Debt Nation: Debt Wish- How Student Loans Can Destroy Your Future
Students apply for college loans because getting a degree is their ticket to the future. The diploma becomes your passport to your next destination – having a well-paying career. Sadly, for many students, instead of a passport, the loan becomes a debt trap – one where they spend decades trying to get out of.
Let’s take
a look at “Exhibit A”, the United States of America, the most powerful economy
in the world.
According
to 2018 statistics, Americans owe more than $1.5 Trillion in student loan debt.
In comparison, when distributed among 45 million borrowers, the total amount of
student loan debt in America is $521 Billion higher than the country’s credit
card debt!
On average,
a college student will take out a loan worth $29,800. The median monthly student
payment for the loan is $222. That means, it would take approximately 11 years
for the student to settle a loan!
When you’re
saddled with debt for such a long time, it could have gigantic repercussions on
your life and career.
- Say “Goodbye”
to Grad School
If you want
the best-paying jobs in the industry, you should get a Master’s degree.
However, if you’re stuck paying for a $30,000 college loan, how can you afford
the cost of going to graduate school? Getting another loan will make your
problems worse.
- Forget About
Buying Your Own Home
A study by
Equifax showed that nearly 60% of millennials reported they could not afford to
buy a home because of their student loan. Buying a home is a milestone. In
Australia, it is considered the “Great Australian Dream”.
If you are
mired in student loan debt, forget the dream and say “Hello” to your parents’
basement.
- The Job Search
Will Be Harder
Vetting
procedures in the hiring process are getting tougher. According to CNN, more
than 34% of companies run a credit check on their job applicants.
If you are
in a student loan debt trap, you should expect the Hiring Manager to bring this
up during the interview. For many companies, an applicant with a poor credit
score is a red flag.
So if you
can’t give a satisfactory answer, you may find yourself standing in the
unemployment line for little longer.
- A Student Loan
Does Not Go Away
If you
can’t pay off your car loan, the bank will take away your car keys, repossess
the vehicle, and auction it off. If you can’t pay off your home mortgage, the
bank will foreclose your property and put it up for sale.
What if you
can’t pay for your student loan? How can the lender go after money that has
already been spent? You can be dragged into court where student loans are
hardly dismissed during bankruptcy hearings.
And what if
you took out a federal loan? Guess what? The feds can go after your bank
accounts and get whatever is left there.
Conclusion
Getting a
loan seems like the easy way to finance a college degree. Statistically, this
has not been the case. Instead of paying
for your future, you could end up paying
off your future.