Understanding Why College Is A Worth It

In 2019, the cost of college and college related debt are at an all-time high. Most people are willingly to stick to a regular nine to five job instead of going to college to actually get a degree. There are several reasons why they would just stick to that job instead of striving for a career, but number the one reason for most people is the debt associated with going to college. Most people feel like they would rather steer clear of an “unnecessary” debt so they can live their lives a little more worry free. This literature review answers the question: “Is it worth it to go into a huge debt to achieve higher education in the USA?” in several ways. Those ways include:

1. Defining student loans and college debt
2. Stating why the cost of college is so high
3. Stating the steps to paying off college debt
4. Stating other ways to pay for college
5. Stating the effects of not paying off your debt
6. Stating the benefits of getting a college degree

The stigma should be removed from people’s minds and people should be more open to attending college so they can enjoy a little more money in their pockets.

Sometimes, the student may have a scholarship or grant to pay for school but that form of payment doesn’t cover the full cost. Parents and guardians are sometimes unable to help also. Therefore, the student has to find another way to pay for college. That is where the student loans and eventually student debt come in. A federal student loan is a loan that is made through a loan program administered by the federal government (Aid, 2019). There are several different federal student loans available in the United States. You can either have a direct subsidized loan, a direct unsubsidized loan, or a direct PLUS loan.

According to the official federal student loan website, a direct subsidized loan is a loan offered to undergraduate students who display financial need. The student may receive up to $5,500. A direct unsubsidized loan is a loan offered to undergraduate, graduate, or professional degree students. These students do not have to display financial need. Up to $20,500 is offered to the student. The final types of loan offered is the direct PLUS loan. This loan is for parents who are borrowing money to pay for their dependent undergraduate child’s education, and for graduate or professional degree students. Financial need does not need to be displayed. The maximum amount offered in the total cost of attendance for the student. (Aid, 2019)

Student debt is money owed on a loan that was taken out to pay for educational expenses. Student debt is typically incurred when a student uses loans to cover the portion of tuition that has not otherwise been paid for through their own assets, grants, loans taken out by parents or guardians, or by scholarships. While it is possible for students to save money to put towards the cost of higher education, the escalating price of that education at many institutions increasingly narrows the plausibility of covering such costs without some form of financial assistance (Kagan, 2019).

The cost of an undergraduate degree has risen by 213% at public schools and 129% at private schools since the 1980s (Hoffower, 2019) and, it doesn’t seems to being decreasing anytime soon. In the 1980s people could attend college for about $10,000. This cost covered everything including room and board. People could afford to pay for college and still have some money left to spend however they wanted. In 2019, $10,000 would just about cover tuition for a semester in a private college and about 75% of the total cost in a public college. Add in room and board, meal plans, and other college expenses and you can add another $10,000 to the cost for both private and public colleges.

The reason why the costs have increased at such a high inflation? Schools aren’t getting as much funding from the states and government. Because of the high enrollment statues of the colleges, the states aren’t able to keep up with the demand and are having to spread the little money they receive across the several colleges in the state. To cover the money not received from the state and government, the schools are depending on more students enrolling so they can raise tuition. The tuition has to cover the cost of professors and other little things around campus that start to add up.

The need for more dorms and student services on campus also contribute to the rise of tuition. To cover the cost of building and furnishing a dorm for students who prefer to live on campus, schools are increasing the cost of tuition for students even more. Students are also relying more on the services offered on campus like counseling and healthcare. This means that more people need to be hired to offer those services to students because at the end of the day they pay for them.

There are several steps to consider when paying off your student loans. The first step is finding the right payment plan for you. You don’t want a payment that is so low it takes you 10 or more years to pay it off. You also don’t want a payment that is so high that you can make the payments at all or on time. This will cause your loan to become delinquent or default. A loan is considered 'delinquent' when a borrower doesn't make a loan payment on time. (Wamala, 2017). Most federal student loans enter default when payments are roughly nine months, or 270 days, past due. Private student loans often default after three missed payments, or 120 days total. (Helhoski & Lane, 2019).

The next steps is making payments, on time, through your loan servicer. According to the Federal Student Aid website, you can find out who your loan servicer is by simply logging into your student account. After finding out who your loan servicer is, you can make a payment, through them, online, by phone, or by mail.

