Student Loans

Student Loan Debt vs. Entry Level Pay: An In-depth, Up-to-Date Overview

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 16 minute read

Student Loan Statistics

Student loan debt has been on the rise, especially during the last decade. Statistics show that 2017 has been the worst year yet for student debt. In fact, as of 2017 Americans owe more than $1.4 trillion for the debt they obtained for their school-related expenses. When compared to the nation’s credit card debt, student debt outweighs it by about $620 billion. Students that graduated in the year 2016 had an average loan debt of more than $37,000, which was a whopping six percent increase from those who graduated with a degree in 2015.

There are more than 44.2 million Americans walking around with student debt hanging over their heads, and of these people, 11.2% of them are delinquent in paying back their debt. The average monthly payment for those repaying their loans is $351. That is quite a hefty payment for young people who have just freshly graduated college, especially being that many of them find it difficult to find lucrative employment even though they have a degree.

(Data via federalreserve.govWSJ, herehere and here and here)

Who has Student Loan Debt?

It is important to understand that there are many types of colleges to choose from, including private and public colleges as well as those that are for-profit and those that are nonprofit. Still yet, statistics show that student debt plaques graduates from all of these schools. 66% of students earning a degree from a public college leave with student debt, while 75% graduating from private nonprofit colleges have debt and an astonishing 88% of those graduating from for-profit colleges have debt.

It should also be noted that students who receive Pell Grants are likely to obtain a higher amount of loan debt. In 2012, 88% of students who received Pell Grants ended up having an average loan debt of more than $30,000. Of those who did not receive a Pell Grant, 53% of them had only about $26,450 in student debt.

Data via

Out of the $1 trillion debt for student loans, about 40% of it has been incurred by students who received graduate and professional degrees. Here is a quick overview of the average amount of student debt obtained by students according to the fields they go into:

  • Master of Education: students graduated with an average debt of $50,879
  • Master of Arts: students graduated with an average debt of $58,539
  • MBA: students graduated with an average debt of $42,000
  • Law: students graduated with an average debt of $140,616
  • Master of Science: students graduated with an average debt of $50,400
  • Medicine and health sciences: students graduated with an average debt of $161,772

Data via 2012 study

What is Student Loan Debt?

When a person acquires student debt, this means the student has borrowed money to pay for educational expenses, such as tuition, books, supplies, transportation to and from school, housing, and more. Because college tuition costs have been on the rise over the past decade most students are finding they must acquire a large amount of student debt to pay for their degrees. Within the United States, the majority of student debt is services by Sallie Mae, which is a publicly traded company.

As you can imagine, some degrees are worth acquiring student debt, while many are not. So why would a person choose to earn a degree if the debt incurred can be so enormous? Well, to put it simply it is because the money that can be earned from a degree can go well beyond paying off the debt. Also, a degree can lead to a person being able to obtain a job that is both personally and occupationally fulfilling. It is imperative to understand that taking on student debt is only to your advantage if you actually complete the degree program. Many students find themselves with excessive student debt for programs they do not complete; therefore, leaving them with no degree to pursue their occupational dreams.

What is the Student Debt Crisis?

All consumer debts besides those related to housing are overwhelmed by student debt. What has caused this crisis to occur? Well, it starts with the fact that tuition costs have significantly risen over the past few years; however, this is not the only factor. In fact, predatory student loan practices have caused students to get in over their heads, and this combined with an absence of consumer protection for college students also plays a huge role in the crisis. Student debt would likely be greatly lessened if it were able to be removed from a person’s credit through bankruptcy, but unfortunately, it is not. Even worse is that Congress led by Joe Biden in 2005 passed a law that chained students to their loan debt until death with no availability for the debt to be cleared through bankruptcy; this law made it legal for the government to go far beyond garnishing wages to make up for the debt. Those with student loan debt have the risk of having their Social Security payments garnished as well as their assets seized to repay the debt. And if you think the government hasn’t used this law to their advantage, you need to think again. More than $1 billion has been collected from Social Security to help lower the nation’s student debt.

Predatory student loan lending practices have a major impact on the student debt crisis. Lenders are encouraged to tell students that they should borrow as much as they can to pay for the school expenses, using any leftover monies to cover additional living expenses that tie into their daily living. All of this leads to students borrowing an unnecessary amount of money. For example, if a student needs to borrow $4,540 for a semester, the lender will encourage him or her to borrow $7,000+. This might seem enticing to the student as he or she can use the leftover money to purchase a car or for other purposes and the repayment of the loan won’t take place until a few years down the road when the student has graduated. What happens, though, is that the student incurs a massive amount of debt and is extremely overwhelmed when the repayment time period rolls around.

