifelong burden.

Colleges must also be held accountable for rising tuition costs and misleading financial practices. Until then, students must take control of their financial future by making informed choices about their education and debt.