Disadvantages of Student Loans

I just discussed the benefits of student loans since student loan debt has been in the media so much lately. As I do believe there is a real problem that is occurring, I wrote about some obvious advantages of student loans that help aspiring students. Now I am going to discuss several disadvantages of student loans and problems that can come up if the student does not realize what he or she is getting into. The main problem is students who want to obtain higher education are forced to use student loans to finance their education. While higher education is a positive, the additional financial burden can set you back for a long time, and some many never recover from it. Below are a few things to consider when thinking about getting student loans. 

Student loans can last your entire life: Student loan debt can make it incredibility difficult for the student to ever get out of debt. Since many people are in their 20s or 30s when they borrow for their education, the large amount borrowed on top of time, can make it very difficult for the borrower to ever meaningfully chip away at the outstanding balance. This can make it very difficult to build up an emergency savings account or to save money for retirement. Lastly, no matter what student loans will never go away so you may be stuck with them forever. 

Student loans are expensive: The cost of student loans can be very expensive, especially when you consider the amount you have to take out at such a young age. In today's age, many students are coming out of college with over a $100,000 of debt. This also does not include living expenses during college. That amount is so large, many people feel like there is no way they can pay that off. 

Student loans have to be repaid no matter what: Student loans have to be repaid even if you do not graduate or if you do not receive your degree. Even if you are in financial hardship and have to declare bankruptcy, your student loans will not go away, and you will still have to make payments to your student loans until they are paid off. This strict requirement makes student loans a risky venture. 

Student loans can ruin your credit score: Defaulting on a student loan creates a lot of problems for the borrower. The default is not removed from your credit history even after seven years. If you declare bankruptcy, you will still have to make payments, and the proceedings can lead to wage garnishments if you do not make payments. This can lead to a poor credit score for the rest of your life. 

Student loans carry interest charges: All student loans charge interest on the money you borrow. Some even charge interest the day you borrow. This can increase your outstanding loan balance very quickly, and digs you a deeper hole everyday. The private loans are usually structured this way, and some private loans charge high interest and high penalties for not paying on time. 

Savings is a better option: 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.

Student loans add stress and can sidetrack your career: The high amount of debt you have to borrow makes the borrower shift their focus on repaying their student loans rather than focusing on their career. The additional stress and pressure to pay off these loans can negatively impact your health and your career. You may have to sacrifice your long-term goals to be able to pay your student loans off.