In all the discussion over student debt and the question of how big a crisis the ever-expanding mountain of it represents to the future prosperity of today's students, it's often easy to overlook one key factor: not all debt is created equal. While expensive, the cost of a medical degree or an MBA can often be paid back more easily than, say, the loans for a MFA that doesn't necessarily lead to a lucrative career.
But it turns out that there's much more than simple choice of major involved in predicting which loans will end up as unpayable millstones hung around the neck of the borrower. Recent research by the Washington Center for Equitable Growth points to a couple of pertinent facts about student debt that are often missing from discussion of the crisis: first, that there's an inverse relationship between the amount of debt and the likelihood of delinquency:
And, second, that delinquency is disproportionately an issue that affects low-income borrowers:
While there's undoubtedly a rich vein of political commentary to be mined from the WCEG's data and associated explanations (which I recommend checking out in full), the key takeaway for someone considering whether or not taking on student debt is worth it lies in that first chart: if you reasonably expect a significant improvement in your income, you'll likely have little difficulty in meeting the repayments for the loan. If, on the other hand, the reputability of the school and/or program are in doubt, or you're unlikely to be able to leverage the qualification to improve your financial position, you're much more likely to have difficulty in repaying the loans.
Future earning potential is by no means the only factor when considering whether or not to furthering your education, but the harsh reality is that failing to consider it before making a costly commitment can lead to years of pain and the necessity of putting other life decisions on hold.
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