It is not uncommon to find someone in their 20s struggling to pay off the student loan they took in hope of getting a college degree which would, in turn, help them land a high paying job. While a college education does ensure a better future, you should also be aware of the pitfalls of going knee-deep into debt so soon in your life. This is what this post is all about.
Here Are 5 the Things We All Hate About Student Loans
1) Education does not guarantee a high paying job, think of the unemployment numbers
University degrees are now becoming irrelevant to big employers. Al least this is the case in Australia. An Austrian news website published and articles describing how big corporations are betraying the ones who invested thousands of dollars in college education. It’s about time employers in other developed countries will follow the same trend.
2) Late payments can hurt your credit score
Another reason why we all hate student loans is, they can also tank your credit score. Miss one payment and it could set you back by a year. Unless you pay up within 30 days of missing a payment, the student loan lender will report to the credit bureau. This is how they keep you in check. Miss multiple payments and you will find yourself in serious trouble.
3) The student loan debt situation is getting worse in the United States
The student loan debt situation is getting worse and worse; also it is estimated to get even more acute in the year 2020. According to a stat by Investopedia, student loan outstanding debt in the year 2019 is about $1.41 trillion. Moreover, 14.4% of adults in the nation are with a student loan. The number don’t lie. They tell the real story. Check out also this interesting student loans study here.
4) A student does not have sufficient life experience to make such a huge financial decision
Modern society does not shame people who make poor financial decisions. In fact, it merely sympathizes with the poor money decisions a young adult makes. I am not asking you to shame someone who is knee-deep in student loan debt, but I think it is our moral responsibility to be informed and keep others informed on things involving money.
5) Those with a low credit score have to bear a high-interest rate
In 2019, the interest rate on Federal student loan for a graduation course is 6.08% whereas for a post-graduation course is 7.08%. Such is the case even when Federal student loans are considered to be the cheapest. Besides, fixed private loans can go up to 12.49% and variable private loans up to 11.87%. The situation does not seem to be getting any better in 2020.
All stats about student loan debt point to only one direction. As I said earlier, numbers don’t lie. This is also a reason why so many people in millennials and Gen Y group are gravitating more towards things like entrepreneurship and freelancing.