This morning, I read this CNBC article, which discussed the fact that student loans have gone up over 150% in the last decade. The article states that “The average outstanding college loan balance is now $34,144, up 62 percent over the last 10 years.”
Like most college students, arts majors (music, drama, dance, visual arts) will need to take out college loans in order to pay for their schooling. Generally, institutions of higher education don’t have a sliding scale for tuition based on projected earnings for each college major. Arts majors need need to weigh the value of the education they are receiving with the amount they will need to pay in order to earn their degree.
When I coach artists, a big part of the conversation is about lowering financial risk in order to have more flexibility to pursue the things you love to do. With college becoming more expensive than ever, I encourage you to consider the impact of taking out college loans in order to pursue your art. Here is a breakdown for you to consider as you make the decision to take out college loans:
- First, lets look at the average pay for artists working in the field.
- A salary of $51,000 or $43,000 a year is a good amount of money, but it starts to become a challenge if you have 30 years of college loans to pay off.
- Let’s do the math.
- As of July, 2017, the average federal loan interest rate sits at 4.45%.
- The average student loan at the end of the 2016 academic year was $37,172.
- If you take the normal 30 years (360 payments) to pay off your loans, you would have a monthly payment of $171 a month.
- The amount in interest you would pay for that period of time would be just over $28,000.
- The TOTAL amount paid (Interest + Principal) during this time would be $62,197.
- If you came out of school with the intent to be a software engineer with an average salary of $81,000, the percentage of your annual loan payments against your salary would be about 2.5% of your annual income.
- If you came out of school with the intent to be an arts educator, with an average salary of $43,000 a year, the percentage of your annual loan payments against your salary would be about 4.7% of your annual income.
To be clear, there is still great value in taking out loans in order to earn a college degree, as long as you are informed when you make your final decision about where to go. If you would like to do the math yourself, click here to access this free online tool I created to help you think about your college loans.
How are college loans influencing your career decisions? Tomorrow, I’ll list some strategies for those of you who have already taken out college loans.