Student loans are a common method students use to put themselves through post-secondary education. According to some sources, over 50% of all bachelor’s degree recipients need to take on student loan debt to finance their college and university experiences.
Though student loan debt is popular, many student have apprehensions about whether or not taking on this extra debt is beneficial for their future.
This post will cover some pros and cons of student loans to help you decide whether or not student loans are right for you. Let’s get right into it.
Pros of Student Loans
While student loans may seem scary, the benefits of them are what really puts your future in perspective, leaning towards more of an investment for yourself rather than a debt title. They are becoming more and more available not only through banks, but also through online lending platforms.
If you decide that the pros outweigh the cons of student loans, you need to start thinking about where to borrow the money. If you decide to avoid banks and go with online lenders, we recommend you read this SoFi student loans review. But, we are getting ahead of ourselves, let’s first take a closer look at the pros related to getting a student loan:
Sense of Security
One of the main concepts of student loans is the affordability that comes hand in hand with a sense of security that you will be able to afford your education. All students want to be able to finish and get their degree so having financial reinforcements is always welcomed.
The access to student loans can take a great weight off someone’s shoulder especially for someone who is on a tight budget. Not having to worry about tuition fees, allows you to focus solely on studying, hence increasing the chances of obtaining a diploma.
Chances for Better School
Student loans may sometimes be the one thing keeping you from getting to your first option school. Being accepted to your school of choice is an accomplishment, not being able to go there because of your financial situation is something that you might end up regretting later.
Getting a student loan with an affordable interest rate might be the solution for those who find themselves in such a situation. Investing in a better education for yourself is something that pays off in the long run.
Credit Score Build
Another benefit that can feel like an investment at the beginning of applying for a student loan is the credit score build. With the correct handling of your student loans through the years you also start building a credit score.
For many young people this can be one of the earliest chances to start building a good credit history which is a very important thing for the future . Therefore this can be seen as a good investment that will help you take advantage of financial opportunities down the line.
Cons of Student Loans
As any big financial commitment, student loans have their list of cons that you shouldn’t overlook when making a decision. Doing your research and getting the right information about the disadvantages of student loans can help you decide if that is something you want to do.
Being aware of both the advantages and disadvantages of student loans will ensure you make the right choice for your financial well being. So, now let’s take a look at the cons that are associated with such commitment:
Not Covering Your Whole Cost
With higher education come high and unpredicted costs. Taking out a lons will help you financially to a certain degree, but you have to keep in mind that it won’t cover all your costs.
It is a bad idea to keep on increasing your loan to fully fund your education, hence it is not a solution that will guarantee a total financial security while you are a student. You need to be smart with your money, and avoid fully relying on a student loan.
It is a Debt
Before even considering a student loan as an option, you have to understand that the meaning of the word loan is very similar to debt. So by taking a student loan you are signing up for a long process of repaying a debt in your life.
It is a big commitment that will be around for 10-20 years, hence you have to be aware that you will have additional expenses for years to come. The stress of having a debt should not be taken lightly.
Potential for Bad Credit Score
There are negative consequences from your taking on a student loan and not being able to pay it back on time. If you are unable to make the monthly payment, you will start to build a bad credit score that will prevent you from benefiting from future financial opportunities.
You don’t want to be in a situation where your interest rate gets higher or you get penalties for late payments. You have to be able to manage your expenses so you don’t compromise your credit history.
Final Thoughts on Student Loans
Getting as much information as possible can give you an answer for whether or not you should take a student loan. Student loans can be both a saving grace and a nightmare, depending on the decisions you make and the terms you agree on.
You need to take into consideration all the aspects of such commitment. Furthermore you also need to think about the future implications and obligations a student loan has.