April 27, 2012

Good Debt, Bad Debt

Ben Franklin described it as the “Eighth wonder in the world.” Another adage reminds us, “It can be your best friend or your worst enemy.”

The “it” is compound interest which in a roundabout way is at the forefront of our daily news again, this time regarding the level of student loan debt in the U.S. With college loans now exceeding $1 trillion, we are very right to be concerned, parents, students and especially educators.

While the process of acquiring a loan is a fairly easy one, the decision to then take a loan should not be. Following the dictates of The Northwood Idea, we must practice careful planning when determining how much debt, if any, to take on to pay for something as important and expensive as a university education.

Before students decide to borrow to finance all or part of their education, it’s important for them to consider the median earnings for professionals in the industry in which they expect to work. And they need to look closely at the level and quality of experiential learning opportunities available, such as internships, leadership development, and student and volunteer organizations. If the job being considered is in an industry where the median salary is $38,000 annually (before taxes and living expenses) for example, $150,000 in student loan debt may not be a sensible choice.

At Northwood University, we have done, and continue to do, everything we can to ensure our students and their families are getting the best value for their dollar.  We offer everything from scholarships and student work programs, which help off-set the cost of tuition and living expenses, to real-world internships, practicums, study abroad programs, and industry partnerships. As a result of these programs, many of our students have two, three, or more job offers before they walk across the stage to receive their diploma.

There are those who will try to leverage the issue of student loan debt as a way to increase government regulation and control, especially in an election year. It is up to us to maintain a balanced and sensible approach to student loan debt.

“Business borrows first,” is still the rule of thumb in the marketplace today and it can be a model for students pursuing a college degree too, but only when careful planning dictates the need and value of borrowing to fund an education

Have a great weekend.


Have a great weekend.

Keith A. Pretty, J.D.
President and CEO
Northwood University
4000 Whiting Drive
Midland, MI 48640