We can agree that not all loans are bad from a financial point of view. In fact, getting a loan can improve your credit score as long as you repay it in a timely manner.
On the other hand, the pros and cons of a loan vary depending upon the type of loan. For example, a home loan is beneficial as it lets you purchase an asset whose value appreciates as time passes. On the contrary, an auto loan suffers from a not-so-favorable opinion; as any vehicle depreciates over time, and the interest paid on the loan ultimately adds to the cost.
Are student loans favorable?
When it comes to student loans, people have various opinions on this subject. Some are in favor of a student loan and look at it as a cost for a brighter future. Whereas, some opine it to be not so worthy of the cost and stress. In recent years, the rise in student debt has shocked several policy-makers and forced many to reconsider its benefits to cost ratio. Often, the cost has surpassed the benefits by miles.
There are cases where not just the loan holder but the whole household is under the burden of this debt. The college education fund is constantly on the mind of parents, often even before the child is born. The loan repayment amount sometimes equals or is more than the family revenue; which then leads to defaults, and ultimately increases in total debt amount. Why should higher education become such a burden for general people? Why is accessing higher education such a tough choice for so many individuals in society?
Who does student debt impact most?
Student debt impacts borrowers over time by raising debt burdens, lowering credit scores, and ultimately, limiting the purchasing power of those with student debt. It often results in making the borrower financially weak when actually student loans should be a building block for a brighter future. According to experts, all this debt could slow economic growth, with borrowers prevented from fully participating in American capitalism.
The middle class and lower class populations are hit the most because of student debt; as education is the only way for them to have a better future. Even though there are numerous need-based scholarship programs, the number of students who actually land a scholarship is negligible. After committing to student debt, if they fail to land a well-paying job, the debt piles up and they are stuck in the same vicious circle.
While it is a known fact that student debt does more harm than benefit, there is no escape from it if you want to pursue higher education. Hence, it will be wiser to follow a well-thought strategy to make sure that an education loan does not get the best out of you and reap maximum benefits out of this loan.
