Education Loan: Is It Worth It? | Insights from Kapeel Gupta, Study Abroad Expert

Are student loans good or bad? Are they a great benefit or do they just add up to a bad investment?

In fact, they can be both. Good student loan debt can get you a college degree to help you move up the career ladder. Bad student loan debt can leave you ill-equipped to repay, crippling your finances for years to come.

So today I am going to talk about the pros and cons of student loans and other debt. I believe this will help you a great deal in taking a decision whether you should go for an education loan or not.

Hello all, I am Kapeel Gupta, founder of study abroad academy. I am on a mission to coach and mentor 100,000 high school students and help them realize their dream of studying in the best universities of the world and build happy careers for themselves.

Today I am going to share difference between a good student debt or a bad student debt. This will help you that one should go for a student loan or not. I believe all of you are ready to note down these points. So, let’s get started.

Let’s see What is good debt, exactly? It’s about borrowing money for something that will appreciate or increase in value and make your loan worth the investment in time and money.

Mortgages: Mortgage loans can be considered a “good” type of debt. Unlike a car, which loses value the moment it pulls out of the parking lot, a house will (hopefully) increase in market value over time. If you sell it years later, you’ll (ideally) make enough profit to offset some of the principal and interest you paid on loan.

Small Business Loans: Entrepreneurs who apply for loans can also be on the bright side of debt, as the money they invest in paying for overhead, office space, equipment, employee training, and salaries must be paid overtime to make your business profitable. exit.

What Makes Debt Bad?

Simply put, bad debt is borrowing money to pay for something that diminishes or decreases in value over time.

Auto Loans: Potentially high-interest rates not only increase the total principal amount you borrow, but the car you buy is often a depreciating asset. In that case, buying a car through an auto loan could add additional interest costs on top of maintenance, insurance, and gas which are normally added to the car’s current price.

Credit cards: This can be a good form of revolving debt, but it can turn “bad” if you let your balance build up, making the interest unmanageable. While some cards come with rewards and benefits, they may or may not be worth it if you end up paying a ton of interest.

So Are Student Loans Good Or Bad?

In the debate between good debt and bad debt, student loans fall into a grey area. They can be considered good debt because the money you’re borrowing to go to college is your ticket to earning a degree and getting hired in a high-paying job. This debt must be paid off over time with a profitable career.

In fact, having a college degree significantly increases your earning potential, compared to your peers with less education.

On the other hand, student loans can be bad because such a degree does not guarantee employment.

While unemployment for college graduates has been historically low, it hasn’t always stayed that way. The Great Recession in 2008 and the coronavirus pandemic erupting in 2020 have worsened the job market for graduates and recent graduates. Even alumni who find jobs more easily than their peers may not earn the kind of salary that makes it easier to pay off student debt.

Is Student Loan Debt Good?

Student loans allow you to get a college education without paying full tuition. With a college degree, you increase your chances of finding a stable, well-paying job.

Some student loans are subsidized. If you qualify, your interest will be paid over the selected time periods.

Student loan interest rates are usually lower than most other loan products, and the interest is tax-deductible.

Student loans come with a variety of repayment plans that one can check from different banks. It can make it easier for you to align loan payments with your budget.

Is Student Loan Debt Bad?

Even if a college education improves your career chances, you may still find yourself unemployed after graduation. Student loans can be a burden in the beginning of the career.

Entry-level workers fresh out of college may also not earn enough to comfortably afford their loan payments. Also, the high value of debt compared to a lower salary can prove to be a problem.

Unaffordable student loan debt can lead to default which can ruin your credit score and prevent you from being approved for other types of credit.

To Conclude I can say:

Student loans are a big decision that you will have to grapple with for many years after college. Before signing up for a large student loan balance, do some research on your degree’s income potential. It may be easier to justify a larger student loan balance for in-demand, higher-paying fields. But you may prefer to spend less for a degree with lower earning potential.

Try to estimate your monthly payments and how they may impact your future budget. Before pursuing student loans, it would be a good idea to look for free money for college by taking advantage of grants and scholarships. Such scholarships are provided by both Central and State Governments, private Corporate players. Good amount of scholarships are provided by the universities themselves.

You can contact our study abroad experts also to help you give good insights on it.

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