Student Loans: Borrow with Caution!

Hey everyone! Today Bridget from Money After Graduation is guest posting on a topic I think most of us students and ex-students can relate to: student loans. Take it away Bridget!

I took out my first student loan in 2019. I’m lucky because that was my third year of university, which means had I funded my first two years the same way, I might owe twice as much as I do now. Before I go on, I want to point out that I’m happy with my decision to take on debt to get a post-secondary education… I just wish maybe I had borrowed less and spent what I did borrow more wisely.

Student loan debt is often considered “good debt” for a number of reasons:

  1. You use it to buy an income-generating asset: a degree. College graduates earn on average $1 million more over their lifetime than those who did not pursue any type of post-secondary education.
  2. Interest rates on student loans are generally low, averaging one-third to one-half of the rate charged on things like credit cards. Consequently, student loan debt is less expensive than consumer debt in some respects.
  3. There’s little to no stigma for owing on student loans. While it’s easy to label someone a frivolous over-spender if they have $40,000 in credit card debt, someone else that owes the same in student loans will rarely get so much as an eyebrow raise in their direction.

But do student loans deserve some stigma? To be totally honest, I’m sure I didn’t spend all my student loan money on tuition and textbooks. There’s a lot of clothes, make-up, food, and alcohol that gradually sunk me deeper and deeper into the hole. I thought I was buying stuff, but I was really just buying debt. Turns out student loans are just like any other debt because they cost more every day that goes by.

The interest rates on my loans are 5.5% and 3%, and the interest is calculated, compounded, and added to my balance daily. I don’t even log on anymore because I hate to see the total amount, I’ll pay over the lifetime of the loan grow. I just close my eyes and throw money at it and hope it all goes away by the end of next year.

Debt is the most expensive thing I’ve ever bought, because it’s the only thing whose price tag keeps growing! This is not something that occurred to me when I was borrowing, and now that I’m paying it off I wish my student-self had exercised some self-restraint.

It seems ridiculous to still be paying for some things I bought years ago that I don’t even own anymore, and it’s even sadder that now I have to say no to things I want because I can’t afford them while carrying such a big debt around. If you’re a student, borrow carefully lest your future self be found gazing wistfully at store windows unable to go in. A few years in college can mean many more years in debt.

Did you borrow money for school? How has it impacted your life?

Leave a Reply