The Reasons Why Student Loans Are Not A Good Idea

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Since being in this class, I keep hearing “good debt” and “bad debt” and how important it is to know the difference. Debt is considered good when what you get out of it is higher in value than what you put in it. “Good debts” are things like mortgages, business loans, and those similar because they’re things you can build the value of them by ownership, whereas “bad debts” are things like credit cards and car loans because you end up paying for more than just your purchase. The worst debt, however, is student loans, both subsidized and unsubsidized, and here’s why:

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-They are nondeductible, and you can’t dispose of them. More often than not, the debt doesn’t even lead decent-paying job or even a job in the field you major in.

For most people, student loans are nondeductible. Even worse, with very few exceptions, you can’t even get rid of them in bankruptcy. It will be a constant burden for decades if you don’t pay them off. Yes, even in retirement. This kind of debt doesn’t just sit with you until you pay it off; instead, it gets worse and builds up the longer you go without paying it off. Not only that, but it can also prevent you from doing things like buying a home by damaging your credit rating, and depending on the severity of the damage, it can put low-cost credit out of reach. According to one report by Demos, “student debt is particularly damaging for individuals who struggle to repay their loans. Delinquent borrowers are saddled with fees, penalties, and rapidly accumulating interest; borrowers who default on their loans face ruined credit and a debt often several times their original loan balance. ”

Decent paying jobs are increasingly hard to find and you only have about six months to start making payments on these huge loans. According to the Washington Post, “. . . just 27 percent of college grads had a job that was closely related to their major,” meaning 73 percent of those who go to college spend all that time and money for classes they didn’t even need. On top of that, “. . . only 62 percent of U. S. college graduates had a job that required a college degree. ” Think about that: is it really worth it to take out thousands of dollars in student loans that you’ll a) most likely struggle to pay back in a timely manner and b) use to get a degree in something you won’t even use in your career when there’s a 38 percent chance you won’t even put it to use in the first place.

One could argue that there is less unemployment among the college educated, their earnings are greater than those who are not college educated. Though this is true, here’s what they don’t tell you. While, yes, it’s easier to get a job with a degree under your belt, it’s, more times than not, accompanied by a large amount of student loan debt that requires most of the income made. One could also argue that student loans help those who can’t afford to further their education. In reality, student loans aren’t going to help someone who is already financially struggling. It’s in the title: loan – borrowing money, or in lay man’s terms, more debt. If you have no money to put towards college, you have no money to give to someone else to pay for your college, simple as that.

Overall, student loans are not a good idea. Student loans may sound like a good idea at first, but if you really look into what they are, you’ll realize they do more harm than good. Especially if you are already struggling or in debt, adding debt to your already bad financial situation won’t help. Student loans are just a way for people to make money off you. If you must use student loan services, only take out the bare minimum you need.

31 October 2020

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