Did you know that the current outstanding balance on student loan debt is $1.78 trillion? That’s approximately one out of five adults who have student loan debt. The average balance for graduates stood at about $58,238. We were all told we needed to go to college to get a good job, but many have discovered that thinking may have been slightly flawed. Many found themselves knee-deep in student loan debt, working in a completely unrelated field to their degree. I hope this hasn’t happened to you, but today, let’s take a look at a few student loan tidbits.
Are Student Loans Predatory?
Many argue that student loans are predatory. Predatory lending can be defined as follows: Predatory lending includes any unscrupulous practices lenders carry out by enticing, inducing, misleading, and assisting borrowers toward taking out loans they can not pay back reasonably or must pay back at a cost that is extremely above the market rate. Personally, I don’t believe all lenders are participating in this practice. Many good lenders will inform and guide you on your options and your educational path. The argument is that if a child who just turned 18 cannot be trusted to rent a car, consume alcohol, or, in some states, go to the casino, they should not be able to take out a $50,000-$100,000 loan. No sane car dealership would authorize these numbers (without a parent or guardian cosigning and an incredible down payment, of course, but you understand what I mean). Many graduates regret not taking a deeper dive into the fine print of their loans, and their parents were none the wiser as well because they wanted to encourage their children’s academic development.
Are Student Loans Beneficial?
The debate between good debt and bad debt is an age-old discussion. One camp believes that good debt is beneficial because it shows other lenders and credit unions that you are financially responsible and can pay back money borrowed, which in turn allows you to borrow more and higher amounts of money. The other camp believes that all debt is bad and that if you don’t have the cash to pay for something, you don’t need to purchase it at all. In my opinion, both camps have great points. However, I believe that sometimes we need a little help financially. Taking out a loan is not a death sentence, as many claim it is. If you do decide to take out a student loan, be wary of the amount you are taking out. Often, you get your loan overpaid, and students use that to go on a little spending spree. Instead, you should open a savings account and dump the excess into that. Remember, you have to pay that all back, so only use what you need and use it for its intended purpose.
What Comes Next?
Life after college comes at you at warp speed. You have to start working full-time (if you weren’t already doing so), and it’s time to pay the piper. Many find they cannot find a job in their field or that their degree is essentially worthless for the work in which they are most passionate. If so, I strongly recommend speaking to the next generation of potential graduates. My line of thinking is that not everyone needs a college education. This concept truly depends on the line of work you are in. Many workers can benefit from hands-on experience vs. hitting the books. If you have worked in retail management for many years, you can work your way up the food chain to a better-paying job than if you got a bachelor’s degree and started out with a lower salary due to inexperience. The degree alone won’t get you there; it’s all about networking and work ethic. If you decide not to attend college, circumstances are definitely more difficult, but it’s a slow burn. Graduates without experience can get an interview with their resumes alone simply because they attended a school. Keep in mind both of these points when educating the youth on education (I didn’t need a degree to become a teacher for that lesson, eh?).
At the end of the day, you are the end all be all to your financial health. Be cognizant of your situation and always set a goal for yourself. A stagnant life is a boring life. Try to take good risks! You can’t live fearfully in the present due to the future. At the end of the day, whatever decision you make will be the right one for you.
Did you like this article? Check out this article on our sister site: Protection From Elder Financial Abuse.
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