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Why Student Loans Are Considered the Third Way to Ruin Your Finances


Income loss and failing to keep up with uninsured expenses are the first two ways that could result in ruining your finances. The third and newly introduced way that messes up your finances is taking student loans for financing your education.

This is comparatively new. Traditionally, people who complained about the ruining of their finances often did one of the two traditional ways
mentioned above. A person can get into such circumstance if they suddenly experience a significant decline in income they earned, for instance by losing employment. Similarly, people who incurred uninsured, large expenses also experienced losing finances.

In a way, student loans ruin your finances in a similar way as uninsured expenses do. In this case, the expense is the cost of education that you pay using the student loan you have taken. More and more students are opting for student loans to continue with their higher education. In fact, according to Federal Reserve Reports, student loan debt almost tripled in the past eight years.

Students are encouraged to opt for this loan type as there are minimum requirements to stand eligible for one. You can access the loan from lenders even without proving whether you will be able to return it back or not. The lenders are kind of least bothered about you returning the money usually because student loans are guaranteed by the federal government. Moreover, it is possible to avoid the liability, even in case of bankruptcy.

Another major reason is that you are eligible for your first student loan even before you are 18 years old. However, this isn’t considered an absolutely unchangeable option. You can change your school or your major subjects but in case you change your mind for continuing with your debt for higher education, you will be left without the degree in your hand, which was your only hope for making money to repay the loan.

It is like using your credit card for shopping without realizing what the average credit card debt is and how it will become equivalent to spending the same amount on shopping thrice as much. It is even surprising to know that most are shocked when they hear what the average credit card debt is here in America. Same is the case with students who have taken student loans.

So what choices are you left with? Find out!

The Standard Route

Follow the old route and search for the best college that provides you with an opportunity to borrow only the money required for education.

This is still considered a better choice, especially if you have someone else on your behalf to pay money for your education and sticks to only the real cost of education, saving you from debt trap for your entire life.

So this sounds like a practical option to most people. However, it is better to say that this option works better for rich people. Because only they have the power to select a college they like without the need of borrowing money. It is also a feasible option for those who are experts in certain areas such as music, sports and any other activity that earns them scholarship money to spend.

High-Reward, Risky Route

If you are looking for an option that helps you earn well, continue with your education with borrowed money and then keep your fingers crossed and pray that all goes well and one day you have enough to get rid of your debt obligation. For this, you must have good know-how of what the average credit card debt is.

It is a little sad how so many students are trapped with student loan debt since the obvious threats to finances with regards to this route weren’t so clear until the last few years. Many students made the wrong decision as they were unable to determine whether the course they are
taking will help them earn the money they have already spent on education. This is the major reason why a great number of students with degrees in social work or English are under the unfortunate pressure of our debt collection system.


Pre-planning is a must. At certain times you don’t have a choice and you need to select a route to go about your education and career in the long run. If student loan is your last hope, make sure you do your homework and analyze whether your education will pay off in the future or not.

Author’s Bio

This article is composed by Elaine McPartland who is associated with “Consolidated Credit” as their community writer. She has an expertise in writing articles related to debt consolidation and how to pay off debts easily and smoothly. You can add her at her google+ profile.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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