College may be one of the best economic decisions a person can make. Having a bachelor’s degree will on average increase lifetime earnings by 66% and even higher with advanced degrees. Students seem to agree; in 2015, 69% of high school graduates enrolled in a college or university program.

The downside to post-secondary education is the 510% growth in national student loan debt over the past decade. The impact is far-reaching: an entire generations’ financial growth has been stunted due to student loans. The financial burden of these loans has far-reaching consequences that affect decisions such as buying a house, starting a family and saving for retirement.

In the next several blogs, I want to look at the problems higher education costs are causing on the personal finance level for students and families, the cost for the Millennial generation, and what solutions are available.

First, I want to introduce you to a friend of mine, whom I recently interviewed about her education and financial history. Even though she’s been 20 plus years out of college, student loans are still a significant part of her finances and have shaped her perspective on money.

When I applied to (college) it was haphazard.

A Common Story: Student Loan Debt and Personal Finance Struggles

This story highlights several of the most prominent issues with student loans that I see, and it’s something I’d like to use to explain this in more detail below.


College is one of the biggest financial decisions in a person’s life, and students often lack the perspective necessary to make the best choice. The cost of some four year universities is upwards of $250,000. Many times the biggest financial decision high school students make is whether or not they should work a part-time job during the summer.

Combined with this lack of experience making financial decisions, many students have certain lifestyle expectations upon finishing college. Most teenagers have little clue how much money it would take to sustain the lifestyle they see themselves living. Without taking this into consideration, they may pursue degrees that are interesting to them without knowing if their chosen career path will support the life they want.


Using numbers may seem like a logical way to approach college funding. If a student wants to be an engineer, you could make a reasonable assumption on how much they would make based on the starting salary data and the school they choose. Knowing this, you could back into what a reasonable level of student loan debt would be.

The problem is, choosing a college major isn’t always easy or definite. According to the National Center for Education Statistics, 80% of students change their major once in college, and the average student changes majors three times. Many commit to a financial aid package without having this most useful piece of information, and knowing whether they are making a wise financial decision.

Another all-encompassing issue is what, beyond a degree, do you and your student want them to get from college? There is a lot of talk about return on investment, or whether you are getting your money’s worth by attending certain colleges. This has to be considered along with the overall experience of college. Some argue there is more to get from college years then simply coming away with a marketable degree. Some things you can’t quantify by dollars, such as personal, emotional or spiritual growth.


In a recent survey by, 68% of high school seniors said “they literally knew nothing” about student loan payment or refinancing services available to them after college. With an average counselor to student ratio of 476:1, it’s no wonder students are clueless. Beyond a token financial aid information night, there is very little communication on college financial issues.

Many students are expected to attend college, yet have little knowledge of student loans or how to evaluate various financial aid packages. Then there is the formidable task of filling out financial aid forms.

While there are many options for paying for college, the easiest is with student loans. Searching for and applying to various grants and scholarships, signing up for a service commitment in return for college funding, and working through college are all alternatives to borrowing money, but require significantly more time and energy to secure. Many students find it easier to take out loans, while failing to understand the full magnitude of the debt they are incurring.


High school personal finance classes are required in only 17 states. Students enter college with new found freedom and are easily enticed to sign up for a credit card in exchange for a pizza. Plastic in hand, most students lack fundamental knowledge of APRs and the pitfalls of debt. As you heard in my friend’s story, students are woefully unprepared to deal with decisions about debt.

Former Federal Reserve Chairman Ben Bernanke summarized the need for financial education:

“Financial education supports not only individual well-being, but also the economic health of our nation … Consumers who can make informed decisions about financial products and services not only serve their own best interests, but collectively, they also help promote broader economic stability.”


Parents are many times the most influential force in helping students decide whether and where to go to college. However, the college landscape has changed significantly over time, even in the last 10 years, and doing what worked for mom and dad will often not work now. The cost of tuition between 1971 to 2015 at public four-year schools went from approximately $500 per year in current dollars to $9,139, meaning the cost of tuition has increased over 1800%! College tuition is growing on average more than 6% above inflation every year, begging the question, how is this sustainable?

In our next post, we’ll discuss how student loan debt has affected the Millennial generation and what each family can do to prepare for the costs of higher education.