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.