Why College-Goers Misunderstand Debt

Student-loan debt is one of the largest financial obligations many Americans will ever take on. To an 18-year-old who has never paid rent or balanced a budget, $80,000 in loans can feel abstract. What is rarely emphasized is the practical reality: monthly payments that can follow graduates for decades, quietly shaping where they reside, what jobs they take, and how they live. Yet college is often treated not as a financial decision to be carefully evaluated but as an unquestioned obligation, a path many follow with unthinking faith that the consequences will eventually work themselves out.

For many middle-class families, the decision to send a child to college is guided as much by emotion as it is by economics. For many middle-class families, the decision to send a child to college is guided as much by emotion as it is by economics. College is still seen by many as the safest route to white-collar employment and long-term stability, even as tuition rises and wage premiums for some degrees shrink. Parents often encourage borrowing, not because they have calculated the likely return on their child’s investment but because they fear the alternative, limiting their child’s opportunities for the future.

When young people are asked to make one of the largest financial decisions of their lives without the tools to assess it, confusion is almost inevitable. That optimism, combined with the cultural assumption that college is the default path for most students, can overshadow careful considerations of debt, monthly payments, or post-graduation financial realities. In this context, student loans are less a calculated investment and more an accepted cost of securing a socially desirable outcome. What is striking is how differently families approach college than they do other expensive long-term commitments. A mortgage or car loan is usually discussed in terms of monthly payments and household cash flow. College, by contrast, is often justified with general claims about opportunity or earning potential, while loan-repayment figures take a backseat. Most students can recite the total amount they have borrowed but have little sense of what repayment will demand once rent, utilities, and other basic expenses enter the picture. Interest accrual over time only magnifies that burden.

This gap in knowledge is reinforced by the limited emphasis on financial literacy in American high schools. Students are carefully guided through college applications, essays, and standardized testing yet often receive little instruction on how loans work, how interest accrues, or how to evaluate debt relative to income. As a result, student borrowing is often treated as routine and manageable at the outset, even though its consequences can prove inescapable later.

When young people are asked to make one of the largest financial decisions of their lives without the tools to assess it, confusion is almost inevitable. Until families, schools, and policymakers are willing to discuss higher education in concrete financial terms, including its costs, risks, and realistic returns, student borrowing will continue to be driven more by faith than by calculation. Reintroducing basic financial reasoning into the college decision would not diminish the value of education, but it would force more honest decisionmaking around a choice long insulated from scrutiny.

Reagan Allen is the North Carolina reporter for the James G. Martin Center for Academic Renewal.