Student loans are a cents-ible way to fund post-secondary education

College graduates have lower unemployment rates and earn $550,000 more in lifetime earnings than high school graduates, making student loans a reasonable investment.

Despite the fact that about 80 percent of full-time college students receive at least some financial aid, finding funding for education beyond high school remains a serious concern for many people. The economic reality is that increased education leads to higher income. According to a recent study by Pew Research Group about the lifetime earnings of college graduates a bachelor’s degree increases an adult’s income by more than half a million dollars above that of a high school graduate.

In today’s uncertain economy, it’s also worth considering that education pays more than ever: while in 2008 the unemployment rate for high school graduates was nearly six percent, only 2.8 percent of those with bachelor’s degrees were unemployed. While every student would probably prefer to graduate debt free, more and more are realizing they will need to consider student loans as part of their long-range career preparation plans.

The most important thing to remember when evaluating student loans is that they must be repaid. Unlike most other forms of debt, it is virtually impossible to have them discharged in bankruptcy court. Repayments can even be taken out of Social Security retirement checks. Loans must be repaid even if the student drops out of school without graduating. Simply put, while student loans can open the door to a successful future, they are a serious responsibility.

There are several questions a potential borrower should ask when considering applying for a student loan:

  1. Is this a federal student loan or a private student loan? There are big differences between the two.
  2. When will repayment have to begin?
  3. Is the lender asking for payment of upfront fees that must be paid before you get the loan? If so, reject the offer as a scam. Legitimate student loan processors cannot do this.
  4. Can this loan be consolidated with others I have?
  5. What student loan forgiveness programs might I qualify for based on my future career choice?

As frightening as the idea of student loans can be, when all is said and done, 86 percent of recent college graduates say that the investment has been worth it for them. With responsible decision-making, making a personal investment in one’s education can pay big dividends by the time retirement comes around.

For more information about the different types of student loans, see "Student loans are not one-size fits all – make an informed decision."

For more information about student loan forgiveness, see "Public service student loan forgiveness can save borrowers big bucks." 

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