USA Today has a good story about a young 29 year old with $165,000 of student loans.

She got a degree in Chiropractic health and makes $44,000 a year. Not surprizingly she can’t afford to eat out or feel she’s making any headway reducing her debt. She also isn’t saving for retirement nor does she have health insurance. She does however feel saving for her future kids education is important.

Hmmm….don’t you think you’d try and see if getting $165,000 in debt was worth it if you could only get a $44,000 job? Assuming a she pays 5% interest on her student loans and ignoring her other credit card debt and car loans, she’d pay about $687/mo interest on her student loan. Her monthly pre-tax income is $3700 so she pays a whopping 18.5% of her income towards the interest on her student loan!

Why would someone pay more than 1 times the potential annual salary is amazing. I have a friend who’s going to Harvard Business School. Luckily she has a business and the contacts she’s made in her first semester should more than pay for the education. But even if that hadn’t been the case, spending $150,000 atleast makes financial sense since many HBS grads make that in the first year.

Kind of like the kids who go to Ivy league schools to get philosophy and liberal arts degrees and then wind up with $120,000 student loans and $26,000 jobs!!! Its ok if your daddy is rich and can afford to send you there. But if you’re going to be paying off the loan yourself, you better make sure it doesn’t take you 30 years.