When Is Student Loan Debt Worth It? Wise Investment V.S. Risky Decision

January 12, 2022

graduation cap with a jar filled with money and scrabble blocks that spell out "student loans"

For many, college seems like an amazing opportunity...until they have to pay for it.

But did you know that you can go to college without taking a lot of student debt (or even any)?

In this article, we explain why all student loan debt isn’t bad, even if it feels that way at first. We will show you all of the different funding options available to you before you even have to start thinking about student loans.

These tips will help you determine whether the student debt you’re choosing to take on is a wise investment or a risky financial decision.

Money, money, money.

We spend it on many things.


A new car.

A house.

Maybe even starting a business.

But no payment scares people more than a student loan. The problem? Too many people are only looking at the statistics and having one of these two reactions --

“I will never go to college no matter what, because I don’t want student loan debt.”

“I know college is expensive, so I’m just going to go where I want and not worry about it until I graduate.”

Both mindsets are dangerous. Here’s why.

General Mindset vs. Particular Mindset

Both mindsets are only looking at their student loan debt in a general sense, not a particular sense.

Here’s another way to put this - to decide not to go to college because the average student loan debt is over $25,000 is to assume that it will be that much, or more, for yourself.

In reality, student loan debt is different for everyone and depends on many factors, including what career you want to go into, your academic record in high school, your financial history and, of course, where you choose to go to school.

If you’re just looking at the raw numbers (say, $10,000), it seems like a lot - maybe even too much - to have to pay back.

But if the job you get from an Associate degree earns you just $5,000 more than without one, it would return the investment to you in two years. Now, in this case, the $5,000 is a very conservative number, as someone with any specialized degree or certification is potentially more employable than one without.

With the right choices, you could pay off your student loan debt quickly, then continue making consistent money in a high-paying job.

That’s the power of going to college!

By looking at your particular situation and options, you will be prepared to make a sensible choice regarding student loan debt. You will be able to decide with confidence what amount of debt is manageable to be able to pay off in a timely manner.

So how do you get started? First, you need to decide what type of college experience is going to be best for you.

Here are the main types of college situations:

  • Public or Private Education
  • Two-Year College or Four-Year College
  • Transfer Or Native Student

Public vs. Private Education

The average amount of student debt has been rising each year (currently $28, 650 on average per person). However, most of the cost inflation can be traced back to private institutions, whose focus on academic research and graduate programs requires an increase in operational costs and resources.

This means that some graduates of very expensive 4-year schools or graduate programs do end up having $50,000 or more in student loan debt.

But this is not the normal student experience.

For many two-year and four-year public colleges, the price of tuition has not increased substantially in the last several years.

Public institutions are regulated at the state level and can only make changes to educational pricing from there. This makes it much less likely to find dramatic increases in tuition from year to year, as every state’s government wants to keep their educational funding stable.

According to a report from the Urban Institute, the average in-state tuition for a two-year college in the United States during the 2018-2019 year was $3,700, while the average four-year tuition was just over $10,000.

Again, these are average numbers and do not reflect out-of-pocket costs for students. For example, you may already be eligible for state grants just by being a resident. Combine this with academic scholarships and you could end up paying even less!

Two-Year v.s. Four-Year Colleges

The question of choosing a two-year or a four-year college is also a question about your career goals.

Unfortunately, many two-year colleges (particularly community colleges) come with a poor stigma. They are often associated with fewer resources, less qualified teachers and a lack of resources.

This misconception is, not unlike with cars or real estate, a sense of “perceived value” - if something costs more, it must be better...right?

The truth is that two-year colleges are more valuable than they’ve ever been before, especially because of their low-cost tuition and fees.]

In fact, most community colleges now (including Delgado Community College) have agreements in place with four-year colleges in their area. This allows you to transfer from a two-year college to a four-year college, waiving application fees and hours of trying to transfer credits in the process.

By doing a simple transfer, you can save significantly on tuition for the first two years (where you’ll be taking many of the same general education courses anyways) and can still get your bachelor’s degree in four years or less.

[screenshot of transfer equivalencies]

Does your desired job and career path require that you get a bachelor's degree? If it’s not an immediate need, but something you would definitely like to get at some point, you could always get an associate’s degree first, find a steady job with your new accreditation, and see if your place of work can help pay for bachelor’s degree while you stay working full-time.

There’s never been a better time for tuition assistance in the workplace, as so many companies now realize just how important it is for their employees to be well-educated without going into crippling debt.

The most important thing to remember about choosing an affordable college option is that there is no one-size-fits-all situation. Everyone’s financial needs, career goals and general interests are just a little bit different.

Each one of us value college for different reasons. Some of us will care most about the type of training we’re getting, while others will be more interested in student life, the area where the college is located, or just the price point.

Here are a few questions to ask yourself before making a decision on college and where you’d like to go:

Who are the alumni of the major I am interested in?

Does the college align with my values?

Is there a certain sport I want to play or student activity I want to join?

Do I want to live on campus, or don’t mind commuting from home?

These are just a few basic questions to get you started.

Remember that there are no wrong answers here.