He analyzed four hypothetical scenerious to determine lifetime disposable income of 18-year olds:

1)      One who borrows $30,000 a year to attend a four-year college.
2)      One who borrows $15,000 a year for four years.
3)      One who graduates debt-free.
4)      A high school graduate.

Student Loan Debt

What Kotlikoff found:

Using the starting salary of $45,000, all the college graduates ended up with more disposable income than workers with just a high school diploma. (This study does not include those who went to a tech school or obtained an associate’s degree or apprenticeship somewhere.)

The college graduate who borrowed only $15,000 a year ended up with 4.4% more spending money than the one who borrowed $30,000 a year.  (Obviously, the more you borrow the more you will pay back-with interest.)

The college graduate who graduated debt-free had nearly 9% more disposable income than the one who borrowed $30,000 a year. (Wouldn’t it be nice if everyone had access to a free education or at least a rich grandparent?)

But get THIS…

If the heavy borrower earned the same median income as a high school graduate immediately after college, which is $28,000, the graduate’s spending power would be 16% lower than that of the high school graduate!

Kotlikoff’s final conclusion…

Because it’s nearly impossible for a borrower to discharge student loans through bankruptcy, the debt just keeps accumulating –even if the borrow can’t make payments. “It’s like a debtor’s prison for life,” he says.

 

"In our discussion about the rising burden of student loans, we received numerous comments from readers who took on a lot of debt to pay for their education. Some found they simply couldn’t afford to repay the loans with the jobs they found after college. Others said their debts determined their life choices. Still others wondered if the college experience was worth the financial burden they’ll carry for decades afterward. Here are excerpts from their comments." (Read more comments from the New York Times)