Student loans are a common form of debt that many individuals take on in order to finance their education. While they can be helpful in achieving one’s academic goals, they also come with the burden of high interest rates and long repayment periods. As a result, avoiding student loans altogether can have a significant impact on setting the tone for not taking on debt for the rest of your life.
In this article, we will explore the benefits of avoiding student loans and how it can positively influence your financial future.
The Cost Makes Education Costly
When comparing education pricing internationally a trend becomes noticeable over the years, skyrocketing to unreasonable prices. Based on the data provided by the College Board since 1989 average family income levels have increased only by 62% while tuition fees have increased by 213%. This bothers the student loan sector quite a lot.
As the cost of education continues to increase, loans offered by financial institutions become the only possible option for many students. While student loans help augment one’s education, it also means beginning life with a hefty amount of debt. In 2019, a report published by the Institute for College Access and Success indicated that student debt for those with a bachelor’s degree on average stood at $28,950 which is likely to increase for those pursuing professional degrees.
The Effect of Student Loans on Economic Stability
As much as students believe that working toward obtaining a degree and eventually getting a job will help them get rid of the debt they are acquiring, it is important to understand that student loans would considerably restrict economic mobility and flexibility. College students burdened with debt are unable to make certain financial choices, let alone save money due to the monthly interest they are required to pay towards their loan.
Last but not the least, student debt is seldom a temporary burden: a report published in determining the viability of the average American college graduate buying a home revealed that approximately 30% of the United States population has an outstanding loan of $29K .
Many students who consider such an option often shift to an income driven remuneration plan due to loss of employment or other unforeseen challenges, according to the standard policy with Federal financial institutions, students have a decade to repay their loan. As stated previously, many Americans are unable to purchase a house because they have yet to pay off their college loans.
Why It is Necessary to Live Debt-Free?
In order to pivot to a life free of debt, a good way to begin is to steer clear of student loans. Such an approach can assist to fund education in an alternative manner through working part-time, applying for scholarships/grants or perhaps picking a college that is more budget-friendly.
People who live without student loan debt have the ability to exercise control over how they manage their finances, as they are not forced to take on high-paying jobs or pursue certain careers for the sole purpose of paying off their loans. People are free to selective with their careers and strategize for the long term if they so wish.
How It Affects One’s Ability to Obtain Credit?
Applying for a student loan can result in one having a really bad credit score. Due to the enormous amount of debt, students frequently struggle to pay it back, which lowers their credit score. As a consequence of this, getting a line of credit or a loan in the future becomes a challenge.
While having student debt is burdening, not having any at all will help maintain a good credit score. Great financial opportunities present themselves during the time your credit score increases.
What Can Be Done to Avoid Student Loans?
While avoiding student loans may seem impossible, there are certain ways in which you can avoid debt in your education. Here are some tips to help reach your goal of avoiding student loans:
Make Saving A Habit: Save money in advance by opening a bank account specifically for your educational expenses. You’ll be surprised how fast it adds up.
Apply for scholarships and grants: Applying for scholarships and other programs will help you avoid student loans as it is essentially free money.
Start working in College: Working part-time can be done while you’re studying but it reduces the number of loans you will have to take.
Try in community colleges first: Only go to four-year universities once you are completely sure about the field you want to work in, otherwise go community college first. It saves a lot of money.
Look into income-share agreements: Lorraine states that these are agreements that replace traditional student debt by getting paid as a share of the future income.
The Positive Impacts On The Future
The potential impact that student loans have on lives can be stupendous. By choosing to live such an existence devoid of these loans, you set yourself up with a debt free foundation and an ample amount of life choices. Life choices that amplify your values and are in sync with your goals.
Not having to take up student loans further means that you have a greater alternative when it comes to disposable income. Having more disposable resources to invest in other areas like an added personal savings allows for a greater net worth overall and stronger financial strength in the longer term.
Conclusion
To summarize, it is beneficial to do away with student loans in order to have a better financial future. Education remains one of the most expensive commodities in the world, and the burden of debt education brings is long lasting.
Therefore, it is important to seek means of financing your education without incurring heavy debts. If people set the tone to live life in a zero debt society, it becomes easy for them to incorporate such strategies in their lives in order to achieve the financial and other goals which they form during their path of life.
