Is It Okay to Have Student Loan Debt?

With national student loan debt totaling a whopping $1.75 trillion, parents and students are rightly worried about taking out loans. On average, graduates are leaving college, saddled with around $30,000 worth of student debt. This is a concerning figure for prospective students wanting to take out loans to fund their education.

Should you be worried about taking on student debt, or is it actually okay to have student loan debt? We’ll get into the meat of these questions throughout the rest of this post. 

Can Student Loans Be Beneficial?

Student loans can seem daunting, but for most students, they are a necessity. With the rising cost of higher education, you may need loans to pay tuition fees and living expenses. No one wants to owe money to the government or other private institutions, but the fact remains, that investing money in your future can benefit you financially down the line.

To put it simply, student loans are a financial tool that may provide you with better job opportunities and may open doors for you in your career. More importantly, the right college degree—and the debt you take on to acquire it—could mean the difference between financial struggle and a lucrative career. 

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In short, while it is certainly possible to borrow too much money if you plan carefully, you can come out of school with better financial security than when you went in.

What Type of Student Loans Should You Consider Taking Out?

There is a range of student loans to choose from. Specifically, students and parents can either borrow money from the government, or they can apply for a loan from a private lender like a bank. 

Of these options, we highly recommend getting a government loan. The interest rates for these loans are usually lower, which makes paying back your student debt much easier. To be offered a government loan—and other forms of financial aid—fill out the Free Application for Federal Student Aid (FAFSA).

Which Government Loans Can You Apply For?

Federal Direct Student Loans are the most common form of student debt. As a borrower, you may be eligible for subsidized loans or unsubsidized loans. Of these options, subsidized loans are preferable, as they are interest-free until you leave school. 

Unsubsidized loans, on the other hand, accrue interest as soon as you take them out. With unsubsidized loans, students end up owing more money than they would with a comparable subsidized because interest will build up over a longer period of time. 

We consider Federal Direct Student Loans to be the best way to pay for a college education, but such loans do have a cap. Since they are in the student’s name and students generally have limited credit, Federal Direct Student Loans are limited to $27,000 – $31,000 for an undergraduate degree. If you need more than that, your parents will have to take out loans.

In this case, we suggest loans known as Parent Plus Loans. These loans are borrowed from the government, but the interest rates are a little higher, and they are unsubsidized. However, this is usually a better option than taking out private loans, since government loans have a fixed interest rate and tend to have better interest rates overall. 

How Much Money Should You Borrow and Are There Negative Impacts Associated With Student Loans?

Again, it’s not necessarily bad to have student loan debt. Over time, student loan debt can benefit borrowers by providing a college education to pave the way for future success. Still, borrowers must exercise care. Excessive student loan debt can become overwhelming if you aren’t careful and don’t use financial common sense. 

Specifically, you never want to take out too much money. Loans should cover only what a student needs for tuition and living expenses. To help students avoid excessive debt, families should, if they are able to, help pay for room and board or other expenses. Students can also reduce their debt load by working a job while in college. Overall, a good rule of thumb is to keep your total student loan amount less than your anticipated first-year salary.

Each student will require a different amount of money to finance their college dreams, but when it comes down to it, don’t overborrow. It can be tempting to take out extra money for vacations, dining out, and other luxuries, but you should avoid doing this. 

Finally, make sure you are spending money on a degree that will land you a career. Each college degree has its own value and choosing a major that interests you is not wrong. Still, you want to research which degrees will earn you a livable income that aligns with the lifestyle that you want to live. This way, you can reliably pay back your student debt and achieve financial stability and independence!

We at HelloCollege aim to help you get the most out of your university preparations. For more information about paying for college, and choosing a major that will aid in helping pay back student loans contact us.

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The Hello College Team

HelloCollege CEO Andrea Emmons has spent the last 15 years guiding students and families across the country on their path to college. Andrea knows the profound impact proactive college planning has on the lives of students and is passionate about mentoring families through the process.
Kevin Krebs - Founder of HelloCollege

About Our Founder

Kevin Krebs

Inspired by his parents, Kevin’s journey from a first-gen, diverse, low-income background to Northwestern University shaped him. After experiencing challenges, including student loan debt, he founded HelloCollege and has spent the last 25 years helping students successfully navigate college admissions.

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