Summary5 min read

Optimal Finance Daily: Why Student Loans are Not “Good” Debt

Host: Diania Merriam
Episode: 3313
Date: October 11, 2025
Featured Post: Jen Hayes of JenHayes.Me

Episode Overview

In this episode, Diania Merriam reads and reflects on Jen Hayes' article "Why Student Loans are Not Good Debt." The discussion tackles the long-standing belief that student debt is “good” debt, questioning its return on investment (ROI) and the risks associated with educational loans. Both Jen’s post and Diania’s commentary urge listeners to critically assess if taking on student loans truly benefits their financial future.

Key Discussion Points & Insights

1. The Myth of Student Loans as “Good” Debt

[01:36–03:30]

Jen Hayes shares her personal journey: going to college felt mandatory, and she was told by her parents that “student loans were good debt.”
The central myth: a degree automatically ensures a profitable career, making any debt worthwhile.
Quote [01:36, Jen Hayes]:

"I was young and naive and I believed my parents when they told me that student loans were good debt. It would be worth it I thought because I would make a lot of money after college. Then came the recession... I finished grad school buried in massive debt with a low paying job. I no longer agree with the idea that student loans are good debt."

2. Questionable Return on Investment (ROI)

[03:30–04:47]

Many students leave school with significant debt but not necessarily higher earnings.
Jen points out that higher earnings are offset by massive debt loads, particularly in fields like law, where debts can reach $200,000.
The ROI for many degrees (ex: communications, psychology, philosophy) is minimal.
Advice [04:21, Jen Hayes]:

“If you're going to take on student loan debt, don't. Just don't. The only time it makes any sense to take on debt is if you take on a minimal amount and major in something practical that will make you a lot of money right after you graduate, like engineering or another STEM subject.”

3. The Interest Trap

[04:47–05:37]

Compounding interest makes student loans exceptionally costly over time.
Even with a seemingly modest loan and interest rate, borrowers can end up paying “tens of thousands of dollars in interest.”
Interest often accrues during school and grace periods, and is capitalized (added to the principal) after deferments.

4. Difficulty Discharging Student Loans

[05:37–06:10]

Unlike most debt, student loans are rarely discharged in bankruptcy.
Nonpayment leads to wage garnishment, and the continued accrual of interest can extend repayment for years—if not decades.
Quote [05:58, Jen Hayes]:

“Student loan debt, unlike most other forms of debt, cannot be eliminated during bankruptcy... If you stop making your monthly payments, the lender will garnish your wages until the balance has been paid.”

5. Alternatives to Educational Debt

[06:10–06:38]

Jen proposes several alternatives:
- Work for a few years to save for a community college degree.
- Complete a two-year degree while working, then return to school for a bachelor’s only when finances allow.
- Consider if a bachelor’s degree is even necessary for your field.
Quote [06:30, Jen Hayes]:

"Whatever you decide to do, don't believe the lie that student loans are good debt."

Host Reflection & Broader Context

[07:42–09:00, Diania Merriam]

Diania echoes Jen’s skepticism but adds nuance:
- Not all degrees and all student debt scenarios are equal; STEM fields may still offer substantial ROI.
- Cites survey data: nearly 40% of people with degrees question whether college was worth it.
Diania acknowledges that while student loans have lower interest rates than credit cards and offer flexible repayment, they remain a serious financial burden.
Advises listeners to thoroughly research career paths and understand the risks and benefits before borrowing.
Quote [07:45, Diania Merriam]:

"Although many people view student loans as a way to obtain a higher paying job, this is not always the case. As highlighted in this article, there is a significant risk that the return on investment will be minimal."
Quote [08:25, Diania Merriam]:

"Student loan debt is a complex issue that requires careful consideration. Potential students should research degree programs thoroughly and understand the risks and benefits of taking on these loans..."

Notable Quotes & Moments

Jen Hayes:

"Making more money doesn't really matter if you also have more debt." [03:57]
Jen Hayes:

"Interest on student loans compounds. This means that the interest itself collects interest. This interest also accrues daily..." [05:07]
Diania Merriam:

"It’s clear to me that taking on student loans for your education is a topic that requires careful consideration before making any decisions." [07:42]
Diania Merriam:

"That’ll do it for this episode. Have a happy rest of your day and I'll be back with you again tomorrow where your optimal life awaits." [09:00]

Timestamps for Important Segments

01:36 – Start of Jen Hayes’ article narration
03:30 – ROI discussion and cautionary advice
04:47 – Dangers of accruing interest
05:37 – Student loan bankruptcy protections and consequences
06:10 – Alternatives to traditional student loan routes
07:42 – Diania’s reflection and actionable commentary

Summary Takeaways

Don’t accept the “good debt” myth: Student loans can be burdening without guaranteed payoff, especially outside practical, high-demand fields.
Understand interest impacts: Compounding interest can make even smaller loans balloon over time.
Student loans are hard to escape: Unlike other debts, they’re rarely dischargeable, ensuring a long-lasting financial impact.
Consider alternatives: Strategies like working before college, attending community college, and paying cash for further education offer more sustainable pathways.
Do your homework: Research potential earnings and debt load before committing; not all degrees or debts are created equal.

