Personal Finance: Educated but broke

Michelle Singletary
Thursday, August 19, 2010; 10:17 AM

I hate it when people say a student loan is good debt. There is no such thing as good debt. There is only debt. With that in mind, of course I side with the growing number of experts who are boldly arguing that racking up a lot of debt for college isn't such a great investment after all.

"Perhaps the greatest lesson of the Great Recession isn't that you shouldn't go to college, but that you should approach it like you would any other investment: with caution," writes Allison Linn in Is it worth it to go to college?.

"It's a very risky investment," Laurence Kotlikoff, an economics professor at Boston University and president of Economic Security Planning Inc., told Linn in an interview.

Linn reports that a small group of economists and others have begun to argue that the investment is, in fact, too risky, and that people should skip both college and the debt associated with it. The debate over how much a college education should cost is brewing as the economy slowly recovers and college tuition steadily increases, leaving many graduates in debt.

Let's look at the example Kotlikoff uses. He calculated how much discretionary income a student would have after graduation, assuming he or she took out loans to fund an education at University of Massachusetts at Amherst, a public school, or New York University, a private one. After factoring in everything from taxes to 401(k) contributions, Kotlikoff calculated the graduate paying off the debt from UMass would have $36,515 for discretionary spending the first year based on a salary of $65,900. Using the same factors, The NYU graduate would have $22,128.

Of course, a lot of factors could alter the calculations, but Kotlikoff's point is that you need to do the math, which a lot of families are not doing.

"If you become a philosophy major and that somehow can't translate into much income in the future ... the payoff just won't be there," Kotlikoff said.

Read Linn's article, check out my column today about student loan debt, and then join in the debate. This week's Color of Money Question is, "If you accumulated a lot of debt for college, have you found it worth the burden?" Send your responses to and put "Is College Worth It?" in the subject line.

Responses to Workplace Wrath

I received an overwhelming number of responses to last week's Color of Money Question. I asked whether you thought Steven Slater should be applauded for how he left his job. Slater was the JetBlue flight attendant who has generated a lot of media attention for throwing a tantrum after an alleged encounter with an unruly passenger. His antics have many people praising him as a hero for put-upon service workers, while others consider his behavior reprehensible.

Here's what some of you had to say:

"No, he should not be applauded," said Lockey McDonald of Decatur, Ga. "If he is fed up with dealing with this type of passenger, he should go into another profession. He'd be a happier person. In the past twenty years, civility, respect for others, and simple manners have gone by the wayside - we are becoming a nation of loud, rude people: ugly Americans."

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