A few months back, we discussed how student loans make college education worthless. That was back in September 2013. We pointed out how putting yourself in debt is just not worth it because it puts you under so much financial obligations. According to our research in the previous article, student loans can do the following:
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It can ruin the reputation of college education – at least some high school graduates are discouraged from pursuing a higher education because of student loans.
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It lessens the ability of college graduates to invest their money in homes, cars, etc.
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It discourages consumers from getting important services like medical care because they would rather pay for their student loans.
These are only a few of the things that makes people fear student debt. In truth, these are valid reasons to want to avoid debt. However, you should not let this fear stop you from trying to have the best financial opportunity in the future.
Some people may argue that there are college dropouts who made it big. People like Steve Jobs or BIll Gates have done well without a college degree. While that is true, you have to realize that these people are extremely talented. Unless you are certain that you are ingenious enough to come up with the same innovative inventions, then go ahead and skip college. If not, you may want to look at the data that we have researched to convince yourself that college education and student loans may be worth it.
Study reveals that putting yourself in debt for college is justifiable
Don’t get us wrong, we still think that student loans are dangerous and if you can avoid it by saving up for your studies, that is what we suggest you do. But if you do not have the opportunity to save, then we can say that it is alright to put yourself in debt – and that is because of the statistics we have researched. In this study done by Pew Research based on the data from the US Census Bureau, they provided proof that those with college education are getting ahead in the workforce.
The data published on PEWResearch.org showed the following:
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Almost 50% of the overall income goes to college graduates (Bachelor’s degree or higher).
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In 2012, one out of three households have a college graduate.
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⅔ of American households share in the 50% of the whole income distribution in the country.
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25% goes to those who went to some college (Associate degree or less).
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20% goes to high school graduates.
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5% goes to high school undergraduates.
All of these data are based on 2012 figures.
When compared to the 1991 figures, the income distribution is as follows:
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37% goes to those who have a college degree or more.
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28% goes to those who are high school graduates.
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23% goes to those with an Associate’s degree or less.
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12% goes to high school undergraduates.
As you can see, the growth of the income distribution of those with a Bachelor’s degree took in the percentage from high school graduates and undergraduates. They used to get 40% of the income share. Now, they only get 25%. the combination of the college degree (Associate and up) rose from 60% to 75%. That is a big difference from 1991 to 2012.
The same study also revealed the growing income per household each year. It varies as the educational degree increases (except for the Doctorate). Here is the trend as arranged by PEW Research from the raw data of the US Census Bureau.
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HS Undergraduate: $33,959 (1991); $32,632 (2012)
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HS Graduate: $54,707 (1991); $52,199 (2012)
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College level but no degree: $66,038 (1991); $63,008 (2012)
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Associate’s Degree: $72,407 (1991); $68,902 (2012)
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Bachelor’s Degree: $92,289 (1991); $100,637 (2012)
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Master’s Degree: $104,193 (1991); $114,897 (2012)
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Professional: $150,869 (1991); $180,671 (2012)
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Doctorate: $131,365 (1991); $150,087 (2012)
Starting from the Bachelor’s Degree up to the Doctorate, you will notice that the average annual income increased. In the Associate below, it decreased over the years. Apparently, those who invested in a higher education reaped more rewards because their income bracket increased over the years.
How to make sure that your college life will not cripple your financial future
What these data is trying to tell us is this: college education is something that you really have to invest on. But as we said, it does not really have to be through student loans. You have to understand that there are better options to finance your education. Here are the options that we have for you.
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Search for scholarship programs. Talented individuals are always rewarded and the same is true for your education. It does not only mean you have to be academically talented. You can be good at sports or something similar. Know your strengths and play on that to get financial help for your education. That way, you do not have to rely too much on student loans.
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Look for student financial aid. Inquire with the school that you are going to find out the details of their student financial aid. All colleges and universities have this. Find out if you qualify and if you do, go ahead and apply.
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Put a tight lid on your credit card spending. Some students get into some serious financial difficulties because they acquire credit card debt on top of their student loans. Credit.com consolidated a couple of statistics that included the fact that 91% of undergraduates own at least one credit card. It also mentioned that the average debt of undergraduates is at $3,173. Do not be a part of this statistic. Try to control your spending especially when you know that it will be through credit cards. If you can keep your credit card spending to a minimum and only for emergencies, you can keep your future debt payments to a minimum. Even if you will be bound to pay for your student debt, it will not be a burden because that is the only debt that you have. You do not have to choose between student loans and credit cards anymore.
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Apply for a part time job. Another option to help pay for your financial needs while you are studying is to get a part time job. You have a lot of options to do this. You can have yourself hired as an intern. Or you can get a job tutoring. Retail companies and restaurants are also popular options for student looking for a part time job. You can earn between $5 to $8 an hour this way. Not only will it help you pay for your needs, you can also get valuable experience. That can help you get a job easily – because you already have experience.
The bottomline that we want you to look into is this: a college degree is important because it will help you earn a lot. You have to understand that your earning potential will not only be more, it will also grow over time. If you have to apply for student loans to do it, then that is a sacrifice that you have to make. Just remember to be wise with how you will spend your loans. Get a job, limit your credit card use and learn how to budget your money.