Higher education can be a great thing because it can open many doors for employment opportunities and career advancement. The primary problem with attending college is that it can be incredibly expensive to matriculate at an institution of higher learning. The majority of students that attend colleges and universities use forced to use student loans to finance their educational costs. While student loans do provide access to an educational experience that might be otherwise impossible, they do have many drawbacks. Let’s take a look at a few of them.
Student Loans Are Expensive
The primary disadvantage of a student loan is the cost of getting one. Depending upon where you go to college, a student loan can leave you hundreds of thousands of dollars in debt. Many of the top tier institutions have tuitions that range from $40,000 a year and up. That does not include the cost of items like books, lab fees, and residential housing. A college student can come out of school with an undergraduate degree and a massive debt burden.
Student Loans Can Last For Decades
Student loan debt can make it difficult for a young person to get out of debt for a long period of time. Some people have student loan debt 20 to 30 years after graduating from college. This can make it very difficult to build up an emergency savings account and to save money for retirement. Student loans are impossible to get rid of without paying them off even if you have financial hardships.
Student Loans Can Ruin Your Credit
Defaulting on a student loan can ruin your credit and your chances of obtaining employment in certain professions. Student loan defaults are not removed from your credit history after seven years and are not wiped away. They are not discharged during bankruptcy proceedings and can lead to wage garnishments if not paid as agreed. A simple four year loan can lead to years of bad credit and debt repayments.
Student Loans Have To Be Repaid Whether You Graduate Or Not
Student loans have to be repaid by borrowers even if you do not graduate from the college where they were taking classes. There are a large number of people making student loan payments despite never receiving a degree. These payments are a hardship for many people whose income levels do not match up with their monthly loan repayments.
Student Loans Carry Interest
All student loans charge interest on the money borrowed. Repaying the interest owed on a student loan can be a costly endeavor depending upon the type of loan that you get. Private student loans have much higher interest rates than regular student loans and can leave you paying 10% or more annually in interest.
There are a number of reasons why student loans should be your last option when financing a college education. It is much better to use savings accounts and college savings plans to pay for the costs of college. They will keep you from having to repay a massive sum of money after you graduate.