Student Loans are the most common option used by the students to finance their education, but are they a good option?
Students nowadays are the most indebted population. In America alone, the millennials owe a total of $620 billion to the banks. This is an astonishing amount considering the fact that many students tend to take more than they need. It is important to understand that a student should borrow as little as possible. In this article, we evaluate the facts to see if student loans are good or they make the situation worse for students.
Is the loan a good option?
A student that takes student loans usually falls into two categories. Firstly, there are those who take out more than needed. Then there are those who are terrified by the payback process. Before taking a student loan there are two things that should be clearly understood. These include understanding the purpose and process of a student loan.
There are four questions that a student should ask himself before applying for a student loan. These are:
- How will this loan help me?
- Will I be able to pay it back?
- Will it affect my ability to provide for myself and my parents as an adult?
- What affects will it have on my credit history?
It is also important to talk to an elder or a senior student about the loan. They may be able to provide you with good advice.
Considering other option before applying for a student loan
Many students are told that student loans are always good debt. Falling for this, students go for it without considering any other option to finance their education. Scholarships are a far better option then student loans, still many students tend to go towards loans. Furthermore, students could also find part-time jobs during their studies to finance their education. Student loans are seen as an easy path; so many students go for them instead of going for other options. These other options may not be able to cover the entire cost for you still they will leave you better off in the end as compared to loans.
Considering your monthly salary after Graduation
In a student loan, borrowing is the easy part the difficulty comes when the returning period starts. You just have to apply and if approved thousands of dollars in your account in no time. Many students do not consider their future before borrowing money for their education. Some tend to be more idealists and ignore the fact that the world works in some other way.
Students when applying for a study loan have no or less idea about their monthly payment in the future. It is not before a student graduates and starts a job that he gets the idea of his monthly earnings and expenses. So it is important to consider your future before applying for a student loan.
Forget Buying or Building your own home any time soon
Student loans influence the ability of a person to buy or build a new home. Many students term student loans as the basic reason behind not being able to get a new home. Students, when they get a job, have to repay the loan and with other expenses, it becomes difficult for them to save enough money for a home.
Student Loans cannot be returned
If you take a loan to buy a car and fail to return it you can give the car to settle the loan. But, this is not the way in student loans. Once you have taken the loan you have to repay no matter what the condition. The money a student takes gets spent in education and when the payment process starts there is nothing left to pay. However, there is an option of loan forgiveness but it is very difficult to come by. Therefore, students should consider this before applying for a student loan.
Difficulty in getting the job
Many companies do a background check before recruiting new employees. Now, if a company finds that you are late in repaying your loan they may not consider you. This can affect your future and many become an obstacle in your way.
Expensive colleges are not always a good option
Many students take student loans because they want to go to an expensive college. It is a common belief that top-tier colleges get you a good job, but it is not a guarantee. Many expensive colleges are not even worth the weight and money that a student invests in them. Many students realize this fact after graduating from college and having thousands of dollars of debt to repay.
In a nutshell
Student loans are an easy option to get and finance the educational needs but they are not a good option. Many students fail to repay their loans and end up bankrupt. It is important to consider various factors before applying for a student loan.
