Should Students Still Get Student Loans To Pay For College?

If you’re in your last few years of high school and wondering what’s next, you’ve probably started thinking about how you’re going to pay for college. Hopefully your parents have some money saved in a 529 savings account, or maybe you qualify for scholarships or other merit-based assistance. If not, you will most likely need to borrow money to attend a four-year college or university, or maybe even a community college.

But, should you Really borrow money for college? While taking on debt for higher education is definitely a personal choice, you’ll find experts who vehemently disagree about the usefulness of student loans — especially in a country where the average student loan debt is $37,691 per borrower and the average state student loan debt is at $37,691 is currently $36,510.

Graduates already struggling with credit debt are either stuck paying off their loans or hoping and praying for a comprehensive student loan forgiveness bill. However, those who aren’t out of college are right to wonder if college credit is even worth it.

When to use student loans

Getting a student loan might seem controversial at the moment, but there are still reasons to think about it. Financial advisor Chris Kampitsis of Barnum Financial Group’s SKG team points out that for students with limited funds, there is often no viable alternative to paying for college other than winning the lottery.

Also, federal student loans are not the worst financial products out there as they come with competitive fixed interest rates and numerous repayment options. Kampitsis also says student loan interest can be tax-deductible, while most types of debt that aren’t secured by collateral don’t offer any tax benefits at all.

Derek Brainard, director of financial education at AccessLex Institute, says that while student loans get a bad rap, there’s no denying that access to student loans makes it easier for millions of students to access higher education.

“Even the comparatively lower prices of community colleges and state schools are unaffordable for many,” says Brainard. “When used strategically, student loans can be a gateway to higher income and job satisfaction throughout life.”

Steve Winnie, CEO of CampusDoor, says private student loans also have their place when it comes to filling funding gaps. In cases where students cannot access additional funds during their studies, private student loans may be the only vehicle to afford textbooks, materials, and even tuition.

“If they’ve exhausted their scholarships and their parents don’t have a 529 plan, borrowing responsibly and choosing the right major is a fantastic investment in their future,” says Winnie. He also points out that interest rates are currently only 3 or 3.5 percent, making college borrowing incredibly affordable.

The reality is that going to college is still a good use of time and money. According to the Bureau of Labor Statistics, earnings in all industries increase based on educational attainment, and there are no exceptions to this rule.

In fact, the latest statistics from BLS.gov show the following median weekly earnings based on nationwide education attainment:

  • Less than high school: $592 per week
  • High School: $746 per week
  • Any college, no degree: $833 per week
  • Associate’s degree: $887 per week
  • Bachelor’s degree: $1,248 per week
  • Master’s degree $1,497 per week
  • Professional Degree: $1,861 per week
  • Promotion: $1,883 per week

The College Borrowing Problem

A college loan could absolutely help you make more money when you graduate, but there are plenty of pitfalls to watch out for. Brainard says that students who borrow the full amount of available student loans without first figuring out how much they actually need for an academic year will cause themselves unnecessary financial stress after graduation.

“Too few borrowers take the time to compare their total student loan debt load with the salaries in the field they are pursuing with their degree and the repayment options available,” he says. “First taking out a loan without understanding the terms of your debt and how it will affect your debt-to-income ratio is never a good idea, and student loans are certainly no exception.”

Besides, it really depends Where You go to school too. Ms. Charlie Javice, CEO and founder of Frank (a company focused on college affordability), says some colleges just aren’t worth paying out of pocket. In particular, we’re talking about colleges that get terrible results when it comes to job placement rates, low graduation rates, and high student debt default rates.

“If students choose to attend these colleges, they probably won’t be able to meet the minimum monthly student loan obligations,” says Javice.

Related: The best tools to help you research and choose a college

Additionally, there really are other ways to pay for college outside of student loans. For example, there are college grant programs you can earn through military service, as well as dual degree programs. Scholarship opportunities are also greater than many realize, according to James Lewis, president and co-founder of the National Society of High School Scholars (NSHSS). In fact, the NSHSS offers dozens of new scholarship opportunities throughout the year with a variety of eligibility criteria.

These options may not help you avoid student loans entirely, but they can help you keep your loan debt to a minimum.

Is it worth taking out a loan for studying?

In the end, nobody can tell you whether it makes sense to borrow money for your studies or how much student credit you should take out. However, there are some general rules of thumb you can follow to ensure you don’t end up decades of your life in crushing student loan debt.

Find out about colleges that offer programs in the field of study you are considering and be sure to compare them based on their programs and their prices. Look for schools in your area that offer competitive tuition and fees, and don’t be afraid to take general community college courses for a few years. Finally, make sure you calculate the return on investment of your college choice.

Whatever you do, don’t fall for the narrative that you should borrow whatever it takes to “follow your dreams.” If you take out a student loan without a plan, that dream can quickly turn into a nightmare.

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