Don’t Worry About the Money: Why Stressing About Student Loans is Unnecessary
I find that students worry about money far more than they should. These worries start during the applications process when the high tuition price tag leads many to make admissions decisions on the basis of finances. Don't do this. Every college in the nation has plans set up to help you afford its education. For most students, educational loans are a necessity. And these types of loans should never frighten you.
Student loans are very different than other types of loans. While you may be seen as a credit risk if you hold $1000 in outstanding credit card debt, carrying twenty times that or more in educational debt does not have the same financial stigma (assuming you make your minimum monthly payments, of course). These types of loans are considered "good debt" because they represent an investment. Further, students loans are incredibly common. 65.7% of graduates go into the real world with loan repayment beckoning and with an average debt of $19,237.
Colleges loans common and harmless, and may even help you financially as well if you're smart about repayment. Consider these comments from John of FreeCollegeBlog.com:
If the student loan is subsidized, chances are that your best bet is to make the monthly minimum payments and forget about it. Most investments, even safe ones like government bonds, can get a better interest rate than what you're paying to the student loan. It might just be 1 or 2% difference, but over the life of the payments you could earn thousands more from investing than you saved by avoiding the almost non-existent interest fees.
In other words, you might actually be able to make money by intelligently investing the capital you've earned as a result of your education. Read the rest of John's investment analysis in his Pay off students loans, or invest? article.
The major point to take away is that educational loans are not scary. It may be daunting now to look ahead to the future and see an eventual debt of $30,000 and a repayment plan stretching 10 years after graduation, but this should never influence your ultimate application decisions. Notice that in my 10 things to think about when picking a college article, I never once mention the cost. Pick a school that you love without worrying about the money. You never know when a handsome financial aid package will be dropped in your lap, even potentially after you've already become a student.Have any insight on this topic? Want to ask a question or make a suggestion? Click here to leave a comment.
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