How does the Student Debt Crisis affect Families?

As you can imagine, when Social Security, assets, and wages are garnished and seized, this can be detrimental to families who rely on their monies to support their standard of living. According to the founder of Student Loan Justice, Alan Collinge, “The human cost of this phenomenon cannot be understated. Families and individuals are being financially destabilized and wrecked. Family formation, home and other purchases are being delayed or cancelled, people are actually fleeing the country and even committing suicide as a result of this predatory debt.”

How Much Time does It Take to Earn a Degree?

The length of time that it takes to earn a degree will of course depend on the type of program you are wanting to complete. Take for example a dental hygienist program. This type of degree typically takes two years to earn, however, there are 17-month programs available. In fact, many two-year programs can be completed in anywhere from 15 to 18 months. It will help to shorten the length of time that it takes to earn a degree if you double up on classes and take summer courses. You will want to remember, though, not to overwhelm yourself with too many studies as this can cause your grades to suffer and add much stress to your life. Here is an overview of common degrees and how long it takes to earn them:

  • Radiology Tech: two years with median annual wage of $50,260
  • Fashion Designer: two years with median annual wage of $62,810
  • Computer Specialist: two years with median annual wage of $71,510
  • Registered Nurse: two years with median annual wage of $62,810
  • Paralegal: two years with median annual wage of $44,990
  • Occupational Therapist: two years with median annual wage of $45,05
  • Petroleum Engineer: four years with median mid-career salary of $157,000
  • Chemical Engineer: four years with median mid-career salary of $108,000
  • Purchasing Manager: four years with a median mid-career salary of $97,000
  • Financial Analysts: four years with a starting salary of $47,500
  • Information Systems Managers: four years with a starting salary of $50,900

Data via

Is the Student Loan Debt Worth Getting a Degree?

You may find yourself asking if getting a degree is actually worth it in the end. The truth is, though, only you can answer that question. However, here are a few other questions you should be asking yourself:

Do you actually plan on using the degree? If you are earning a degree only because you think it is the right thing to do, you will want to reconsider. There are many people who go to pursue and establish successful careers without having to get a degree. Just because you have a degree does not mean you have to use it, and if you do not actually plan on using it, then you will be wasting money on the expenses incurred?

Are you sure you know what you want to do? If you are unsure as to the career field that you want to go into, it is highly suggested that you wait until you have more clarity. You do not want to obtain debt for a degree that you are not sure you will end up using. It is not uncommon, though, for young students to be unaware of what they want to get a degree in. If this happens to be you, you can always start off by taking courses that can be applied to any type of degree; these courses are considered general studies and are basic classes that are needed for any program that you go into.

Do you plan to go to work once you earn your degree? In order to pay back any debt that you acquire for college while you are earning a degree, you will of course need to get a job once you graduate; this is why it is essential to assess whether or not you plan on going to work once you graduate. If you plan on taking time off from working, then you will probably want to do this before you go into debt for getting a degree. Most student loan lenders require repayment to start back within six months of graduation.

Which Degrees Pay the Most Money?

Looking to know which degrees pay the most money? If so, take a look at these and keep in mind that regardless of the length of time it takes to earn each degree, the more experience you have under your belt, the higher your wages are going to be:

Top-Paying 2-Year Degrees

  • Computer Engineering
  • Economics
  • Management Information Systems
  • Construction Management

Top-Paying 4-Year Degrees

  • Petroleum Engineering
  • Systems Engineering
  • Actuarial Mathematics
  • Chemical Engineering

Top-Paying Graduate Degrees

  • Nurse Anesthesia
  • Strategy
  • Chemical Engineering
  • General and Strategic Management

Top-Paying Degrees

  • 2-Year: Political Science — $86,100, 20+ years experience
  • 4-Year: Petroleum Engineering — $185,000, 20+ years experience
  • Masters: International Business — $158,000 20+ years experience
  • MBA: Strategy — $175,000 20+ years experience
  • PhD: Statistics — $172,000, 20+ years experience

Data collected from Payscale and here

Which Degrees are the Most Expensive to Earn?

When it comes to saving money on a degree, you should most definitely opt for one that is not well-known for being expensive. Here’s a quick look at the most expensive degree fields. Please keep in mind, though, that you may be able to significantly lower the cost of earning these degrees if you choose another school. Still yet, these degrees are going to be expensive anywhere you choose to earn them.

