Investment, Risk and Reward

Investment, Risk and Reward …it sounds like I have turned financial planner.  Nothing could be further from the truth…..but, I am all about the plan.  Some of my earlier Blogs were about the importance of having a plan.  The plan I referenced was a plan for identifying career direction and using effective tools to meet that goal.  But for the last three weeks I have written about the importance of watching trends and aligning your career choices with marketable degrees.  I have also promoted the importance of completing that degree in four years.  But today, I want to take you further down the planning path and look at the impact of paying for college as an investment, reward and risk beyond completion of the degree.

In the Winter 2011 Newsweek Kaplan, Linda Stern wrote an article, Strategies to Help You Pay the Bills.  In it she says, “During the 2009-10 school year, tuition went up 6.5 percent at public schools and 4.4 percent at private schools, while the consumer price index actually fell 1.48 percent, continuing a long trend.  Since 1991college tuition has risen 163 percent and household income has gone up 23 percent, according to College Board and census figures.” While the numbers are alarming, she points out that thoughtful planning, effective questioning and reasonable judgment can result in controlled spending and available funds for advanced degrees or creating career opportunities.

So why am I talking about financial planning?  Because student loan debt is out of control and the ramifications are extensive.  Going back to the concept of marketable degrees, how marketable are you if you default on a student loan and create a poor credit rating?  Did you know that there is an increasing trend of employers who monitor credit ratings as part of employment prospects?  In an article published this past week in the New York Times, Laura Asher states some of her concerns regarding the student loan crisis as, “Things like buying a home, starting a family, starting a business, saving for their own kids’ education may not be options for people who are paying off a lot of student debt.”  The article addresses the fact that student loan debt now exceeds credit card debt for the first time ever and that in 2008 two-thirds of bachelors degrees awarded also carried student loan debt.  Click here to read the entire article.

Getting and paying for an education is an investment.  It is an investment in earning potential, social and cultural opportunities and self satisfaction.  It can have great reward both financially and in personal fulfillment.  The risk is how to balance paying for the education without using all of your resources and without loan debt that exceeds your earning potential and creates negative lifestyle impact.  When making decisions about schools… investment, reward and risk are definitely part of the equation.