Question

Do you think student loans are a benefit to students, a detriment to students, or both? Explain in about words please.

Answer 1

This is depend on the repayment ability and income level of the students.The best federal education loans are the Direct Subsidized Loan. This loan has subsidized interest, fixed interest rates, and low fees. Next are Direct Unsubsidized Loans, followed by the PLUS Loan.There are three types of student loans: federal loans, private loans and refinance loans once you leave school. Federal loans are provided by the government, while banks, credit unions and states make private loans and refinance loans. Federal loans are more flexible overall.

They can be considered good debt because the money you're borrowing to attend school is your ticket to earning a degree and getting hired at a well-paying job. ... On the other hand, student loans can be bad because that degree does not guarantee employment.As a result, graduates in debt often miss out on the benefits that come with a degree. ProgressNow found that students with outstanding loan payments were 36 percent less likely to purchase a house, and other research indicates that “Those with student loan debt also are less likely to have taken out car loans.

What makes debt good?

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.

Mortgage loans might be considered a “good” type of debt. Unlike a car, a house will (hopefully) increase in market value over time. If you sell it years down the line, you’ll (ideally) net enough of a profit to offset some of the principal and interest you’ve paid on the loan.

Entrepreneurs who take out a small business loan may also be staying on the good side of debt, since the money they put into paying for overhead, office space, equipment, employee training, and salaries should pay off over time if their venture is a success.

Leslie Tayne, a debt resolution attorney at New York-based Tayne Law Group and author of the personal finance guide “Life & Debt,” described good debt as “a debt that you can easily maintain in your budget and debt that has given you a benefit.”

Basically, good debt will allow you to “be thankful for what debt has allowed you to have,” she told Student Loan Hero.

What makes debt bad?

In a nutshell, bad debt is borrowing money to pay for something that diminishes or drops in value over time.

An auto loan might be an example of bad debt. Not only does potentially high interest add to the total amount of principal borrowed, but the car you bought is usually a depreciating asset. In this case, buying a car via an auto loan might just be adding extra interest costs on top of the maintenance, insurance and gas that normally add to the ongoing price of the car.

Credit cards can be a good form of revolving debt, but they might become “bad” if you let your balance build up, making the interest unmanageable. Although some cards come with rewards and perks, they may or may not be worth it if you end up paying a bundle in interest.

Other forms of debt, like payday loans and cash advances, often come with insanely high interest rates that can eat your budget up alive. Likewise, big-ticket purchases that need to be financed — like luxury items you don’t need — can be considered bad debt since they don’t appreciate in value.

“Debt is only bad when it becomes unmanageable, out of your budget, and you can no longer pay it,” said Tayne. “It can also include debts that simply don’t make sense or debt you didn’t even intend to take on.

Student loans are offered by a number of private and federal financial institutions. ... But students who do not have a good credit score can always consider federally-funded student loans. These are need-based loans that require no credit check and are easy to apply for. Just head to fafsa.ed.gov to get started.

You'll have to pay interest. One of the worst things about student loans is the fact that you'll always pay more than you originally borrowed, thanks to interest. According to 2017 research from New America, the average interest rate across all student loans is 5.8%, but that can vary depending on the type of loan that you take out.