For the most part, you can’t borrow money these days unless you have some proof that you can pay it back. Tighter restrictions on mortgages make it difficult for people without jobs or with low-paying jobs to borrow money for a home. Even credit cards have been more difficult to get without solid proof of income. When it comes to education loans, it’s a different story.

Every year, millions of students are not only allowed to borrow money, but they are also encouraged to borrow money to pay for a college degree or post-graduate education. Even though these students often have no solid proof of income, lenders still shower them with thousands upon thousands of dollars. The thinking is that once they graduate, they’ll get high-paying jobs and be able to pay back their loans without a problem.

Reality looks a lot different for many of today’s students. The student loan crisis has many asking if higher education is a scam or if it’s worth it to mortgage their future selves to get a degree today. With student loan debt topping $1.3 trillion, many are asking if there isn’t a better way.

How Can People Pay for School?

While a private or national education loan is one option for students considering enrolling in college or graduate school, borrowing money isn’t the only choice students have. It might be the choice that’s most often presented to students since it makes the lenders who are pushing education loans money.

Before you consider using loans to cover your educational costs, consider your other options:

  • Grants. Grants are free money to pay for college. Usually, they are awarded based on your financial need, so if you earn or your parents have a high income, you might be disqualified from getting a grant. In some cases, even students with lower than average salaries aren’t eligible for grants.
  • Work-Study. Work-study is a program that lets students work, usually at on-campus jobs, in exchange for earning a capped amount to use to cover school costs. If you receive work-study, you are only able to earn up to the total value of your reward each semester.
  • Scholarships. A scholarship is like a grant, in that it’s free money for school. Unlike grants, you can receive a scholarship even if you have a high income or a lot of savings. While a few are given out based on financial need, most scholarships are awarded based on a student’s academic performance or other qualifications.

Although loans aren’t the only way students can pay for their educations, data from the National Center for Education Statistics shows that students tend to receive considerably more in loan money than they do in grant money or from other funding sources.

Why Do So Many Students Have Education Debt?

You can point to two primary reasons why so many students end up in debt after college. One is the price of school itself. According to College Data, the average cost to go to a four-year public university (in-state) was $25,290 in 2017-2018. The cost of a private school was twice that, $50,900 per year.

The interesting thing about college tuition prices is that they seem to be a bit of a chicken or the egg case. Students borrow to pay the high price and as a result . . . schools increase the cost of tuition.

One study from the New York Federal Reserve revealed that schools often boosted the price of tuition in response to an increase in the number of subsidized students at the school. For every additional dollar of aid (which includes federal student loans and federal grants), schools tended to increase the cost of tuition by as much as 60 cents.

The fact that the more people borrow, the more expensive colleges, forcing students to borrow more can make the entire financial aid system seem like a huge financial education services scam. Universities are making money hand over fist while hurting the very students they should be helping.

The other primary reason why education debt rates are so high comes down to ignorance. When the typical student first applies for and enrolls in college, he or she is around 17 or 18-years-old. In many cases, students have no real experience with borrowing money or a real grasp of what it means to borrow $37,172 (the average amount of debt for graduates in 2016).

In part, that ignorance stems from a major fault in the system. As Marketplace reported, colleges are traditionally prevented from advising against taking out loans to pay for school. If a school were to recommend that a student not borrow to cover tuition costs, it could look as if the school was somehow blocking that student’s access to education.

Instead of giving students a broad grounding in debt or confirming that they understand what it means to borrow — and ultimately repay — so much money, schools just need to confirm that students realize that they are responsible for repayment after they graduate.

The Pros of Higher Education

While some may view of all higher education and the post-secondary educational system in the US as a big scam, some benefits do exist.

One of the most significant benefits of getting a college degree, despite its high price tag, is the potential for increased earnings of the course of your life. According to Pew, the median annual salary among college graduates was $45,500, compared to just $28,000 for people who had only finished high school. Bachelor degree holders were also much less likely to be unemployed (less than 4 percent) compared to high school graduates (12 percent).

Still, a median salary of $45,500 doesn’t seem like it’s worth taking on almost that much in debt over the course of four years. College and higher education have additional benefits beyond the financial.

Some studies show that people who graduate from college tend to have a better quality of life than those who don’t. College graduates tend to live healthier lifestyles, be more engaged with their communities, and, if they have children, are better able to prepare their kids for school than non-graduates.

The Cons of Higher Education

Of course, getting a degree isn’t all sunshine and roses. Some argue that the price of school far outweighs the benefits in many cases. There are also a few other arguments against going to college.

One big drawback of going to college is that while it provides a person with the potential to earn more money, it doesn’t guarantee that a person will earn more. For example, the Chronicle of Higher Education noted that between 1992 and 2008, there was a sharp increase in the number of college degree holders working in positions that were considered low or unskilled.

Low or unskilled jobs are positions that don’t require a degree or positions that barely require any education at all. While low skilled jobs are an important part of the economy, there is something very frustrating about spending four years in school, going into debt, then finding a job as a server or bartender afterward.

Another argument against college is that well,  non-college graduates seem to be the ones to get the big things done. The majority of innovative companies in the past few decades were founded by people who had either never gone to school or who had ended up dropping out of college to establish their companies, as Live Science notes.

While not a direct drawback of higher education itself, taking on so much debt so early in life can set a person up for financial stress. For example, having to make substantial monthly loan payments for the first 10 years after graduation can mean that a person saves less for retirement and ends up with a considerably smaller nest egg.

What Graduates With a Lot of Debt Can Do

If you fell for the great education swindle and now find yourself staring at 5 or 6 figures worth of debt, all hope isn’t lost. There are a few programs that can help you manage and repay your debt.

Income-based repayment options are available for students for federal loans, or loans from the US government. Under income-based plans, the amount you pay each month is capped at no more than 10 or 15 percent of your discretionary income. That helps to keep your monthly payment low but does extend how long it takes to pay off the debt.

After 20 or 25 years (depending on when you graduated and signed up for the program), any balance remaining on your debt gets forgiven.

If you have mostly private loans or a mix of federal and private, you might consider refinancing your student loan debt, to lock in a lower interest rate and streamline the payment process.

Neither option is perfect, but then again, there’s no perfect solution to an educational system that encourages significant amounts of debt.

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