Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: May 21, 2012

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The country’s student loan problem is growing larger and more severe with each passing day. If an 18-year-old with no job approached a mortgage lender and sought money for a home, he’d get laughed at. If an 18-year-old with no job sought to purchase a vehicle from an auto lender, he’d get laughed at. But when an 18-year-old with no job approaches a student loan originator, he’s handed tens of thousands of dollars each semester.

But the problem isn’t necessarily the origination of student loans, but rather it’s that nobody is telling these kids what kind of benefits their degrees will yield. This inexperienced population is agreeing to student loan terms that they may not be able to repay. High school students are simply told to “do what makes you happy,” and if that’s underwater basket weaving, then so be it.

Humanizing the Problem

Consider the story of Kelli Space, a 23-year-old alum from Northeastern University in Boston, who racked up an astounding $200,000 in student loan debt.

According to her website, Two Hundred Thou, Space explained her situation to her fans:

“I was 18 and the first person in my family (including extended family!) to attend college. Therefore, not only was the excitement consuming me, but my parents didn’t exactly know how college would or wouldn’t affect my salary in the future. We applied for scholarships during the summer but they heard—as much as I did—that the cost of tuition should never keep you from attending a great school. So… we made the mistake of following such romantic advice. Cue Regret.”

The crux of this tragic story though isn’t the fact that Space owes $200,000, but rather it’s the fact that her degree, Sociology, yields an average starting salary of less than $40,000—a statistic revealed by her college itself.

If we give her the benefit of the doubt and assume she can start making $40,000 tomorrow, she will need to work five years without spending one dime to pay off her student loans.

That’s assuming she doesn’t need shelter, food, water, clothing, entertainment, or any other material good or service…

The Difference Between Doctors and Teachers

Colleges charge tuition based on the college’s name and reputation, not on the “product” they provide. For instance, the total cost of tuition and mandatory fees for UCLA, as stated on their site, is $13,910.21 for undergraduate California residents—regardless of what field of study one pursues.

But the values of different degrees vary wildly, despite the fact that their student loan costs don’t.

According to Salary.com, family practice physicians make an average of $174,945. Elementary school teachers, however, make an average salary of $52,138. Two individuals, each pursuing one of these professions, however, would pay the same $13,910.21 per semester if they sought a degree from UCLA.

That begs the question: should college costs be dependent upon the degree chosen?

Personal Responsibility

Now the role of personal responsibility shouldn’t be forgotten. Students are fully able to see the cost of their tuition and student loans before they sign any dotted lines.

Despite the fact that Space attributes her acquisition of student loans to “romantic” advice from others, she doesn’t shy away from taking responsibility for her debt.

“I don’t place blame anyone. It’s an unfortunate situation, but it’s purely my responsibility at the end of the day,” she explained under the “Who do you blame?” question in the sidebar of her website.

But with that said, kids are told from the moment they enter our nation’s education system that they need to go to college if they wish to be successful. They’re told from as early as pre-school that they can grow up to be anything they want to be. And at no point are most given actual financial advice about the different earning their college educations will yield.

Furthermore, as previously revealed by Space, kids are told the cost of tuition should never keep them from going to a good college.

John Doe, who wants to be a teacher, is never told that he can attend a community college for two years, transfer to a cheap public state college that requires minimal student loans to complete a degree, and still make the same amount of money as his colleagues who obtain their teaching degrees from Ivy Leagues.

Suppose two individuals walked into an electronics store: the first person is looking for a new DVD, and the second for a new television set. Then they notice a sign that says every item is $100. Naturally the person looking for the DVD will immediately turn around. But what if that person has no idea what DVDs are worth? What’s to stop him from getting ripped off?

Similarly, there should be a system in place that takes the actual “worth” of a degree and assigns a fair market value, just like every other industry. After all, aren’t we supposed to protect our children and our futures? As it stands now, we’re betraying them while simultaneously shooting ourselves in the foot since it’s not only them who will pay for this growing student loan debt bubble, but the entire country as a whole.