3 Reasons to Give Thanks for Student Loans
If asked to compare borrowing student loans to a holiday, you'd probably pick Halloween. After all, taking on tens of thousands of dollars in loans is scary stuff. However, here at the Student Loan Ranger, loans make us think about a different holiday -- Thanksgiving. And, no, that's not an April Fools' Day joke.
Thanksgiving is about realizing what we should be thankful for, no matter the other difficulties we face. If you're a student loan borrower, no one will blame you for focusing on the negatives of that situation, such as rising college tuition and student debt levels and high loan default rates. These are concerns that shouldn't be overlooked.
But because of these issues, people often overlook the benefits of student loans. These silver linings actually do exist, especially for federal loans. So, in honor of the upcoming Thanksgiving holiday, let's dig into three things about student loans that borrowers should be thankful for.
See [how a republican-led Congress could affect student loans.]
1. Student loans help you pay for college. According to The Wall Street Journal, more than 70 percent of the class of 2014 borrowed student loans. It's understandable if you think that number is too high. However, you should also think about what that 70 percent would have lost if they didn't have loans. Perhaps they would not have made it to graduation or avoided enrolling in college in the first place.
In addition, research has shown that college graduates earn more money in their lifetimes than people with only a high school diploma.
But for many students, going to school represents much more than a better salary. It's easy to forget your original intentions after you graduate, especially if you're facing a massive student loan bill. If that's the case, remember that that debt actually paid for fulfilling one of your dreams.
Learn about [creative ways to reduce your student loan debt.]
2. Loans can help establish and build your credit score. Federal law can make it difficult for people younger than 21 years old to obtain a credit card. As a result, it can also be difficult for these individuals to build a positive credit history. Having good credit is essential to passing many key milestones in life, including being approved for an apartment lease, car loan, mortgage or even a job.
This is another reason to be thankful for student loans.
As a form of debt, student loans are taken into account as part of your credit score. While you may be worried about a lender seeing all your student debt, you may not have to be -- provided you handle things the right way.
Lenders use credit scores to vet potential borrowers. Essentially, they're trying to determine how risky it will be to lend you money. If you have high debt and low income, you might give them pause.
However, you can counteract this by showing you know how to manage your obligations. That means paying recurring debts, like your student loans, on time, every time. Doing that will be a big point in your favor.
Find out [how late student loan payments can hurt your credit score.]
3. Certain student loans come with repayment benefits. Federal student loans come with repayment benefits that you don't typically find with other types of consumer debt. Borrowers of these loans are entitled to repayment options that could postpone their payments, decrease the amount they pay each month or even eliminate their debt altogether. Try to imagine your bank forgiving the remainder of your mortgage if you worked at a nonprofit for 10 years.
If you're dealing with an economic hardship or other financial struggle, you should be especially thankful for those payment postponements. You may be eligible to pause your payments temporarily with a deferment if you're currently unemployed, suffering from a disability or living in a federally declared disaster area.
Even better is that if your loans are subsidized, they won't accrue interest during an approved period of deferment. That keeps the amount you owe consistent while you take the time to get back on your feet.
Ryan Lane is the senior editor for American Student Assistance, where he oversees the financial website saltmoney.org and serves as the editor of the SALT Blog. He graduated from Syracuse University with a B.S. in journalism.
