Does Education Predetermine Financial Success?

Study finds college grads are more likely to have mortgages and achieve stability… even with student loans.

Parents are quick to warn children that they’ll never achieve anything in life without a college degree, but most of us have met people in our lives who are flourishing in spite of the fact that they never attended college. So how true is it that you can’t succeed without continuing your education? And given the high cost of a higher education, is it a sounder financial decision to just skip more school and go straight to work?

According to a new Money Under 35 study by Navient and Ipsos, college graduates are more likely to become homeowners who can successfully sustain a mortgage and are more likely to avoid financial distress, regardless of whether or not those college grads took out student loans to fund their education. For the study they broke people into two groups – those 25-30 and 31-35.

In the 25-30 age bracket:                                   

  • 32% of those who have bachelor’s degree or higher have a mortgage, regardless of whether they borrowed or not
  • 24% of those with an associate’s degree have a mortgage
  • 20% of those who went to college but didn’t finish have a mortgage
  • Only 16% of those who graduated high school have a mortgage

In the 31-35 age bracket:

  • 45% of those with a bachelor’s degree or higher have become homeowners
  • 31% of associate’s degree holders have a home loan
  • 30% with some college but no degree own a home
  • 35% with no college education own a home

So as you get older, it’s possible to achieve homeownership and the same level of financial stability that you would with an education if you don’t have one. The moral of the story is that it may take you longer because you’re less likely to have the same income level as college grads – particularly in entry level positions when everyone is starting out in their late teens and early 20’s.

“You might think student debt automatically means you that you have to delay major milestones like homeownership so you can pay off your loans,” says Gary Herman, President of Consolidated Credit. “However, this kind of data reinforces the idea that even with the high price tag of today’s average college education it’s worth it for the income and the ability to reach your financial goals faster.”

When it’s worth it to borrow for school

Make no mistake – a four-year degree is going to set you back if you’re using student loans to cover the entire tab for your education. However, you have to balance that cost against the earning potential of your chosen career path. This means in most cases, student should take time to look up salary ranges of various careers before they settle on a major.

“Borrowing to go to college just for the sake of attending or for getting the ‘college experience’ isn’t in your best financial interest because you’re taking on debt without a clear path on how you’ll generate the funds you need to pay it back,” Herman explains. “But choosing a career with high earning potential that you can get into with an associate’s or bachelor’s degree in most cases is going to be worth the debt you have to take on in the long run.”

For more information on how to keep the cost of education low so you can advance your career, visit Consolidated Credit’s section on Affording College. If you’ve already finished school and you’re facing challenges in paying your loans back, we also provide information on Student Loan Debt Consolidation that could be invaluable to help you create a plan that pays off your loans as quickly as possible within the limits of your budget.

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April Lewis-Parks
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