Pros and Cons of Student Loans | Education and Learning Blog

Posted by admin on Mar 16th, 2012 in Students

Whether for graduate school or undergrad, many people use student loans to finance their education. Some do this out of necessity. Others do it because they believe student loans to be a prudent financial choice. There are many pros and cons associated with student loans. A smart and informed student should recognize these things if he or she wants to make the best possible decision before heading to college.

Student loans can be deferred or put into forbearance:
One of the major pros of using student loans is that most of these loans are very flexible. Government-backed student loans come with the option to defer. Students do not have to pay the loans while they are still enrolled in school. Another positive is that students can request an unemployment deferment. If a student does not have a job and is looking for work, he or she can contact the loan provider and request an interest-free deferment with many loans. Lots of loan providers also provide a temporary forbearance for students who are having difficulty.

Some student loans can be forgiven:
Some students will take government loans before working in the public interest. People who plan to serve for ten years in a public interest position can have their government loans forgiven after that point. This can amount to a massive amount of savings for those students. This option is not available with all privately funded loans.

Student loans charge interest:
Even though the interest rate is low, student loans still charge something each year. Interest paid is money that you could have otherwise had. Graduate loans carry a higher interest rate that can make paying off the loan difficult in some instances. This will make your education more expensive than it might have been. Some people will rationalize this cost. Still, it remains a negative factor associated with taking out student loans.

Student loans cannot be discharged through bankruptcy in most cases:
Whether you have Discover.com student loans or government loans, it is incredibly difficult to discharge student debt in bankruptcy. The vast majority of people will be stuck with these loans regardless of their financial situation. Many other types of debt can be discharged if things go wrong. You can expect to pay off these loans until you?ve zeroed out the balance, left the country, or left the earth. The finality of students loans is scary. This is why students should think long and hard about taking out loans before they receive the first dime. When used properly, they can be a definite positive.

Source: http://www.talkedu.net/pros-and-cons-of-student-loans/

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