5 Reasons to Love Student Loan Debt in College

Are you worried about a huge amount of student loan debt in college? Here are five reasons to relax, and embrace your financial debt.

I didn’t want to borrow money when I was in university, but recently discovered the sweetness of student loan debt. Here’s the upside of borrowing money to go to school.

But, be careful who you borrow money from! Private student loans suck. In  Government Vs. Private Student Loans – Which is Better?, I describe why I think a government student loan is far better than a private student loan for college students. But, I haven’t actually talked to private lenders, so I could be mistaken about which is better. Could those billion-dollar a year banks, financial institutions, credit unions be less greedy and money-hungry than I think? Perhaps. But I doubt it.

If you don’t want to get a student loan, take a deep breath and consider the bright side of borrowing money for college…

5 Reasons to Love Student Loan Debt

I borrowed money to get both my university degrees, and I have no regrets. I didn’t even know that student loan debt could actually be beneficial, but I’ve learned that borrowing money for college can actually set the tone for a successful career.

Here’s why student loan debt can be a good thing…

1. Student loan debt is “good debt” that can increase your credit 

“Knowing the difference between good debt and bad debt is the key to financial well-being,” says Suze Orman, author of  The Money Book for the Young, Fabulous & Broke. “Good debt is money borrowed to purchase an asset: homes or mortgage, education or student loans, etc.”

Good debt is a loan that you have to pay back, that gives you something worthwhile over the long-term. A mortgage is good debt because you get a home out of it, as well as a great investment. A student loan is good debt because you get an education that you’ll (hopefully) use all your life.

And, if you pay back your college student loan on time, you’ll increase your credit rating. If you don’t have a credit history yet, a student loan is a great way to start one. This is why student loan debt can actually set the stage for a successful financial future.

2. Student loan debt offers immediate access to college

If you save money for college for years, you may never get there! Other things will come up: work responsibilities, mortgages, marriage, pregnancies…and eventually you’ll be 55 and still wondering why you can’t afford college. The benefit of student loan debt is that you can get your education under your belt right away.

If I saved up for college and refused to get student loans, I’d still be in my first year of university.

3. You won’t have a hard time paying off your student loan debt (?)

This reason to embrace student loan debt isn’t as solid as I’d like to believe. According to the Canadian government (Stats Can), most college graduates don’t have a problem paying back their student loan debt. Two years after graduation, one in five college and bachelor graduates with student loan debt had paid it off completely. Of course, the ability to pay off your college student loan depends on several factors, such as the amount owed, interest rates, employment, earnings, and personal circumstances. Even your health can affect your ability to pay off your student loan debt.

4. Student loan debt increases self-esteem and self-confidence

“Debt can be a good thing for young people – it can help them achieve goals that they couldn’t otherwise, like a college education,” said Rachel Dwyer, lead author of a recent study about how young adults perceive debt and assistant professor of sociology at Ohio State University. “Young people seem to view debt mostly in just positive terms rather than as a potential burden.”

Overall, Dwyer said her research suggests student loan and credit card debt can be an important resource for young adults, because it allows them to make investments that improve their self-concept. However, while student loan debt may make young people feel better about themselves in the short-term, it doesn’t mean it won’t have negative consequences in the long term. Dwyer said, “We found that the positive effects [of student loan debt] may wear off over time, but students still have to pay the bills. The question is whether they will be able to.” – from What, Me Worry? Young Adults Get Self-Esteem Boost from Debt

5. Student loans are sometimes paid off – but not by you

I – and many other university students who couldn’t afford our education – was thrilled to get a $2,000 “loan forgiveness” from the Alberta government, back in 2000. That $2,000 paid off almost half of my student loan debt. The provincial government gave us some sort of a grant for the millennium year, to encourage and help university and college students financially. It was awesome – and it wouldn’t happen with private student loan debt.

Don’t apply for a student loan and hope you get a $2,000 grant or subsidized payment by the government on your behalf. Most student loan debt has to be repaid in full – plus interest. However, interest on government student loan debt is lower for college students, and doesn’t kick in for awhile after you graduate.

Even though student loan debt is “good debt”, you still don’t want it around forever! Read How to Pay Off Student Loans After You Graduate.

2 ways to get more money for college

And finally, here’s a tip for persuading family members to give you college money so you can avoid extreme amounts of student loan debt:

“Send your family and friends your high school graduation invitations, along with a letter explaining your college intentions,” say the writers of  101 Ways to Pay for College. “They may just send you contributions to your college fund.”

Resources on How to Pay Student Loan Debt

College Student Loan Debt One way to reduce student loan debt is to read as much as you can about paying for college. Paying for College Without Going Broke will help you navigate the expensive world of a college education.

CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life by Reyna Gobel.

Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents by Zac Bissonnette and Andrew Tobias.

To learn about paying off your student loan debt, read 7 Ways to Be Passionate About Getting Rid of Debt.

And, as always, I welcome your thoughts on student loan debt, being a college student, and the state of the union below…

college student loan debt

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