When you buy something on credit, by either taking out a loan or using a credit card, you will pay interest. Interest is the cost of using someone else's money. Hopefully, you will be buying something useful that will in turn earn you money. When you do that, you need to be making more money than what you paid in interest to borrow the money in the first place.
This is basic business common sense.
However, when it comes to student loans, people throw common sense out of the window.
You are purchasing something as expensive as a house without looking at its monthly payment, how much income you can expect, what other similar houses would cost nearby, or if there is a resell market for that type of house at all.
But still, there is a huge industry, making huge money, trying to convince you to borrow money to go to college. And the message doesn't even have room for debate. There's no critical thinking questions like: should I go to college? why should I go to college? what are alternatives? what are the strengths and weaknesses of getting a college degree?
This blog, and this book, address this essential question: Why college?
Buying a college degree means different things to different people. Some think you are only middle class if you have at least a four year degree. Others think there is no good jobs unless you get a college degree. Think whatever you want. It doesn't change the financial analysis you have to go through: Revenue - Cost = Profit.
Figure out these numbers before you sign for student loans. I didn't, and regretted it until my mid-Forties, when the last of my student loans were paid off.
This is basic business common sense.
However, when it comes to student loans, people throw common sense out of the window.
You are purchasing something as expensive as a house without looking at its monthly payment, how much income you can expect, what other similar houses would cost nearby, or if there is a resell market for that type of house at all.
But still, there is a huge industry, making huge money, trying to convince you to borrow money to go to college. And the message doesn't even have room for debate. There's no critical thinking questions like: should I go to college? why should I go to college? what are alternatives? what are the strengths and weaknesses of getting a college degree?
This blog, and this book, address this essential question: Why college?
Buying a college degree means different things to different people. Some think you are only middle class if you have at least a four year degree. Others think there is no good jobs unless you get a college degree. Think whatever you want. It doesn't change the financial analysis you have to go through: Revenue - Cost = Profit.
Figure out these numbers before you sign for student loans. I didn't, and regretted it until my mid-Forties, when the last of my student loans were paid off.
No comments:
Post a Comment