Can a Minimum Wage Job Eliminate the Need for Student Loans?

Michael Lux Blog, Student Loans 0 Comments

There was a time when a minimum wage job was all that was necessary to fund a college education.  Those days have long since passed.  As the price of college has skyrocketed, minimum wages have not kept pace.

Even though a minimum wage job doesn’t go nearly as far as it once did, can it still make a meaningful difference?

The Value of a Minimum Wage Job in College

In the United States, minimum wage is currently $7.25.  Many cities and states have higher minimum wages.

If a college student is able to work a 20 hour week for 50 weeks out of the year, he or she would be earning $7,250 per year.  That number also assumes that particular student isn’t earning extra money during the summer.

While $7,250 may not seem like much money compared to yearly tuition costs at most schools, it adds up quickly.  Four years of part-time minimum wage work can lower a student loan balance at graduation by over $30,000.  If you put in extra hours or are able to earn more money, the savings on student debt can be even larger.

On a ten-year repayment plan, that $30,000 less of student debt results in a monthly savings of well over $300.

That little bit of work every week during school can make a huge difference in your life after college.  That extra $300 per month is more than enough to buy a nice car.  Better yet, having that debt off the books could mean the difference between an approval an a rejection on a home loan.  Best of all, you could take that extra $300 per month after graduation and put it towards your retirement.  The long-term advantages of a minimum wage job during college can be life-altering.

Minimum Wage Benefits

A part-time minimum wage job may not come with a 401(k) or health insurance, but the benefits of the job go far beyond a paycheck.

For most college students, part-time minimum wage work is in the service industry.  It could be working at a restaurant or in retail.  Though these jobs lack glamour, they provide many valuable life lessons.

Many successful individuals can trace their success back to the hard work and dedication that they learned while working a minimum wage job.  Working in the service industry also provides perspective that has value in many other industries.

If nothing else, if you put a résumé in front of a potential employer and show them that you worked hard during college, it will give you a leg up on the competition.  It means you are someone who has time management skills, it shows you are someone who can handle a stressful environment, and it shows that you are not someone who sees certain tasks as being “beneath you”.

Finding Time for Work and School

The most common excuse for not working during school is that focusing on grades is much more important.  While getting an education is the primary objective during college, it doesn’t mean working is impossible.

Finding time for both does require some time management skills, it may require waking up early on the weekend, and it may not be as fun.  That being said, nearly every college student can find 20 hours in a week to earn some extra money.  If nothing else, it can provide a healthy break from your students.

Bottom Line

Making $7.25 an hour probably won’t pay for your education.  It will require some sacrifices, and you won’t see the benefits right away.

However, the benefits are very real.  Attending college and working part-time during school will put you in a significantly better position financially, make your résumé more competitive, and teach lessons that cannot be taught in a classroom.