Pre-service Elementary Ed Students and Student Loans

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One of my jobs is teaching Math for Elementary Education at a university nearby.  Most of the students who take the course are Freshmen and Sophomores.  This semester I gave them an extra credit assignment designed to:

1) Encourage them to not take out any loans or reduce the amount of loans they do take out; whether student loans, car loans, furniture loans, etc.
2) Encourage them to invest early.  Even if they have student loans, they need to see the importance of paying them off quickly so they can start to invest…and the earlier the better.
So why do I care about my students’ student loans?? Because the average teacher who graduates with their Master’s degree (and many states require a Master’s degree to keep your certification) end up with $50,000 in student loan debt.  That is overwhelming when the starting salary is around $34,000!
Now, I decided to NOT have them do much computing in this assignment because I wanted the focus to be on evaluating and analyzing the numbers, not computing them.  The basic idea was to have them project out how much they will borrow for school (or use the averages given on the website), determine how much per month and for how many months they will be paying back their student loans, and then take that same monthly payment and see how much that would amass if they were able to invest that money instead of having to pay back student loans.  If you want to see the actual assignment you can take a look at one student’s responses here.
The general theme of the responses I got back from the students can be summed up by these three students:

 

The thing that really took me off guard was how small the amount was of “my contributions” compared to what I would actually have at the end of the time period.  I have never had interest as a “friend”, only as an enemy in the way while paying off my car loan.

After seeing these numbers it is so clear to me that you need to steer as far away from loans and debt as you can. It is worth it to get that summer job, and take the time to fill out as many scholarships you can, that way you’re not drowning in debt and you can put the money towards something that will benefit you.

These numbers were quite shocking and honestly quite nauseating.  Why were our parents on informed of this? Or why were we not informed of this earlier?  This was very eye opening and I hope it is not too late to change the way I invest money.

Too often people make decisions because of their debt.  While in college you may not be looking at what the debt will do to you in the future, you are only concerned about getting your degree.  What if you get into teaching and then decide it really isn’t what you want to do the rest of your life (40-50% of new teachers leave within the first five years)?  What if you get pregnant and decide you would like to stay home with your new baby?  Each of those scenarios has a decision that should be an easy one to make, but too many people CAN’T make the choice they want to make all because they have to stay working in order to make their loan payments.  So, I’m doing my small part to open my students’ eyes to their debt before choices are out of control.