Borrow Wisely: The Role of Student Loan Debt

by Roger Michaud
Roger Michaud is a senior vice president and director of sales for Franklin Templeton 529 College Savings Plan. Franklin Templeton is a proud supporter of Jumpstart. Mr. Michaud is also chairman-emeritus of the College Savings Foundation, the leading nonprofit helping American families save for their children’s college education.

Remember back in the good ‘ol days, when college-bound high school seniors occupied themselves with pondering their preferences: East or West Coast? Large or small campus? Thousands of miles from home, or close enough to return for Sunday night dinners?

Paying for college was a serious consideration, too, but tuition and fees were substantially cheaper.

Today things have changed. Jumpstart Corps members are not alone when it comes to having loans to cover the climbing cost of college.

Americans have amassed a record-high $1.2 trillion in student loan debt(1), with the average college graduate emerging with approximately $30,000 in student debt.

While these numbers can feel overwhelming, it’s natural that many students wonder if a college degree is still worth as much as it used to be. I’m here to tell you that investing in a college degree is one of the smartest moves you can make while investing in your own future. Here are just a few reasons why:

  • College graduates earn more(2)
  • College graduates have lower levels of unemployment(3)
  • A college degree can pay for itself
  • College is more than just a degree – it helps prepare students for a career

How do you enjoy the value of college without going into mountains of debt? It all comes down to rethinking how you approach paying for college. Don’t assume you can (or should) rely solely on loans. Find other ways of financing your education first, and use student loans only as a last resort.

  • Save first and ask family and friends for support
  • Look for free money from scholarships and grants (there are several good websites to help you search).
  • Make smart decisions by (1) knowing the cost of the prospective college after financial aid (2) shopping around for your respective major, (3) make sure your declared major is something you’re passionate about, as, changing majors mid-college can be costly (4), getting a clear picture on the income potential from your college and major, and (5) committing to finish your diploma in four years or less.

The simple truth is that student loans are neither “good” nor “bad.” They’re simply a tool.

Ultimately, college affordability is the culmination of many little steps, ranging from finishing a degree on time (or early) to taking summer courses; from living at home to selecting an affordable institution; from carefully selecting a major to carefully charting out your course load.

While you should first take other steps, such as saving money, utilizing tax-advantaged savings like 529 college saving plans, and looking for grants and scholarships, loans can be useful in bridging the final gap between savings and final costs. I believe loans should be the last resort, not the first.

Borrow wisely and enjoy the fruits for decades to come. As they say, education is a gift that lasts a lifetime. Investing in yourself through a quality education will provide you the essential tools to succeed in tomorrow’s economy!

To learn more about saving for college and managing student loans, visit


Investors should carefully consider college savings plan investment goals, risks, charges and expenses before investing. To obtain a disclosure document, which contains this and other information, talk to your financial advisor or call Franklin Templeton Distributors, Inc., the manager and underwriter for a 529 plan at (800) DIAL BEN / (800) 342-5236 or visit You should read the disclosure document carefully before investing and consider whether your, or the beneficiary’s, home state offers any state tax or other benefits that are only available for investments in its qualified tuition program.

1. Source: Consumer Financial Protection Bureau,
2. Source: U.S. Census Bureau, Current Population Survey, 2014 Annual Social and Economic Supplement
3. Source: U.S. Department of Labor, Bureau of Labor Statistics, Current Population Survey

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