When debt produces return on investment

While debt often has negative connotations, not all debt is bad. Debt in pursuit of a university degree is one of the best investments a student can make in his or her future. The return on investment in education is real.

The Organization for Economic Cooperation and Development (OECD) did a study a couple of years ago. The OECD found that the typical graduate from a four-year college earns 84 percent more than a high school graduate. The same study also indicated that a college degree is worth $365,000 for the average American man after subtracting all the direct and indirect costs over a lifetime. For women—who still tend to earn less than men—a college diploma is worth $185,000.

College graduates aren’t having problems getting their careers started either. The US Department of Education’s National Center for Education Statistics reports that as of 2012, college graduates from the Class of 2008 had spent just six percent of the previous four years unemployed. Eight out of ten Class of 2008 graduates had one full-time job during the previous four years, another eight percent of the graduates had multiple jobs during that time period.

No one wants to start his or her career in in the red. And the amount of debt a student incurs should be considered in light of his or her intended career choices. The good news, however, is that in addition to the economic returns your college education will produce, the federal government gives graduates more advantageous repayment options than ever before.

Under Income Based Repayment (IBR), students who have US Department of Education (DOE) loans only have to pay a maximum of 10 percent of their income per month. Any balance left after 20 years is forgiven. IBRs are especially attractive to graduates working in government and non-profit jobs because the DOE forgives their loan balances after 10 years. IBRs are growing in popularity among students. The DOE reports that between April 1, 2013, and September 30, 2014, participation in IBRs doubled.

Graduating from Pace also is an advantage for people carrying student loans. Approximately six out of ten Pace students have at least one internship. Many have multiple internships. This real-world experience gives our graduates an advantage in the job market. In fact, PayScale ranks Pace graduates in the top 15 percent nationally for average earnings in first and mid-career jobs. Pace students also have a lower loan default rate than students from many similar schools.

Students or parents considering student loans should explore their options with Pace’s professionals in our Financial Aid Call Center at 1 (877) 672-1830; while graduating students should talk with a counselor in our Career Services Department. The department is one of the largest of its kind among colleges in New York City. Students can make an appointment with a counselor by contacting the appropriate campus office at http://www.pace.edu/career-services/location-hours-staff-directory.