Do student loans negatively affect your future?
Updated on July 28, 2020
It’s no secret that attending college is quite expensive. Unfortunately, tuition fees keep rising each year, making it more difficult for students to afford quality education. Many individuals looking to join college are often caught between working a part-time job and taking out a federal student loan to cover their educational expenses.
While both options have their pros and cons, most students opt for the latter because it’s quick, easy, and convenient. However, student loans come with debt, which may affect your future, depending on your repayment plan.
So, do student loans adversely affect your future? The answer to this is yes and no. Here’s why.
Student loans are classified as good debt because they’re an investment in your future career. Research shows that you can make more money with your college degree than with your high school diploma, which sets you on a path to financial freedom. Besides, with a college degree, you get more employment opportunities, allowing you to build your career.
Also, with a federal student loan, you have more time to focus on your studies and pass your exams as you won’t have to work to pay for your college expenses.
Your student loan is only as good as your repayments. For instance, when you miss payments or lag behind, you’re more likely to default, causing financial strain and worry. This is because you’ll end paying more in the long run as your interest accrues, stretching your monthly budget and disrupting your savings plan.
Additionally, student loan debt can prevent you from buying your home and affect your debt to income ratio, which is the percentage of your income that goes to debt payments. If it’s too high, you may not be able to qualify for a loan or may get one with a much higher interest rate.
Need student loans?
How student loans impact your future depends on how you’ll use them and your student loan repayment plan. To ensure student loans don’t negatively affect your future, start making payments as early as possible.
Contact StudentLoanify today for more information about student loans.