Newsroom

The good and bad of student loans

By Catherine Mueller

July 12, 2022

Student loans have gotten a lot of press in in the past few years and most of it has not been good.

For some students, the headlines and stories are enough to scare them away from taking out any student loans – even it means not pursuing or postponing education beyond high school.

And while it’s good to be wary of borrowing any money you don’t need, borrowing money for your education in not necessarily a bad decision.

Here are some factors to consider when trying to decide whether to borrow for your education:

• Consider the benefits of student loans. When compared to other types of consumer debt, student loan debt is perhaps one of the best types of borrowing because it is an investment in your education and yourself. It doesn’t decrease in value over time (as what you purchase with other consumer debt may). And that investment in your education should grow over time as you are able to take on new career opportunities and earn increased salary.
• Borrow only what is needed to fund your education and not what is needed to fund a lifestyle.
• Be serious about your educational plans. If you change your mind and decide not to finish your education, you will still be required to pay back the student loans.
• Borrow federal student loans first. These loans often have the best benefits for students and are typically offered first to the student. Private loans are sometimes an option and sometimes necessary, but students should be careful about borrowing private loans, which increases their debt load and may not offer some of the repayment benefits.
• Minimize the amount you need to borrow. If you feel you need to borrow a lot to get the education you need for your chosen career, think about ways to cut costs. Can you attend a less expensive college or live at home to reduce your expenses?
• Pay the interest on the loan while you are in school. This greatly reduces the amount of debt you have when graduate because the interest on the loan is not allowed to capitalize while you are in school.
• Manage your student loans well by tracking the amount you borrow, understanding repayment options, knowing which loan servicer to contact if you have questions or issues, and setting goals to pay off the debt.

Many people have successfully borrowed and repaid student loans. Most likely, they knew the value of education, but also knew that student loan debt is a serious obligation – one which they were prepared to repay.