Listeners are left with a call to question assumptions about educational debt and to seek out practical, individualized strategies for debt-free academic advancement.

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Transcript12 lines

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[01:36]
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This is Optimal Finance Daily. Why Student Loans Are Not Good Debt By Jen Hayes of Jenhays Me When I was 18, I believed that going to college was my only option. I had naively thought that I would spend the rest of my life flipping burgers if I didn't go to college. Since my parents earned middle class incomes, they couldn't afford to pay for my education, but I was too well off to qualify for any assistance other than loans. I was young and naive and I believed my parents when they told me that student loans were good debt. It would be worth it I thought because I would make a lot of money after college. Then came the recession. A few years later I finished grad school buried in massive debt with a low paying job. I no longer agree with the idea that student loans are good debt. In some ways, student loan debt is actually the worst kind of debt to have one. The ROI is often minimal. The best argument for student loans being good debt is the idea that getting a degree will help you land a higher paying job than you would have if you hadn't gone to college. The concept is referred to as the return on your investment. You're spending an absurd amount of money, but you'll make a lot of money after you graduate, so it's worth it, right? This type of thinking explains why people are still continuing to enroll in college despite the insane cost of tuition. There are two problems with this argument. The first issue is that making more money doesn't really matter if you also have more debt. Law school graduates frequently finish school with 100 to $200,000 of debt. Lawyers can earn high starting salaries, but with that amount of debt, many of them are still struggling financially. The second problem with this argument is that many degree programs offer a very minimal return on investment. How many people do you know who make six figure salaries right off the bat with degrees in communications, psychology, philosophy, or any other useless sorry majors? Here's my advice. If you're going to take on student loan debt, don't. Just don't. The only time it makes any sense to take on debt is if you take on a minimal amount and major in something practical that will make you a lot of money right after you graduate, like engineering or another STEM subject. Number two the Interest is killer. It's often the interest, not the principle, that keeps people from being able to make a dent in their loans. Interest starts to grow as soon as you take out that first student loan. It will continue growing during your four or more years of college and during the six month grace period after graduation. If math isn't your strong suit, you might assume that someone with $75,000 of student loans and a 6% interest rate will pay $4,500 in interest on their loans. In reality, they will pay tens of thousands of dollars in interest. Why Compound interest? Interest on student loans compounds. This means that the interest itself collects interest. This interest also accrues daily if you have any periods of forbearance or deferment. Interest continues to collect during this time and is capitalized added to the principal. When you begin making payments again, you can't get rid of it. Student loan debt, unlike most other forms of debt, cannot be eliminated during bankruptcy. Because there are so many income based repayment options that allow you to lower your monthly payments, it's hard to argue that you can't afford to make your student loan payments. Generally speaking, public student loans can only be discharged in the event that the borrower dies or becomes severely disabled. If you stop making your monthly payments, the lender will garnish your wages until the balance has been paid. Considering that the balance will continue to grow substantially due to interest it may be a very, very long time before the loans are paid off. An Alternative to Debt Student loans are often viewed as an okay debt to have because educational loans are considered good debt. While going to college might increase your future earning potential, depending on what you major in, you don't have to go into debt to pay for your education. Believe it or not, you do have other options. Here's what I Work for a couple of years to save up the Money for a 2 year degree at a community college. Get your 2 year degree while working at the same time. Take another break to work for a few years, then go back for your bachelor's at a public school when you can afford to pay cash for it. Depending on what field you work in, you may not even need a bachelor's degree. Whatever you decide to do, don't believe the lie that student loans are good debt. You just listened to the post titled why Student Loans are Not Good Debt by Jen Hayes of Jenheyes Me.
[06:40]
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[07:43]
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It's clear to me that taking on student loans for your education is a topic that requires careful consideration before making any decisions. Although many people view student loans as a way to obtain a higher paying job, this is not always the case. As highlighted in this article, there is a significant risk that the return on investment will be minimal. As Jen mentions, not all students with student loan debt are in the same boat. Though a student who completes a degree in science, technology, engineering or math may have better job prospects than a student who majors in a non STEM field. Another interesting point is the finder.com survey that found nearly 40% of people who earn a college degree have doubts it was worth it These doubts could arise from not using the degree in their field or not finding a job at all. This is a concerning fact that underscores the need for potential students to research their desired degree program thoroughly and go into it with eyes wide open. The article insinuates that student loans are the worst type of debt to have. While I agree that student loans can be a burden, they're not necessarily the worst type of debt. Student loans typically have lower interest rates compared to credit card or personal loan debt. Furthermore, student loans may offer repayment options that other types of debts do not offer, such as income driven repayment plans. Student loan debt is a complex issue that requires careful consideration. Potential students should research degree programs thoroughly and understand the risks and benefits of taking on these loans, but that'll do it for this episode. Have a happy rest of your day and I'll be back with you again tomorrow where your optimal life awaits.