For those looking to establish a steady career, it's considered crucial to obtain a college education. The financial investment that each individual makes with college can lead to more career opportunities and a higher salary. Although taking out a college loan is one of the only ways some students can enroll in college, there are several disadvantages that come with borrowing money.
- It Can Take Decades to Pay off Loans
Many students assume that they'll be able to repay their college loans after a few years, but the reality is that it can take decades in most cases. Some students borrow an average of $100,000, and it can be a slow repayment process that makes it difficult to thrive after graduating. Many people want to obtain an auto or home loan once leaving school, as well as start a family, which can become even more financially complicated with large amounts of unpaid debt.
- Interest Rates Can Add Thousands
Obtaining a loan comes at a cost, which includes having an interest rate that can be ridiculously high. High interest rates can equate to thousands of dollars after everything is repaid. This can mean paying up to $20,000 just to borrow money to attend college.
- It Can Be Difficult to Afford the Loan Post-College
Earning your degree doesn't guarantee finding employment once you complete your courses. After the economic downturn, more graduates have struggled to find employment, especially due to a lack of experience. Others attempt to find unpaid internships for a chance to get their foot in the door or have to settle for part-time jobs. With many loans, the repayment process begins just months after graduating, but this can be difficult to afford without a full-time salary established.
- You'll Have to Repay the Debt Even if You Don't Complete College
After obtaining a student loan, some people find that college is simply not the right choice for them and instead decide to head straight to the work force. Others have interruptions in life that can make it difficult to stay enrolled. Whether the borrower graduates from college or not, the loan has to be repaid and then it becomes a pointless expense for those that did not graduate. You may not ever have a college degree, but you'll be strapped with the debt.
- College Loans Can Damage Your Credit
For students who fail to graduate or are unable to afford the minimum payment each month on their student loan, it's common to default. Like all loans, defaulting on a college loan damages your credit and stays on your record for up to seven years. This can make it difficult to purchase a car or apply for a home loan, and also significantly increases your interest rates on other loans.
