The harsh truth about the cost of higher education is that students often come out of college in a worse financial position than they went in. With a job market that demands degrees even for low paying jobs, graduates often take on more loans than their post-graduation salary can support. After their loan payment is made, their take home pay is less than minimum wage.
Learn the facts about student loans so that you can benefit financially from your education rather than being in debt for the rest of your life.
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Not all student loans are the same.
Federal, private, subsidized, unsubsidized. Student loans come in many types, and some are better than others. Know the differences so that you can choose the right loan.
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Too much student loan debt is financially worse than no college degree.
Many students take out loans to pay tuition and living expenses thinking it will all work out once they graduate with their degree. They don’t do the math to realize that with their expected salary of $30k/year, they won’t be able to afford the payments on $100k worth of loans. Financial aid and loan offices aren’t always going to spell it out for you. It’s up to you to know what you can afford.
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With interest and fees, you end up paying close to double the value of the loan.
6.8% interest may not sound like much on paper, but over the course of the loan repayment it adds up in a big way. Between interest and initial fees, you may end up paying twice what you originally borrowed—especially if you consolidate. That amount doesn’t even include any late fees or penalties if you fall behind on payments. Learn how interest works, and what you can do to keep your final costs down.
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There are tax advantages for loan repayment, under certain circumstances.
If you’re paying interest on student loans, you may be able to reduce your income tax. It may be a small amount, but it’s extra money in your pocket at the end of the year—and extra money you can use to pay down the loan balance.
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Some jobs help you repay your loans.
They may not be everyone’s cup of tea, but certain jobs and employment programs help you repay your student loans or make you eligible for specific repayment plans. Choosing one of these fields can help you pay off your debt, usually while helping make a difference in the world.
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Bankruptcy doesn’t get rid of student loan obligation & creditors will make you pay.
Student loans—both federal and private—don’t fall under the same consumer rights protection laws as other debt. That means things like bankruptcy and statutes of limitation on debt collection don’t apply to student loans.