While you may hear about how many people regret taking out student loans, there are reasons why you may want to do so. Here are some things to factor in when deciding to take on a student loan or not.
Student loans can be used for other expenses besides tuition, room, and board. Many people think of student loans as only being able to be used on things like tuition, room, and board. And though that indeed is what you will use the bulk of your loan money on, you can also use your funds for essential college expenses like textbooks, a laptop, and computer software. Those are not insignificant costs, and the fact that student loans can ease the burden on you and your family is a good thing. However much student loans suck, they carry much lower interest rates than expensive credit cards or personal loans.
Next, paying off student loans may help you build credit. Student loans, used responsibly, can help college students and graduates build their credit scores. Because many college students don’t have any other bills or debts associated with their names, student loans may be the only way for students to begin building their credit history. Having a good to an excellent credit score will come in handy throughout the rest of your life as you apply for apartments, look for credit cards, finance a home purchase, and even when you’re applying for jobs.
Student loans can be very expensive. When you borrow student loans to pay for your college education, you don’t just have to pay back the amount that you borrowed: You have to pay back interest as well. On the high end, that can be comparable to a credit card. If you can afford to pay for college without using student loans, it would be in your best interest to do so. And be sure to always accept federal student loans first, before turning to private student loan companies, to save more money.
Also, student loans mean you start out life with debt. If you rely on student loans to pay for college, that means that you will start out your adult life in debt. Depending on how much you borrow, it could mean for a difficult first few years out of college, especially if, like millions of other college graduates, you’re having a hard time finding a job that pays enough money to allow you to live a decent life. Taking out fewer (or no) student loans could mean the difference between being able to live a comfortable life and struggling to make ends meet.
It’s almost impossible to get rid of student loans if you can’t pay. If you can’t afford to pay your mortgage, your credit card bills, your car loans, or your medical bills, it might seem like your world is coming to an end. But you’ve got one final emergency valve you can release in those situations which can allow you to dig your way out of debt: declaring bankruptcy.