Are Student Loans Worth It?

Are Student Loans Worth It?



The topic of student loans is big in the news these days, with some going so far as to call the current state of lending and repayment a “crisis.” That begs the question—are student loans worth it?


While the answer to this will vary depending on each individual situation, here are a few factors to help you decide whether or not taking out student loans will be worth it.


The loan amount
Most student loan repayment plans are 10 years long. Taking out $20k worth of loans versus $150k in student loans will make a huge difference in your monthly payment and overall debt load. Because a large student loan can send you debt-to-income ratio sky-high, you’ll want to take into account the effect a large loan will have on your ability to get a mortgage or buy a new car.


The payment amounts
Knowing how much your monthly payments will be can help you make a more informed decision about whether or not your student loans will be worth the cost. Check out this handy student loan repayment calculator to help you see the monthly payments for different amounts.


Available repayment plans
It’s a good idea to know your repayment options before you take out student loans. Fortunately, there are many different types of student loan repayment plans that can ease the burden of student loan payments, including income-based plans, “pay as you earn” plans, or extended payment plans. You can find out more about them here.


Tuition costs
In my opinion, this is where a lot of people get into trouble. Yes, a humanities degree from a private liberal arts college would be a dream come true for some people. But what happens when you graduate with six figures worth of debt and the job options are limited to careers that max out at $40,000 a year? Or you decide to attend a for-profit college or program that is not yet accredited?


Now’s the time to be realistic. Unless you’re positive you’re going to be making enough money when you graduate to comfortably shoulder a $500+ monthly student loan payment for the next 10 years, consider going to a more affordable school.


Your chosen field
safe to say that certain fields—including medicine, nursing, engineering, and computer or technology-related fields—are the most employable and also command some of the highest starting salaries. (In fact, 6 of the 10 most employable degrees in this survey were technology-related.) When you graduate with a good-paying job in place, it’s easier to justify heftier student loans.


Before you apply for student loans, remember that you’ll have them until you pay them off (even if you file bankruptcy). If you borrow responsibly, use common sense, and look at your job prospects, major, and employability realistically, your student loans don’t have to be a crisis.


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