Unlike a car that depreciates in value the minute you drive it off the lot, a college education is an investment that continues to payoff—with increased earnings not only in the initial year after completion, but for a graduate's lifetime.
Further, well over half of UT System undergraduates take out loans to help finance their postsecondary education. Earnings greatly impact not only the borrowers’ ability to repay their student loans, but how burdensome those loan payments may be. Median cumulative loan debt for a bachelor’s degree from a UT academic institution is $20,142, though several UT institutions are significantly below this amount (graduates from 2001-02 to 2013-14, inflation adjusted). When considered on a monthly basis, median pre-tax earnings one year after graduation are approximately $3,700 compared to an average loan payment of $207 (with a standard 10-year repayment plan). This equates to a debt-to-income ratio of 5.6% one year after graduation, which is well below ratios that are considered even moderately risky (9%) and even slightly below the 6% threshold that is considered cautious.
Taking out student loans can seem overwhelming for many students, but when the average student loan debt for UT System bachelor’s degree recipients is considered in the context of estimated earnings annually (or monthly), debt figures gain meaning, are easier to understand, and clearly show the value of a degree.