Today, more students than ever before are graduating with student loans. Colleges have become significantly more expensive than they were in the past and a college education has become more necessary than in years prior, meaning more people are going to school and more people are borrowing a lot of money to pay for it. Unfortunately, this has led some to believe that a student loan crisis is looming on the horizon as young people are starting their lives burdened with thousands- or even hundreds of thousands – of dollars in debt.
Will You Be Able to Repay Your Student Loans?
If you are thinking about taking on student loans to go to school, it is essential that you stop for a minute and think about whether you’ll actually be able to repay those loans. Student loans are not dischargeable in bankruptcy, which means if you take on loans that you cannot pay, you can be burdened with these loans for the rest of your working life. It is, therefore, necessary to do your research and to make sure you have a chance of paying your loans back.
To determine if you can repay your student loans or not, ask yourself these questions:
- What is the average salary available in the profession you hope to get into after college? If your degree prepares you for a profession where there is a reasonable average salary, then you likely will be able to repay your loans. If you major in something that has few or no practical uses, on the other hand, then you may not be able to get a job that pays you anywhere close to the amount of money you need to make your loan payments. Compare the average salary to the amount of money you are borrowing and to the monthly payments on loans of that amount. This should give you a great barometer of whether you can pay your loans back after college or not.
- How is the demand for new professionals in your field? Some fields are simply becoming saturated with new employees and there are no jobs available. There are, for example, far more people scheduled to graduate from law schools in upcoming years than there are jobs for new associates. This means that there is going to be an over-supply of new young lawyers in the field and there won’t be jobs for everyone.
- How is the job placement rate for your school? Those who graduate from the ivy leagues or from schools with great reputations are more likely to be able to find jobs in their field (and to find jobs at all). If your school is not ranked on the U.S. News and World Report or is not considered to be a “good” school, they may have a low rate of graduates actually getting jobs that require a college degree. You don’t want to pay money for a degree and find that your degree is virtually useless in increasing your employability since this will guarantee that you can’t repay your loans.
- How expensive is your education going to be? The more expensive the school, the more you will need to make in order to repay your loans. Consider starting at a community college and transferring to finish or try to take more credits so you can graduate sooner.
- What is the interest rate on your loans? Low interest government student loans are significantly easier to pay off than higher interest private loans. Government loans also offer you options that private loans don’t, such as loan forgiveness if you perform certain types of work such as teaching or practicing medicine or law in a disadvantaged area.
These are just a few of the many considerations in determining whether you can repay your student loans or not. Of course, your lifestyle after graduation is also going to play a role in whether you are actually able to repay your loans or not. If you live frugally and dedicate yourself to paying off your loans as quickly as possible, you’ll have a much better chance of getting them paid off fast.