A unique new app helps students understand that a $30,000 career choice may not be worth incurring $100,000 of college debt

Student debt has been in the news a lot lately.  And with good reason. Fifteen percent of all American adults report they have outstanding undergraduate student debt while seven percent have outstanding postgraduate loans.

According to a Department of Education analysis, the typical undergraduate student with loans now graduates with loan debt of nearly $25,000. But many of the more than 45 million students with federal student loans are burdened with much higher debt. In fact, while the average federal student loan debt balance is over $37,667, many others have loans approaching or even more than $100,000.

Student loan debt has now become the second-highest consumer debt category after mortgages.

Was it a smart move for so many to take on so much loan debt in the first place? Do students always understand how the salary expectations of their chosen career may not warrant the excessive loans required to complete their studies?

Myth: A college degree always means financial success

Obviously, no one wants to go into debt. According to Nerd Wallet, students take on college debt with the best of intentions. They’ve been encouraged to pursue their dreams and that a college degree will be their ticket to a well-paying, successful career and a financially secure future.

But that dream can be quickly shattered when they wind up burdened with crushing debt they can’t repay. There are several reasons students fall into the degree debt trap and end up with a job that doesn’t earn enough to repay their student loans.

  • They are told the key to life success is a college degree
    Whether it’s their family pushing them towards college or a high school culture that bases its own success on the number of students going on to college, college isn’t right for every student. When students are overtly or subtly pushed into getting a college degree, if it isn’t a career they love and ultimately stick with, they may be setting themselves up for unmanageable future debt.
  • They don’t research projected income for their chosen career
    In many cases, students lack information about typical earnings in their chosen field and make borrowing decisions that saddle them with debt they’ll struggle to repay with their salary.
  • They don’t ask enough questions about their loans
    Whether it’s how student loan interest works, when repayments must begin after graduation or what actual monthly payments will be, they don’t ask the right questions and take on debt without understanding all the nuances.
  • The loans don’t feel real
    Students are often willing to take on large amounts of college debt because they don’t connect with the reality that they’ll eventually have to repay it – with interest. This “present bias” means people often make choices that benefit them in the short term and overlook future consequences.
  • They don’t consider waiting to start college
    Whether it’s wanting to save more for the expense of college, or uncertainty about which career path to pursue, there’s no harm in waiting to start college…and taking time to ensure that finances are in order. And nothing wrong with seeking internships or job shadowing opportunities to ensure the right career choice before incurring tuition debt.

Also worthy of serious student consideration is the demand for workers in manufacturing (welders, pipe fitters, etc.) and the construction trades (plumbing, electrical, etc.). Many other career paths exist with a need for workers who don’t want to sit in an office all day, including retail, hospitality and trucking.

Not every student is ready for two or four years in college. There are more opportunities than ever before for high school grads to find meaningful – and well-paying jobs – that don’t require a college degree.

Knowledge makes a difference

According to the American Psychological Association (APA), many students say they prefer to “just not think about their loans” because adding that debt stress to their academic stress is overwhelming. While that’s an understandable reaction, says the APA, research shows that hiding from debt can be associated with other poor financial life decisions.

How can we help students avoid the often life-changing pitfalls of unrelenting student debt?

The answer is Money Path. This unique tool takes high school students on a journey into the future to help them learn important life lessons today so they can avoid financial challenges later.

Money Path is a unique and comprehensive web-based app that links academic and career planning with financial planning. Money Path shows students the reality of how the academic and career choices they make will impact their lives and long-term financial wellbeing. Through a personalized, technology-based experience, students can:

  • Explore different life paths after graduation: whether it’s college, an apprenticeship, military service, or direct entry into the workforce
  • Investigate the cost of higher education and plan how to manage student debt
  • Customize a monthly budget based on their career starting salary
  • Learn creative ways to save for important financial goals like an emergency fund, a home, or retirement
  • Compare several different personalized life paths side-by-side

Clearly, Money Path is a tool made for today’s students because it enables them to confidently make decisions for their future.  Decisions based not on dreams alone, but on facts.  There is no other tool like it that allows teens to move through a personalized, step-by-step simulation of the many important decisions they’ll encounter after high school graduation.

Thanks to sponsor support, Money Path is currently available free to every high school in Wisconsin. Money Path will set teens on a course to reach their lifelong financial goals and strengthen their communities because once they sign up for Money Path, students have access to the Money Path app and its valuable planning tools as long as they need it.

Ready to help your students start on the path to making sound, real-life financial decisions? Learn more here or request a Money Path demonstration here.