Sometimes your loan can be forgiven. When your loan is forgiven, you no longer have to make payments on it. There are certain circumstances under which your loan will be forgiven. Your loan can be forgiven if you chose a career on the federal or state level, or working for a non-profit that are tax-exempt. You can also have your loan forgiven if you make payments over a consecutive amount of years on time. You do not need to be working in a specific career field to qualify for loan forgiveness based on your repayment history. Generally, you will make on-time payments for 20 or 25 years, depending on the repayment plan. The remaining loan balance is forgiven after that period of time. (Fay, 2019)

The final way your student loan can be forgiven requires extreme events and it also depends on the type of student loan that you have. For example if you are a parent that took out a PLUS loan to pay for your child’s education, the loan may be forgiven if the parent or student dies, the parent becomes permanently disabled or if your loan is discharged in bankruptcy. (Aid, In certain situations, you can have your federal student loan forgiven, canceled, or discharged., 2019)

There are several other ways to pay for college including scholarships, grants, enrolling in work-study jobs, or just paying for it out of pocket. A scholarship is a money given to a student based on their academics, background, major or just need. A grant is a sum of money given by the government, a university, or a private organization to another organization or person for a special purpose (Dictionary, 2019). These forms of payment will only cover about 50% to 90% of the total cost associated with college.

Federal work-study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study. (Aid, Federal Work-Study jobs help students earn money to pay for college or career school., 2019). This part-time job can be offered to undergraduate, graduate, or professional students who are enrolled in school either full-time or part-time. There are jobs offered on campus, working for your college, and off campus, working for a non-profit organization.

Students are paid the federal minimum wage. Undergraduate students can be paid by the hour while graduate and professional students are paid by the hour or by salary. Students must be paid, directly, once a month by the school. They can request that the money be used toward their institutional charges or sent to their bank account. (Aid, Federal Work-Study jobs help students earn money to pay for college or career school., 2019).

There are several consequences associated with not paying off student loans. These consequences include a lower credit score, having your wages garnished by the government, and having a tough time finding a job and a place to live. (Barrington, 2019). Missed student loan payments, or non-payments, are reported to the major credit bureaus. Financial companies routinely check these reports when people are trying to get loans or credit cards. Since your credit score is so low, you will often be unable to obtain both credit cards and loans.

Having a low credit score, because of unpaid student loans, will also affect your job and where you live. Most state and federal jobs look at your credit score when you apply. They want to know how reliable you are before they hire you. They do not want to take a guess on hiring you. Having a low credit score will make the employers think that you are unreliable which will cause them not to hire you. Landlords also look at your credit. They want to know that they can trust you to pay your rent on time with no problems.

If you are able to get a job, the government may garnish, or take, your pay if you have a defaulted student loan. Default on your federal student loans and the government can take up to 15% of each of your paychecks to satisfy the debt. That amounts to $300 a month for someone who normally takes home $2,000 each month. (Sheehy, 2019). This also includes your tax refund and government benefits. This is just like making payments but still suffering the consequences of non-payments.

What are benefits of going through all this trouble to obtain a degree? For one, you will make more money than someone with just a high school diploma. High school graduates earn an average of almost $30,000 per year. Bachelor's graduates earn an average of just over $50,000 a year. And those with a higher level degree (master's, doctorate or professional) average nearly $70,000 per year. (Loveless, 2019) While earning a master’s in nursing or teaching will not earn you as much as earning a master’s in engineering, it will guarantee that you will always have a job. Nurses and teachers are something that the world will always need making them in very high demand. This means that employers will always be willing to pay you what you are worth and sometimes even more.

People that have degrees are also more likely to have a secure, reliable job. These people are seen as more valuable. They are more valuable because they know more skills, can adapt well in the work environment, and are able to work with all kinds of people. When you attend college, you meet and become friends with all kinds of people. These people can teach you a lot and that can make you a better fit for a company. To sum all of this up, they groom you to grow into a better person. The people who suffer the most from job cuts are lower level employees who only have high school diplomas (Loveless, 2019).

College graduates are more likely to be satisfied with their careers. They receive amazing benefits, paid vacation, and are less stressed than those who have to work harder to get to that point. This leads to them being happier with their lives which causes them to perform better at work. In no time, you may see a college graduate leading a fortune 500 company or even starting their own and making their way to top competing with the best of the best. In closing, attending college is worth it even if you becoming in debt. The money that you will make will, satisfaction you will gain from your work, and overall happiness with your successful life will outweigh the debt associated with going to college.