As postsecondary education costs continue to soar, students are increasingly met with challenges about how to pay for college, and it can seem heavily burdensome to take on debt in order to meet tuition.  But smartly utilizing student loans can act as an investment for your future—and investing in your education can improve your odds of graduating, create boundless career and financial opportunities, and protect you from defaulting on your loans.

1)   College is an opportunity to create a higher-income future for oneself.

Earning a degree improves the likelihood of a more profitable income.  The average annual salary of workers with a high school diploma is barely above $35,000.  Compare that to the average annual salary of a worker with a bachelor’s degree: $59,124.  Unsurprisingly, over the course of their careers, college graduates are expected to make $1.3 million more than those with only a high school diploma.  Students who graduate are also less likely to be unemployed (4.5% unemployment rate of workers with some or no college education compared to 2.2% for those holding a bachelor’s degree).

2)   The problem isn’t debt, it’s debt without a degree. 

It’s clear: without a college degree, students are less likely to land higher paying jobs, and without a solid source of income, repaying loans can be exceptionally daunting.  By 2020, it’s estimated 65% of jobs in America will require postsecondary education beyond high school.  But in 2016, roughly 28% of borrowers reported they did not complete the educational program for which they took out student loans.  Sadly, a third of those borrowers go on to make less than $25,000 a year.  Concurrently, those who drop out are four times as likely to default on their loan repayments than those who graduate.  While loans can seem unavoidable, research has shown garnering a degree is worth it in the long run. 

3)   Dropping out to start making money isn’t always the right choice.

Too many low-income students are incurring debt, dropping out, and finding no road to pay back the loans.  While 60% of the wealthiest students graduate, only about 16% of low-income students went on to earn a degree, with many citing work demands as the main motivation for dropping out.  It can seem enticing to immediately start making money, but what students need to know is for those who go on to earn a degree just 10% have defaulted on their loans.  For college drop outs, 49% ultimately defaulted.

4)   Taking on more debt doesn’t increase one’s chances of defaulting

We’ve seen, since 1980, tuition costs at public universities have risen 344% with the vault in private college tuition up 241%.  These can seem like intimidating jumps, but the more a student borrows to curb tuition costs, the more likely they were to graduate and avoid default.  In fact, the default rate among those that borrowed $40,000 or more was just 7%.  For those who borrowed less than $10,000, their default rate was a whopping 43%.  

5)   The overall numbers don’t always tell the entire story

You may have seen the scary statistics released by the Federal Reserve: there is nearly $1.4 trillion in outstanding student loan debt in the U.S.  But that number can be misleading.  Of that $1.4 trillion, 57% of that debt is held by people with graduate school loans—loans that, unlike four-year institutions, have no cap.  What’s more is nearly half of that total is held by people who make at least $81,000 a year (placing them in the top 25% of earners with student debt).  For those that make at least $81,000 a year, they are much more likely to pay off their loans, and pay them off in a shorter period of time.  $1.4 trillion is a startling number, but it doesn’t paint the whole portrait, and it should deter students from investing in their education.

A college degree is the surest outcome a student has at repaying their loans.  And while we can’t fix the soaring costs of college, we can teach students to be financially savvier. How much you borrow, at what times, and on what terms are the most important factors when forecasting a student’s financial future.