Are Student Loans Good or Bad?


Well, I actually don’t have the answer to that.

I do have student loans, though! And I am in the process of paying them off. And I can tell you that although I wish my loans were a little less, and although the loan payment every month  would be nice to have as cash in the bank . . . I don’t regret getting student loans and paying them off isn’t QUITE as bad as I thought it would be.

First of all, a student loan is an investment in your future. When you get a car loan, you get some use out of the car you’re driving. But all along, the car is depreciating in value. You’re never getting that cash back! When you get into credit card debt, you know that whatever you paid for costs WAY more in the end than it did in the beginning with the outrageous interest rates charged by credit card companies. When you get a mortgage, you’re making an investment in your future . . . but if you suddenly can’t make mortgage payments, is your bank going to cut you a break or make you a deal? Not highly likely.

Student loans are different than all this type of debt. Typically, the degree that you paid for with the loan is going to help you find a better paying job. It may not happen instantly, but over time, you will end up making more money, have a much better chance of being promoted or have the ability to go on to further education which will increase your earning potential even more than somebody who didn’t go to school. That’s a pretty big step up for the future.

The loan payments themselves are a little scary at first, and the sight of that loan which could take up to 10 years to pay off can certainly be depressing. But the government has programs in place that help you out. If you got good marks while in school, the government will forgive some of your loan, for example. You also have a six-month grace period after graduating to get out there and find yourself that first job. Let’s say you do find yourself that first job, but it’s nowhere near enough money for you to reasonably live off of and make loan payments. Student loans will let you negotiate a lower monthly payment and may even give you another six month break on their interest relief program, where you don’t make any payments on your loans AND the government pays the interest for you so the loan amounts aren’t increasing.

That’s not too bad when you think about how other lenders behave!

Could the system be better? Sure, it could. Should there be more money available to fund post-secondary education without needing a loan? Yes, that would be great, especially since a post-secondary education is almost a necessity in the workforce now. Should the government really charge interest and make money off the loan? Maybe not. But overall, things could be much, much worse. Student loans are seen as “good debt”, and so if you’ve got one, remember that!

It would be nice if we could all live at home and work during the summers to make enough money to pay for school without a loan. Kudos to those who can. It would be nice if we could manage to work 2 extra jobs around schooling without sacrificing a decent GPA, and maybe some of us can pull that off. But not everybody can! If you’re not in that boat and you’re coming to school with a loan, then take it with a grain of salt. Another payment you’ll be making monthly when you graduate. Just another something to budget for. Not the end of the world.

If you want more information on repaying Alberta student loans, check out edulinx.ca or call 1-866-827-0310. You can also check alis.alberta.ca – click on Students Finance.

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1 Comment

Filed under college, Where to go with a BA

One response to “Are Student Loans Good or Bad?

  1. Hi,
    I really do agree with you, according to my knowledge government is providing some suitable loans for student.
    🙂

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