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5 Times When Student Loans Might Be a Bad Idea

By Elizabeth Aldrich – Updated Feb 6, 2020 at 6:10AM

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Student loans can help you pay for college, but have you considered all your options?

With the ever-rising cost of tuition and living expenses, it can be difficult to cover the cost of higher education. Student loans give you the opportunity to attend college without facing the immediate financial burden. However, there may be other ways to afford college without signing up for long-term debt. Here are some scenarios where automatically taking out student loans isn't in your best interest.

1. You haven't applied for any scholarships

Always explore all scholarship opportunities before resorting to a student loan. There are many options available to all types of students and you don't necessarily have to have a 4.0 GPA or an extensive list of extracurricular activities to qualify. There are plenty of smaller community scholarships that are often overlooked and may only receive a handful of applications, if any at all. 

Use both online and in-person resources for your scholarship search. Your school's college counselors can locate scholarships in the nearby community and guide you through the application process. Online search engines, like Fastweb or Scholarship Monkey, can give you instant access to databases that feature more than a million scholarship opportunities. When browsing through scholarships, tailor your search to match your identity. Or focus on your interests, area of study, and extracurricular activities to find potential matches. This will help you to use your time and effort wisely when filling out scholarship applications.

2. You have other ways to pay for college

Consider all potential options for financial assistance before applying for student loans. Start with those closest to you. If your parents or other family members are able to contribute to your education, let them. Some family members may be willing to lend you money up-front with a set plan to pay them back over a reasonable amount of time. There's no shame in asking your loved ones for help when it comes to investing in your future.

You may qualify for grants or work-study assistance simply by filling out the Free Application for Federal Student Aid (FAFSA). Many students also choose to work part-time and even full-time jobs while balancing their studies. Your school may offer tuition payment plans to break up the cost of each semester, making it easier to afford than a single, large-lump payment. And there's always the option to attend a more affordable college. You can significantly cut your overall education costs by taking core courses at a community college and then transferring to a larger university for your specialized courses.

3. You plan to spend them on non-essentials

Student loan debt follows you around for years. It's expensive and can quickly go south if not managed properly. It's never worthwhile to take out additional student loans to pay for non-essentials like a spring break vacation or a new outfit. Taking on student loan debt should be a last resort, and that money should be dedicated to paying for tuition and related education expenses.

4. You only qualify for predatory loans

If you've maxed out your federal student loans and can't qualify for private student loans with reasonable interest rates, be wary about signing up for student loans with extremely high interest rates and predatory terms. These loans make it even more difficult to pay back your original borrowed amount because the interest builds quickly.

Instead, consider getting a part-time job or attending a school with lower tuition. It may not be your ideal scenario, but it will benefit you in the long-run. When it comes to predatory loans, the odds are stacked against you.

5. You don't plan on graduating

Student loan debt is a burden for everyone, but the burden usually weighs heaviest on students who never graduate. Student loans are often worth the cost because they offer a return on investment, but most people only see that return if they graduate. If you aren't determined to complete your degree, you should reconsider taking out student loans and re-evaluate what your goals and career path may be. 

If it's quick learning or an additional skill you're after, consider looking into vocational schools and community colleges, which are often more affordable. There is no sense in going into massive debt without increasing your earning potential and advancing your career opportunities.

Student loans often open the door for students who may not otherwise be able to attend college. However, it may be possible to get a debt-free college education, so it's important to exhaust other funding options before resorting to borrowing.


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