Q: I’ve heard a lot of people say they regret taking out student loans, but others say loans helped them afford their careers. What’s the truth?
A: The truth is that student loans are neither purely good nor purely bad — they’re just a tool. When used wisely, they can open the door to the career of your dreams, and higher lifetime earnings. But if used poorly, they can become a financial burden that you carry with you for decades.
Student loans are the reality for about 42.7 million Americans — roughly 13% of the population — totaling $1.77 trillion in debt. And for many people, they’re unavoidable. A college degree (or several!) is essential for some careers. For example, if you want to become an engineer, doctor, architect, or work in countless other professions, it all starts with higher education.
For many borrowers, that investment pays off. People with college degrees earn an average of $1.2 million more over the course of their lifetimes, according to an analysis by Georgetown University. That sounds amazing, but the issue is that many students borrow more than they can comfortably afford to pay down.
So how do you know whether student loans will help you — or hurt you? Here’s a rundown.
How can student loans help me?
In addition to helping you land your dream job and earn more money over time (which is the single most important thing student loans do), they can also give you experience with credit. Making consistent, on-time payments with your lender will help you establish a credit history, and with on-time payments over time, you’ll raise your credit score and become eligible for better interest rates in the future on big life purchases like homes and cars.
Okay, so what are the downsides?
Student loans can make your life after college feel incredibly tight financially. The average bachelor’s degree recipient who borrows for college now takes on roughly $35,530 in debt, according to data from SoFi. Assuming an average interest rate around 6% and a 10-year repayment term, that would translate to a monthly payment of about $395 per month.
That number may not sound overwhelming at first — but depending on your starting salary, it can take a noticeable bite out of your take-home pay. The vast majority of borrowers — 71% — have delayed major life events (like buying a home, getting married, having a baby, or buying a car) due to the financial obligation of their loans.
In short, student debt can make launching your adult life a little harder.
Additionally, in the event that you struggle to make payments, you risk damaging your credit. Most federal student loans include a six-month grace period after graduation before payments begin. Once that period ends, consistent payments are essential. Missing payments can hurt your credit score before you’ve even had much chance to build one.
So how do I borrow smartly and avoid regret?
Start by estimating your likely starting salary in your intended field, and use that as a guide for how much debt makes sense. Experts recommend borrowing a total that’s no more than what you expect to earn in your first year out of college.
Next, think about the long-term payoff. If your degree leads to a stable career path with strong earning potential, loans may be a worthwhile investment. If the financial return is uncertain, you may want to limit borrowing, consider scholarships, attend a lower-cost school, or explore part-time work to reduce debt.
Finally, remember that loans aren’t just about the amount you borrow — they’re about how you manage them afterward. Pay your loans (and all your bills!) on time, and treat repayment as part of your long-term financial plan from day one.
Your goal shouldn’t be to avoid student loans at all costs, rather it should be to use them in a way that supports your future, instead of weighing it down.
