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How Will Student Debt Affect Your Future?

20 November 2017 No Comment

Going to college is an expensive time. Aside from the cost of tuition fees, you may also have to pay for student accommodation, study materials, food, gas, and everyday living expenses. Even if you save some money by enrolling on an online masters in accounting, your debt could easily run to $30k by the time you graduate.

What many students don’t fully understand is how their student debt can have a far-reaching effect on their future. Unfortunately, student costs have far outpaced wage growth, so even if you graduate at the top of your class, you may struggle to pay off your debt burden on an entry-level graduate job.

Debt Burden

Most students understand the basics of reducing their debt burden. There has been plenty of publicity about student debt and even President Trump made it a hot issue during his election campaign. But, although it is possible to save money by studying for an online MACC degree, applying for scholarships, or studying at your local state university unless you head to college with a healthy trust fund to tide you over, it is very difficult to avoid some degree of debt.

The problem with student debt is that it doesn’t go away. You are required to start paying back your student loans as soon as you graduate. An average student in their 20s has $22k of student debt. Older students carry even more debt, as higher tuition fees and living costs have quadrupled their debt burden.

The Fun Years

While you are at college, having a ball and making the most of your freedom, the future is probably the last thing on your mind. In fact, you might have a hard problem making plans for the weekend let alone worrying about where you are going to be in ten or 20 years’ time. But you should be worried!

A Reality Check

By the time you hit your 30s, you will be thinking of settling down, raising a family, and building a career. Being $30k in debt is not going to help make your life easier. At some point, you will need to take out a mortgage. Lenders look at your existing debts when they make a lending decision. The more you owe, the less you can borrow, which could prevent you from buying a home. It might even make it hard to rent an apartment in your 20s if your student loan repayments are a considerable portion of your take-home pay, which might be the case if all you can find is a basic entry-level job.

It is impossible to avoid taking out student loans to finance a degree unless your family is wealthy or incredibly well organized with sufficient savings to fund your education. However, it is worth making savings where possible. Online degrees are cheaper and will save you money in many areas, not least accommodation costs. It also makes sense to study a subject where there is a demand for graduates – the healthcare sector is one such area.

In the meantime, try not to worry. You never know, President Trump might decide to write off all student debt!

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