(Note the whole discussion below assumes my husband and I are paying for the education, not an employer)
If you’ve been reading this blog for more than a day, you know that I took out $40,000 in student loan debt to complete my undergraduate degree. While I only ended up having to pay off $26,000 of it (due to this awesome grant), I don’t regret borrowing for my education because it landed me a sweet job in my field of choice (marketing). I’ve been able to enjoy an above average income straight out of school. Yes paying off that debt was a giant pain, but the alternative (working a minimum wage job) is even worse.
Now that I’m student debt free, I’m wondering, would I ever go back into debt to continue my education?
My husband and I were talking about this a few days ago, and we came to some interesting conclusions. Getting more education to increase our collective earning potential is always one of the possible routes forward in life, but figuring out how to pay for it is another matter entirely. Would we take out student loans or save up to pay for it?
I think the answer to this question is “It Depends”.
It Depends on the Cost
First of all, it depends on the type of education we’re talking about. If it’s a certificate program that costs a couple hundred or thousand to complete, I would probably wait and save up the cash to pay for the program up front before taking it.
But what if it costs upwards of $20,000? If it’s a college diploma or masters program we’re talking about, it’s going to cost a ton more, and that amount of cash would be hard to save. In fact, being able to pay for it would mean draining our retirement account and emptying my emergency fund. Even after all of that, we still wouldn’t have enough, and would probably need to spend several years saving the difference. Is it worth it?
For a big expenditure like that, I would be more inclined to take out student loans (which are interest-free during the school period) and let my retirement accounts grow in the meantime.
It Depends on the Income Increase
My willingness to take on debt for continuing education also hinges on whether or not our family income would increase right away. If it was a certificate program that looks good on a resume but wouldn’t allow my husband or I to immediately ask for a raise or switch to a higher paying job, I wouldn’t be as willing to take on debt to finance it.
However, if getting the extra schooling allowed us to immediately increase our earning capabilities (and thus our ability to pay off the debt) I would be a lot more willing to go into debt over it.
My initial gut reaction is to do everything I can to avoid going into debt, but the idea of draining my savings accounts isn’t appealing either – I’ve worked so hard to save, I don’t want to undo all of that hard work.
At least I don’t need to make any decisions about this any time soon, extra education is still a long ways off.
What do you think? Would you go into debt to get more education and a higher income?