Forget part time work, job fairs and temp agencies: To find a secure, long-term job, most pundits agree, the best route runs through the classroom. So with unemployment still high and underemployment even higher, it's hardly surprising that droves of middle-aged Americans are rushing back to school -- and borrowing more money than ever. In fact, while every age group are borrowing more money in student loans, the fastest-growing demographic isn't in its 20s; it's in its 40s.
In 2011, educational borrowing -- and the furor over student loans -- reached a boiling point. Right now, the average college grad leaves leaves school carrying more than $25,000 in debt, and overall student loan debt is on track to exceed $1 trillion this year.
These fresh-faced grads are being joined by an ever-growing cadre of returning students. According to credit score tracking site CreditKarma, the number of 35- to 49-year-olds who are borrowing money for college increased by 47% in the last three years. The amount they're borrowing is also going up: During the same period, the average loan debt of people in this group went up from $9,000 to $12,000.
On the one hand, $9,000 is a far cry from the $14,000 debt that the average college grad in her late 20s is carrying. On the other hand, middle-aged students have less time to reap the returns on their educational investments.
When it comes to determining how much a degree is worth, the standard rule of thumb is to consider a year of salary: Students are advised to calculate the average salary of a graduate of the program and borrow no more than that amount. Assuming a 10-year loan repayment schedule, a graduate following that rule would have to pay 10% per year (plus interest) to service their debt. According to the Student Loan Network, students whose debt payments exceed 15% of their income "tend to default."
For a 25-year-old, this translates into 10 years of repayment, followed by 30 or more years of earnings that (presumably) start out higher, grow steadily and aren't reduced by student loan payments. For a 49-year-old, it means a repayment schedule that ends only eight years before social security kicks in. Denied the years of slow (but compounded) salary growth, their return on investment is likely to be much smaller.
This isn't to say that going back to school is always a bad idea. As The Atlantic's Jordan Weissmann points out,
If a worker's skill set is outdated, and it's unlikely they'll be picked up by a new employer, then going to school is probably the closest they'll get to an escape hatch. Plus there's no opportunity cost, since nobody is paying them anyway, and taking classes gives them a new resume line.
The key is to find a degree or certification program with a high rate of employment, as well as good prospects for the future. A good starting place is "What's It Worth," Georgetown University's report on the economic value of college degrees. But in a constantly-changing job market, one thing is clear: Even the best degree is still a gamble. And, if you're a returning student, the stakes may be higher and the odds may be even steeper.
Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at firstname.lastname@example.org, or follow him on Twitter at @bruce1971.