Canadian businessman and television personality Kevin O’Leary is not averse to investing in yourself via college, but taking on student loan debt should come with an important self-imposed condition–paying it off within a 10-year timeframe.

“You have 10 years to pay it off,” O’Leary told CNBC Make It. “Let’s say you’re graduating and you’re [22] — you have to pay that off by the time you’re 32.”

“College is an investment in your future but it also brings on debt,” O’Leary added. “In other words, you better think long and hard about the debt you’re going to incur in going to college.”

10 years may be the bare minimum–O’Leary told CNBC Make It in a previous segment that new grads should pay off student loans within three years. This is because the longer an individual takes to pay off their loan, the more interest accrues.

Furthermore, O’Leary suggests that before even taking on student debt, prospective college students should think long and hard prior to choosing a major–preferably one in the STEM  (science, technology, engineering, mathematics) field.

“‘What am I taking in university that’s going to give me a salary that lets me pay this off?'” is a question O’Leary says would-be students should ask themselves.

Related: Why Investors Are Concerned About a Global Economic Slowdown

Student Loan Debt Reaches Record Levels

2018 saw student debt levels reach a new record of $1.5 trillion. Individually, Americans carry between $20,000 to $25,000 in student loan debt on average.

On the real estate ownership front, student loan debt is also causing young Americans to put homeownership on the back burner, according to two papers published by the Federal Reserve earlier this year.

This is what the central bank found:

  • Homeownership for adults ages 24 to 32 fell 9% from 2005 to 2014
  • 2% of the 9% decline is due to student debt
  • 400,000 borrowers didn’t purchase a home as a result of student loan debt
  • Student loan balances have more than doubled to about $1.5 trillion in the last decade
  • The average debt per student between the ages of 24 to 32 set rose from $5,000 to $10,000 from 2005 to 2014

“While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits,” the researchers noted.

“On the one hand, student loan payments may reduce an individual’s ability to save for a down payment or qualify for a mortgage. On the other hand, investments in higher education also, on average, result in higher earnings and lower rates of unemployment,” wrote the researchers.

Financial Sector Impact

With the Federal Reserve sounding more dovish as of late with respect to interest rate policy, will lower rates spur more debt? Will this prop up the financial sector with more banking activity?

ETF traders can take advantage of their opinions through upside in U.S. cyclical sectors over defensive sectors. The Direxion MSCI Cyclicals Over Defensives ETF (NYSEArca: RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.

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