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Student Loan Debt: Is It Really Worth It?

— January 27, 2020

Don’t simply believe in everything you hear regarding student loans, whether it’s bad or good. Do your research.

Student loan debt is referred to as the ‘good’ type of debt as the future value associated with the loan implies a relatively higher earning potential for students. Besides, they serve a brilliant purpose. Student loans can be viewed as an investment in your education at a low interest rate to generate higher future compensation. 

However, the magnitude of higher education loans in the form of debt have mounted at an unprecedented rate.

The Favourable Statistics

According to a survey conducted by Morning Consult, around 61% of the respondents said that despite their present financial conditions, opting for a student loan for higher education and going to college was worth it. Similarly, around 35% of the respondents stated that the student loan debt was definitely worth it. 

However, 16% reported that it was definitely not worth it. The average cost of pursuing a higher education degree hovers around £50,000, excluding the interest on the principal amount.

According to the estimates from a research report on student loans by the Institute for College Access and Success, the total volume of student loan debt reached USD1.5 trillion in the United States in 2017. Besides, graduates who opted for loans to pursue higher education in college have an average debt of USD 28,650. 

Given the size of the overall debt in the form of student loans, it can be a warning sign that it is entering the crisis stage, but it cannot be classified as a bad investment.

Why are Education Loans Vital?

Education is a good investment in terms that it generates high long-term returns. According to the Simple Dollar research, students with graduate degrees in the United States are expected to earn more than USD 1 million [over their working lives] compared to the students who have never attended college. This does not take into account of the field of study.

Male student with backpack walking between library shelves; image by Bantersnaps, via
Male student with backpack walking between library shelves; image by Bantersnaps, via

Besides, the income difference between the lowest paying major and the highest paying major stood at a staggering USD 3.4 million, as per the estimates of Georgetown University. Therefore, regardless of the payment, taking loans for a college degree is worth it. 

The lifetime benefits of an advanced education go beyond monetary benefits. Notably, students coming from a humble socio-economic background may have no option but to resort to a student loan for higher education. These students are likely to face other challenges apart from the bludgeoning debt such as non-school expenses and emotional pressure of taking such a huge loan and may need to budget their student loan.

The positive elements of student loan debt

Going forward, the essence lies in the quality of college you’re looking to attend and your budget. If a college has a historical reputation for placing their students in companies with high pay, then taking a student loan shouldn’t be an issue. 

Don’t simply believe in everything you hear regarding student loans, whether it’s bad or good. Do your research, see the growth in average pay of graduate students, interact with them, and delineate colleges based on prospective employment opportunities. Nowadays, students first choose a college based on location as a major element for getting a higher degree. 

However, one must look beyond factors such as the graduation rate of college, size of financial aid given by college, living costs in/around the college, learning environment, and activities after studies. Opting for a student loan is not a bad thing, especially when it’s about your future. Besides, try to clear off your student loan as soon as possible before it turns into a sticky debt. 

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