🎓 How much student debt should you take?

Why tech school is becoming more popular

April 22, 2024

Why do people take on so much student debt?

The short answer is that education prices are rising rapidly and there is an increasing expectation that children will get post-secondary education.

From 2000 to 2021 college tuition has jumped by roughly 65% and this is what most students blame the large amount of student debt on, but did you know that in just the last decade the student loan balance has increased over 65%? That means in just half the time student loans have increased more than tuition has in over 20 years.

This means that there is more going on than just increasing tuition. These days we have a higher population and a higher percentage of the population going into post-secondary education, but this is still not enough to justify the loan balance going up twice as fast as tuition is. There is a bigger underlying issue behind this increasing debt that is crippling young Americans.

People are going to school more than ever now and with the promise of making significantly more money with a degree than without students are much more willing to pay top dollar for education. The issue lies with the fact that the students do not understand the whole picture.

The student loan epidemic

The issue with student loans is not the fact that tuition is increasing but that people are increasingly using student loans for degrees that do not produce a return on investment.

To further this epidemic people are also using student loans for things unrelated to education. This includes things like fancy dinners, vacations, and expensive hobbies. It is okay to enjoy your younger years but not at the expense of the rest of your life.

Students are less willing to work in college than ever, yet they are also taking expensive vacations more than ever, all financed by student debt. If you want to partake of the finer things in life and have expensive hobbies throughout college you NEED to have a part-time job. As the saying goes “work hard to play hard”.

With a combination of rising costs of school, students taking degrees that won’t pay the bills, and students spending tons of money on things unrelated to education it is no wonder we are facing a student loan epidemic.

How do you make sure you are safe?

Many people who go into crippling student debt don’t even realize how crippling and ruining it will be until it is way too late. A popular rule of thumb is to make sure that you do not borrow more than the first year's salary of what you can expect with your chosen degree.

If you do not meet this requirement it may be because of several factors that you can change or control to make sure you fit within the guidelines. Here are the biggest reasons you might not fit this rule…

  • Your chosen degree is not applicable to profitable jobs

  • You are attending a school out of your budget

  • There are much cheaper ways to get the same degree

  • You do not know exactly what you want to pursue in life

  • You are taking on more loan than you need to cover expenses you don’t really need (like vacations)

  • You do not plan to work a part-time job to cover some expenses

Beyond taking strategic degrees and not borrowing more than you truly need you can also consider alternatives to post-secondary education. In the next section, we will talk about technical school and why more students than ever are choosing to pursue this path rather than a traditional college or university.

Why tech school is becoming more popular

First off if you do not know what tech school is or if you have not really considered it as an option it is basically another option for post-secondary education that helps you get more technical jobs and certifications. Tech school is for people who want to become electricians, plumbers, and HVAC installers.

The trades you can go into through tech school are in more demand than ever and we have a very low supply of qualified workers to fill these roles. This means there is a huge supply and demand discrepancy leading to higher than average wages for a lot of trades.

One example of this is that the average electrician salary in the US is over $60,000 and the average wage in the US is less than $60,000. On top of that trade school is significantly cheaper to attend so even if they are making just slightly above average wages they have more money left over after expenses because they do not have to pay pricy student debt interest.

In the end with higher traditional education prices rising and the salary for trades and crafts increasing more and more Gen Z are opting to go to trades school, and this is definitely in their best interest.

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