  • Public Policy and Law at Trinity College: $308,490
  • MBA at Columbia University: $317,030
  • Music at Bard College: $271,375
  • Music and Technology at Connecticut College: $219,950
  • Film Studies at Wesleyan University: $218,370
  • History and Law at Sarah Lawrence College: $402,962
  • Law at Vanderbilt University: $375,620

Data from Finances Online

Are Wages Stagnant as of 2017?

Even though the unemployment rate throughout the nation is lower than it ever has been since before 9/11 — it is at 4.3% — wages are still stagnant. Years ago, low unemployment was a factor that caused wages to rise up, yet over the past few years, the opposite has taken place. Why is it that this stagnation has taken place? Well, according to Bloomberg Businessweek’s economics editor, Peter Coy, there are two primary reasons. First, even though you may not get many people to admit it, workers are content with what they are making right now. And secondly, bargaining power has been thrown out the window. There has been a drastic decline within the civilian workforce that is backed by labor unions, so gone are the days of unions going up against employers to raise their income. Individuals when they go into negotation with employers in regards to their salaries, they don’t have a full workforce behind them to help sway the employers. The second factor comes at the hands of globalization. Many people have lost their bargaining power because jobs are being outsourced to cheaper sources.

7 Hot Career Fields that aren’t Worth the Student Loan Debt

Check out these hot career fields that simply aren’t worth going to school for. If you do, you will end up with an enormous amount of student debt and the jobs you can acquire with the degree will likely not pay well enough for you to pay your debt off within a reasonable amount of time. Instead, you will have a large amount of debt hanging over your hand for the rest of your life.

1) Corrections Officer

The median salary of a corrections officer is about $39,630; this is a 30-year earning of $2,337,376. If you attend a private college to earn a degree to become a corrections officer, you will only obtain an 18% return on your student debt investment.

2) Painter/Illustrator

The median salary of a painter/illustrator is about $37,819; this is a 30-year earning of $2,230,563. If you attend a private college to earn a degree to become a painter/illustrator, you will only obtain a 17% return on your student debt investment.

3) Daycare Center Teacher

The median salary of a daycare center teacher is about $27,910; this is a 30-year earning of $1,646,131. If you attend a private college to earn a degree to become a daycare center teacher, you will only obtain a 13% return on your student debt investment.

4) Religious Educator

The median salary of a religious educator is about $47,957; this is a 30-year earning of $2,828,502. If you attend a private college to earn a degree to become a religious educator, you will only obtain a 22% return on your student debt investment.

5) Catering Manager

The median salary of a catering manager is about $42,533; this is a 30-year earning of $2,508,595. If you attend a private college to earn a degree to become a catering manager, you will only obtain a 20% return on your student debt investment.

6) Human Services Worker

The median salary of a human services worker is about $22,738; this is a 30-year earning of $1,341,086. If you attend a private college to earn a degree to become a human services worker, you will only obtain a 10% return on your student debt investment.

7) News Reporter

The median salary of a news reporter is about $37,393; this is a 30-year earning of $2,205,438. If you attend a private college to earn a degree to become a news reporter, you will only obtain a 17% return on your student debt investment.

Five Career Fields that are Worth the Student Loan Debt

These five career fields are unlike the ones listed above and are definitely worth going to college for. They have a high growth rate and provide a great ROI (Return on Investment) in regards to the salaries they provide.

1) Engineering

Known for being one of the top-paying career fields, engineering is an industry with an expected 3% growth rate through the year 2024. Best of all, you don’t have to go to school for a master’s to go into engineering. Starting salaries for those with a bachelor’s in engineering is about $64,891.

2) Communications

Known for having a bad reputation because of the fierce competition found in this industry, communications is actually a worthwhile career field to invest in. You don’t even have to go to college for four years to get a degree in communications, and the starting salary in this industry is around $47,000.

3) Math and Science

Getting a degree in math and sciences is a great choice to make. There is not a lot of competition in this field and as technology continues to become more advanced, there is a greater need for workers in this industry. Starting salary for a person with a degree in math and sciences is about $55,087.

4) Computer Science

With a degree in computer science you will have many options in relation to career fields. Organizations located all throughout the globe have a need for people specializing in computer science, and this includes both small mom-and-pop shops and Fortune 500 companies. Over the next seven years this field is expected to grow by at least 12%. The starting salary for those entering in the computer science industry is around $61,321.

