The Potential Consequences of Student Loan that Could Destroy Your Life
It is believed that America's student loan debt has ultimately reached a record high of $1.4 trillion in Q1 of 2019. Here are some ways how student loan debt could adversely impact your life.
Millennials are overburdened with student loan debts like never before. As per a recent study conducted by Equifax, it is believed that America's student loan debt has ultimately reached a record high of $1.4 trillion in Q1 of 2019. We know that a wide majority of the students are young and naïve and they seem to be inexperienced with money. Often they go about using their money to purchase things that they want instead of buying essential things. Students need to exercise caution while taking loans to meet up their full expenses for a college education. They need to be extremely careful while considering the pros and cons of the loan. Mismanaged money may have hurt you and may prove harmful to your life. Here are some ways how student loan debt could adversely impact your life.
As per https://www.forbes.com, politicians in the United States agree that higher education is not just an effective way of impressing the middle class; it is of pivotal importance to the future prosperity of the nation. Yet these politicians who are giving top priority to education are ignoring the humungous student loan debt that is slowly crippling several million Americans. Experts believe that the numbers are simply mind-boggling and staggering.
Education-associated debt is known to negatively affect 44 million Americans who are owing as much as $1.5 trillion total and making student loan debt the second most massive debt next to consumer mortgages. We understand that there has been an increase in monthly student loan repayments from just 227 USD in 2005 to 393 USD in 2016, as per the statistics presented by the Federal Reserve. It is firmly believed that at this rate, Americans would soon owe more in terms of books and tuition fees than their homes.You Could Be Compelled to Give up Grad School
Student loan debt could be preventing you from pursuing graduate school. We understand that on average a graduate would be accumulating about $30,000 in terms of student loan debt. Students are often compelled by overwhelming debts to forego college education or leave grad school as they simply cannot afford to opt for another huge loan.You May Not Be in a Financial Position to Purchase a Home
Student loan debt leaves you with no money for buying a home. When in a survey by Equifax, it was questioned that why some consumers did not purchase a home, 55.7 percent of the respondents claimed that student loans or lack of savings as the main reason for not purchasing a house. Even though you could find the monthly payments as affordable but when you are dedicating so much of your funds toward student loan debt, you are not in a position to save adequate money required for making the necessary down payment for your loan. You may browse reputed sites such as NationaldebtRelief.com for professional assistance and more detailed information.Carry on Living with Your Parents
Millennials with overwhelming student debt cannot afford to rent apartments. Today, forced by circumstances, many of them in the age group of 24 to 34 years are living with their parents. This is happening in much bigger numbers as compared to the previous generations. Most of these young adults cannot leave the nest simply because they are not getting adequate income to repay all their student loan debt and simultaneously pay rent for separate accommodation.You Could Be Having a Relatively Lower Net Value
Pew Research Center's data shows that there are some disparities even among college graduates having student loan debt and those students with no debt. The median net value of any household run by a college graduate below 40 years of age having student loan debt is supposed to be $8,700 whereas the median net value of any household that is run by a college graduate below 40 years of age but without any student loan debt is supposed to be $64,700 that is 7x more.You Might Have to Do Without Fulfilling Your Dreams & Aspirations
Student loan debt would be impacting your overall standard of living and financial freedom. Moreover, it would help you identify the dreams to be pursued. For instance, you might want to get associated with a certain nonprofit organization but you simply cannot fulfill your desire and dream to work proactively for them because you need to earn more money to repay your overwhelming student loan debt. You have to necessarily forego your dreams and aspirations for another job that promises better pay for covering your student loan expenses and repayments. You would have to often sacrifice your dream job that may have offered you a sense of purpose and more fulfillment and opt for a job that promises a higher salary. You Might End Up with Lower Credit Score
Most of the main credit bureaus consider student loans just like any other sorts of installment loans. If you do not make payments on the agreed due dates, and every time you falter, it would be impacting your FICO credit score negatively. Lenders are not happy with individuals having a poor credit score since that is perceived as risky. Lenders are not very comfortable at giving out loans to people with a bad credit history. Moreover, if they at all approve your loan despite a poor credit score they would be charging higher rates of interest on your loan. Student Loan Debt Is Here to Stay
Student loan debt is supposed to be quite different from any other kind of debt. For instance, we know that if you fail to make payments for your car, you could consider returning the vehicle to the dealership. Likewise, a homeowner who is failing to keep up with the mortgage payments could handover the home keys to the bank. Unfortunately, in the case of student loan debt, you do not have any leftovers to be returned to the lenders. You have already used up the amount on your college education. Moreover, student loans are hardly ever settled in a bankruptcy court. Conclusion
Students are continuously taking student loans for paying for expensive higher studies in colleges. However, it is of critical importance to realize the adverse consequences of taking a student loan debt. You must be disciplined and dedicated in your approach. Borrow only that sum of money that is needed for pursuing higher education. Start making early repayments. Create a special savings account to repay your student loan debt or start doing part-time jobs to earn some extra money.
This is a very informative article cautioning the students not to go for the education loans blindly.
Today many banks are offering educational loans and their idea is to earn money by getting interests on these loans. This is all right for the banks but the student has to see their financial conditions, family background and other future prospects before finalising these loans. Just because some students are taking loan does not mean that one has to go for it. Another consideration is the job prospects after completing the education. If there are good prospects after that and the student is meritorious and gets campus recruitment or direct recruitment in a big company then only it makes sense to go for big value loans. A mediocre student should think twice before entrapping oneself in such a financial trap of taking a loan but later not being able to repay it.