Education shouldn’t be expensive nor biased to the privileged. This is how many students think of the Public Service Loan Forgiveness (PSLF) or its root cause—the US student loan. Since its implementation, it has been a controversial topic and is still up for debate in the congress and community.
If you’re a student taking loans for your education, a high school graduate who is about to apply for a student loan, or a graduate working from 9:00 am to 5:00 pm so you can pay your loans, you might be one of those wishing for a change.
What are Student Loans?
Student loans are made to help less fortunate students for their college education financially. Whether it’s tuition, school-related fees, or even living expenses during schooling, student loans can cover that for you.
In America, more than 44 million students went to college under the aid of student loans. Even after graduation and getting a job, many are still having trouble paying off their share of credit, which consequently amounted to a total of $1.5 trillion of debt.
One in four federal borrowers struggles on paying off their loans. Being so can cause negative financial consequences, such as a bad credit report, lower credit score, and maybe much more limited options to amend defaulted loans.
Colleges can accumulate a hefty sum of your tuition during your college years. It’s nearly impossible to get into a prestigious college without getting yourself financially backed. Nevertheless, it’s entirely up to you whether to apply for a student loan or not.
The Effects of Student Loans on You
Your Debt-to-Income Ratio
A debt-to-income ratio (DTI) is a personal finance measure that can compare your monthly loan bill to your monthly gross income. Since your gross income is your salary before taxes are cut from it, your DTI is the percentage of your gross monthly income dedicated to paying off your loan every month.
Experts suggest that an individual should have a DTI of no more than 36%. Failing to comply with this prompts lenders to reject your loan application. When they approve your request, it usually comes with a higher interest rate. This can affect your finances badly and can lead to future problems.
Difficulty to Purchase a Home
Credit reports and credit scores affect your ability to get a mortgage. Chances are your application might get rejected due to your unfinished student loan. Although different lenders have different standards for these requirements, it’s still beyond your power to control how much your student loan can influence these factors. The best you can do is to be eligible for a mortgage loan is to pay your debts and bills on time, as well as improve your credit score.
Can Affect your Savings
Some people would opt to pay their student loans instead of putting money on their savings. This severely affects their ability to have Early-Career Retirement Savings. Many are hoping to get out of their student loan fast, thus risking their retirement in the process. No one can blame them, though. Late payments can incur fees and affect their credit score negatively.
The toll on Your Mental Health
Student loans don’t only affect financial matters, but also one’s optimal health. According to research conducted by the UCL Institute of Education and the University of Michigan, student loan debt can lead to stressors, lower job satisfaction, and a negative impact on mental health. These studies had reported that student debt lowers the level of an individual’s psychological well being, regardless of how good his/her salary, career, and family wealth.
In dire need of money?
Paying off student loans can be troublesome, especially if your monthly income isn’t enough for all of your expenses. That is why many debtors also take out other loans to provide for themselves.
Luckily, many lenders had become more accessible through the power of technology, just like Credit Ninja. If you require money, you can take out an installment loan with CreditNinja.com. To learn more, visit their website, and maybe you can get the financial aid you need.
The Student Debt crisis affects the individual as much as it affects the economy. Many are under debt and stress due to their responsibility of paying off a loan they’d probably never see the end of.
However, we need to remember that the reason many are under its effect is because of need. No one should have to suffer to get the education necessary for the economy to thrive.
Sure, student loans have made or will more likely have a positive impact on your life. No matter how much it influences the decisions you make, the bottom line is, it does affect you. Whether it’s good or bad is up for you to decide.