5) Economics

There is a high demand for workers in the field of economics. Fortunately, this is a field in which wages are not staying stagnant. This industry is expected to grow by 6% through the year 2024. Do keep in mind, though, that a career in economics will most likely mandate a master’s degree. However, the starting salary for an economics specialist is about $52,100.

Data from HuffingtonPost

What are the different ways to cover school expenses?

If you are considering taking out a student loan to cover the cost of going to college, it is pertinent to understand your various options. You should also consider any other options you have in regards to paying for all of the accompanying expenses. Here’s an overview of six ways to pay for college:

  1. Student loans: There are different types of student loans to take advantage of, but you will need to speak with a professional lender to determine which one is best for you. Do keep in mind, that regardless of the one you opt for, you should borrow only the amount of money that you are in need of. Different types of student loans include subsidized Stafford Loans, unsubsidized Stafford Loans, Direct Consolidation Loans, Perkins Loans, PLUS Loans, private education loans, and health professions student loans.
  2. 529 Savings Plan: A 529 Savings Plan allows you to save for college according to a savings account that can grow tax-free. Best of all, as long as the monies are pulled from the account and used directly toward college-related expenses, you will not have to pay any federal taxes on them. Qualified college-related expenses include room and board, tuition, textbooks, and fees. In the United States, two-thirds of the states will give residents one or more tax breaks for investing in a 529 Savings Plan.
  3. Prepaid Tuition: Offering the same benefits as a 529 Savings Plan, a Prepaid Tuition Plan allows you to lock in tuition rates in advance. If you do not use the money you invest into the account for college-related expenses, you will have to pay the same tax penalty rate as you would with a 529 Savings Plan.
  4. Roth IRA: A Roth IRA needs to be invested into as early as possible. The money in the account will grow tax-free and as long as you withdraw the money for educational expenses, you will not penalized with the 10% early-withdrawal fee.
  5. Custodial Accounts: This type of account allows you to gift up to $13,000 a year to your child without triggering the gift tax penalty. Once the child reaches a pre-determined age — usually somewhere between the ages of 18 to 21 — he or she then owns the account and can use the monies to pay for college-related expenses. In fact, your child can use the funds for all types of expenses, such as buying a car or a home.
  6. Scholarships: You should always do your best to apply for scholarships and grants to help pay for college expenses. Many students are able to save thousands of dollars every year by taking advantage of grants and scholarships. And while many people think scholarships are only given out to those who excel in academics or sports, there are actually many other reasons entities will give away scholarships, such as the JIF Most Creative Sandwich Scholarship.

What are Ways to Save Money On School Expenses?

When it comes to saving money on college expenses, you first need to take into consideration the money you are going to be out in regards to tuition. Your tuition is going to be the most major expense, so it makes sense that you will want to choose a college that is affordable. If you are wanting to go to a four-year university, you should consider first completing your undergraduate degree at a community or vocational school; both of these schools tend to be far less expensive than universities, which allows you to obtain your undergraduate degree for about a third of the price as you would pay elsewhere. Think about it. If you go to a university at $23,000 a year for four years, that’s $92,000. If, however, you go to a community college for two years at $11,000 a year and then complete two more years at a university to obtain your masters degree at $23,000 a year, that’s only $68,000. You will be saving $24,000.

Another way to save money on going to college is to opt for off-campus housing. Room and board often costs upward of $10,000 a year. If you stay off campus, though, you can likely rent a house with other students at $300 a person, which means you will only be spending $3,600 on housing. Plus, since you will have to cover your rent upfront, you won’t have to worry about paying it back once you have earned your degree. This means your overall student loan debt when you graduate will likely be anywhere from $28,000 to $45,000 less if you choose to live off campus.

What are the Benefits of having a Degree?

The benefits of having a degree should never be overlooked. According to Education Corner, high school graduates have an average income of about $30,000 a year. College graduates with a bachelor’s degree, however, make upwards of $50,000 a year. And those who choose to earn a Master’s or Doctorate degree usually earn at least $70,000 per year. Over one’s lifetime, most degrees will pay for themselves and translate into significant earnings.

The benefits of earning a degree extend far beyond monetary value, as well. Those with a degree are likely able to acquire jobs with entities who offer health insurance, retirement plans, and more. Having a health and retirement plan is essential to the stability of your family and can provide great peace of mind.

Photo by Richard Walker.

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