Without a doubt, obtaining a college diploma is one of the most costly investments a person can make in his or her lifetime. Most undergraduate programs require at least eight full semesters of study to earn a Bachelors of Science or Bachelors of Arts degree, and tuition, room, and board at major public or private universities can easily run into the thousands of dollars per semester. Post-graduate degrees typically require at least two additional years of study, with medical schools typically requiring even more. Taking out college loans may appear to be the best way to finance a higher education given the limitations of financial aid programs, but many financial experts advise caution before taking on too much personal debt at a young age.
Most financial experts agree that college loans, whether private or federally backed, should be used in conjunction with other forms of financial aid such as Pell grants, scholarships, and work/study programs. Many of these programs are designed to cover all or nearly all of a student’s college expenses, including tuition, books, and basic housing. College loans are designed to bridge the gap between tuition and actual living expenses, such as food, transportation, and other personal needs that aren’t covered grants or scholarships. These college loans, unlike other forms of financial aid, must be repaid after graduation or voluntary withdrawal from college. Whether or not a student has earned a degree or secured an entry-level job, he or she may be required to begin repaying college loans as soon as six months after leaving an institution of higher learning.
So, should you take out college loans to fund your own post-secondary education? This is often determined how much money remains after other financial aid programs have been applied to your necessary college expenses, such as tuition and books. Some students discover that they don’t need to take out college loans to meet their personal needs if they budget carefully and take advantage of work/study programs or off-campus employment. Others, particularly those attending expensive private colleges, may find that other financial aid programs are insufficient to cover their school’s obligations, making college loans a necessity rather than a luxury.
In terms of personal loans, federally guaranteed college loans have some of the most favorable terms. College loans have lower interest rates than other types of loans, and borrowers who are unable to make payments have a variety of deferment and forbearance options. Financial aid standards allow a student who is considered financially independent to borrow thousands of dollars through college loans with a low credit score and little collateral. Taking out college loans is a relatively simple way to eliminate financial stress while concentrating on your studies if you require additional funds to support yourself while attending college.
One of the drawbacks of taking out college loans is that you can end up with a lot of debt before you’ve even found an entry-level job in your field of interest. A student pursuing an advanced degree at a major university could easily borrow thousands of dollars in college loans over the course of four years and forget that it is all a loan, not a grant. When that student graduates, he or she may be faced with a sizable loan repayment bill and still be unable to make a full payment due to a lack of income. If you’re thinking about pursuing a low-paying field like social work or the liberal arts, you might want to reconsider your need for college loans. At the very least, only borrow the bare minimum to keep your mind and body in sync.
College loans are a good idea as long as they are used in conjunction with other forms of financial aid. Federally guaranteed college loans may be necessary for some students, depending on the cost of tuition. Private college loans should only be taken out after all other options have been exhausted. College life should be full of social and entertainment opportunities unavailable in the classroom, but it should also be a time to learn about adult financial responsibilities and the advantages of budgeting. Because repaying college loans can eat up a large portion of an adult’s monthly budget, they should only be taken out after all other financial options have been exhausted.