Debt With No Degree: Dropouts Need Help For Student Loans
November 26, 2012

Think it’s hard paying back your school loans after you graduate? It’s nothing compared to the struggle faced by students who have all the burden of debt without a college degree to show for it. The job market is tough right now for everyone, even degree-holding graduates, but unemployment rates are even higher for those who drop out. A bachelor’s degree today certainly doesn’t carry the same weight as it once did in the job market, but it’s still you’re best bet on entering the middle class; bachelor’s degree holding individuals have a significantly higher earning potential than those with only a high school diploma. Unfortunately, the reason many do drop out of college, even with student loans to help pay for school, is cost.

According to Alisa Cunningham, one of several authors of a 2011 study conducted by the Institute for Higher Education Policy, a research firm based in Washington, D.C.: “Students who don’t graduate with some sort of credential or degree, they are the ones who are having the most problems repaying,” Cunningham told the Wall Street Journal. “It doesn’t even have to be a really high amount of loans. It’s just that they get in trouble because they have their daily lives they have to pay for.”

There are more students attending institutions of higher education than ever before; correspondingly there are also more students dropping out than ever before. With college tuition rates as high as they are, students are often compelled to drop out because they can’t afford tuition, but not before they become saddled with student debts. The schools with the highest tuition rates and the highest drop out rates are for profit colleges. For profits tend to place a large emphasis on marketing the school rather than on student success. Based on the numbers, public and private universities overwhelmingly better serve students.

So much of the financial problems students face in order to pursue higher education and the opportunities it provides can be solved by prudent borrowing and debt management. Students need to be aware of which schools will provide them a good value for their education and which schools have high drop out rates. Students will also benefit tremendously by entering into student loans with caution; by knowing what loans you need and having a plan on how to repay them once you’ve earned your degree, you can reduce your risk both of dropping out of school and of defaulting on your student loans.

The student loan landscape is a pretty tangled web and can be extremely difficult to navigate wisely. Fortunately for students there are organizations eager to help student manage and optimize debt.