We came across an article titled "The net worth of college graduates with student debt is truly depressing" and started scratching our heads. Read on to see why...
1- "Americans age 25 to 34 with college degrees and student debt have a median net wealth of negative $1,900 according to a report analyzing 2016 Federal Reserve data released Thursday by Young Invincibles, a young adult advocacy group. That’s a drop of $9,000 from 2013, YI’s analysis found."
That's not good.
2-"It’s hard to say exactly why the median net worth of young adults with college degrees dropped during this period, but Allison speculates that one reason may be that in 2016, student debt accounted for a larger share of overall debt for these young people than it did in 2013."
That's not good.
3- "Unlike other types of debt, such as a mortgage, student loans don’t come with an asset that could apply on the other side of the net wealth equation."
NOT SO FAST!!!!!
What the author is suggesting is that student debt (and by association, education) is not a factor in the broader framework of wealth creation.
The problem with this analysis is that it doesn't take into account a key type of asset, especially for recent graduates: Their Human Capital.
The Importance of Human Capital
We make this entire financial picture easy to comprehend with the FitBUX Score, which up levels our approach with an easy-to-understand score. With our online tools, you can now run specific scenarios before making a decision: How should you repay your student loans? Do you extend your student loans to 25 years and/or repay them aggressively? Do you pursue loan forgiveness options? FitBUX Score variations highlight the potential impact of a given decision on your overall net worth, today and in the future.
So this $1,900 is only the visible part of a more complex picture. In reality your net worth is higher than you think.
To get an understanding of your true net worth, simply create your FitBUX Profile and get your FitBUX Score. You can then set up a call with a FitBUX Coach to get further insights into your situation and identify the optimal student loan repayment strategy. This is a free service from FitBUX. Always.