Pros and Cons of Student Loan

Student Loan - Complete Controller

A college education generally costs a lot of money. As a result, there is an increase in the demand for student loans. Student loans currently burden almost every American student. Odds are if you have borrowed funds for all academic semesters, you have used the services of four to six different lenders. According to a study in 2016, an average college graduate owes around $37,213. If we consider the increase in the percentage of 6% every year, the loan can become unbearable for an individual hired into a median-paying job. Check out America's Best Bookkeepers

Considering the yearly repayment amount, it becomes a seemingly insurmountable task to pay back the loan in a timely manner. Even managing repayments and the growing interest becomes uncontrollable. This situation has led student loan defaults to total around $130 billion. However, despite the negative aspects, a student loan becomes the only solution for students who face financing their education but do not have the funds to pay outright. Here are some of the pros and cons of student loans to help you make a suitable decision for your education and finance it.


  1. Easily Getting the Higher Education: The first and foremost reason students take on this type of loan is to complete their education quickly. Students can get take on this loan at a lower interest rate to finance the education when they cannot pay for it upfront. A student loan helps the students to achieve the degrees they might be required to pursue later in life if they are obligated to pay for everything in full.
  2. Credit History: Student loan debt is usually considered the best way to build up a credit score.
  3. College Degree: It allows students to focus on studying in a college without financing it outright. It accommodates students by removing the immediate financial burden from their shoulders during their student life.
  4. Loan Discounts: One of the main benefits of student loans is that it provides the students some form of a discount on the interest rates if the students keep a favorable credit score. They usually receive a discount of up to 1%. Check out America's Best Bookkeepers


  1. Payments and Interest: If you have borrowed a student loan, you will end up paying more than you borrowed due to interest. The longer you wait to pay off the loan, the more you pay in total. The interest rate and high payments make it impossible for students to use their finances in order to fulfill their other needs.
  2. Difficulties in Non-repayment: If you fail to repay your student loan on time, you might face increased difficulties, including legal measures taken by the lender. Defaulting in repayment may result in the seizure of properties and custody of the individual. It also hurts the credit score of the individual.
  3. Penalties: Penalties, including fees, are imposed on the individual in case of any default in repayment. Penalties may also include an increase in the interest rate for deferred payments, which imposes a significant burden on the individual.
  4. Losing Lenders’ Benefits: Upon the consolidation of the student loan, the student may lose the benefits, including lower interest rates, if they consolidate their loans. Check out America's Best Bookkeepers


A student loan is usually a go-to option for those who lack the immediate finances to complete their college education. It may help students out at a time of need and take the financial burden off their shoulders. Timely payments can also help the students in improving and maintaining their credit scores. However, it is important to realize that it can end up being a huge burden in the long run. Considering the increase in the number of student loan defaults, everyone must realize the risk and burden of payment before they apply for it.

While borrowing the student loan, students and parents must be sure that the education will lead to a career that can help the student easily repay the loan with interest. If the education does not have much scope, burdening oneself with the stress and responsibility of repayment is needless. However, if the career can earn enough to cover the student loan debt and living expenses, taking on a student loan will end up changing the life of the student by providing him with enough opportunities to complete his education without getting a job any other loan.

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