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Are Student Loans In 2022 Worth It?

Are student loans worth It? There aren’t always cut-and-dry answers as to whether these financial obligations were worth it for your family!

Unfortunately, most students (and graduates) do not realize what their future financial situation will be like.

With an average starting salary around $52k and many wondering if their investment will pay off.

The following list includes 5 important points when looking into how much debt might affect future earning potential:

1. Not All Majors Provide the Same Level of Income

At age 18, it may be difficult to decide on a future profession.

While students might select a school based on a certain program, 30% of them will alter majors in 3 years according to the Department of Education.

Although changing majors may not appear to have a big impact at first, it may influence their career success.

Here are some sample starting salaries for students based on their major:

CollageBusinessSocial sciencesMath and scienceEngineeringComputer scienceHumanitiesCommunications

After graduation, you will have to deal with your student loans for many years.

Before taking on a significant student debt obligation, do some research into the earnings potential of your chosen major.

It may be simpler to justify a larger student loan sum if the professions in high demand and well-paid are considered.

However, you might want to prioritize spending less money or take on a lower salary by attending a cheaper college with a major that provides more job opportunities.

You may also like: 10 Things To Know About Student Loans Before Going To School In 2022

2. What Types of Loans Are You Applying For?

While I realize that going to college in your mid-twenties is unusual, consider the following 2 points:

  1. The proportion of 18-year-olds who are able to explain what they want to do.
  2. Financial aid is often based on the needs of your parents, not yours. This can create issues if your money situation changes while you’re in college. Despite independently filing taxes, your parent’s or guardian’s income will be taken into account when determining financial aid, such as government Stafford loans, until you’re 24 years old.

You’re not too old to return to school, and no, you’re not unusual for being unaware what you want to do at 18.

You’ll be able to borrow more money if your FAFSA shows you qualify for as many federally assisted Stafford loans as possible because these are the only sort of loan that doesn’t accrue interest while you’re in school, thanks to the government’s subsidizing and paying it for you.

These are the loans that you receive from Navient or Nelnet, and for which you want to keep as few as possible.

My most recent Stafford Loans have a rate of 4.5%, whereas my highest interest rate on Navient student loans is 7

3. College Cost Varies

When you start getting acceptance letters from colleges, it’s easy to get carried away with visions of your dream school.

But before long the price tag comes into focus and there’s a big difference between public universities or private ones.

Especially if they’re 4-year schools. The average cost per year for both is $22,190-$51,770 according to the College Board but that doesn’t even take into account other factors like living arrangements on campus.

However, the cost of attendance may not be worth it if you need to borrow significant sums of money to pay for it.

On-time completion rates are more likely, but private schools don’t guarantee greater job prospects (Even an Ivy League education doesn’t guarantee high-paying employment).

Consider the full cost and financing possibilities from a variety of schools before making a decision based solely on the institution’s reputation.

You may also like: Student Loan Advice: 12 Tips You Should Know In 2022

4. Graduates May Have a Leg Up in Terms of Finances

A college degree does not guarantee future professional success, most people feel that getting an education is a worthwhile investment.

According to the College Board, median annual earnings for those with a bachelor’s degree are 67% more than those with a high school diploma.

The pay difference is especially stark for college-educated individuals, who make 69% more than their less educated counterparts.

With each level of education, earnings for males and females continue to rise.

The unemployment rate for those without a college degree is typically double that of people with one.

Although 83% of folks with a bachelor’s degree or higher had employment during the reporting period, this was true only for 70% of individuals with some college experience.

According to the Federal Reserve Bank of New York, those who have earned a college degree are more likely to be financially stable.

It also lowers the chance of relying on public assistance.

A college diploma may help you enjoy a better existence and save money on health care in the long run.

You may also like: Student Loans And Savings: 6 Questions To Ask

5. Getting Ahead While Still In School

You may also take measures while you’re in school to improve your financial situation.

You can keep extra money that you don’t need for tuition and board while in college by putting it into a checking account to cover living costs.

There are numerous options for what you can do with any surplus if you have enough money to cover your costs or have access to a part-time employment to supplement your student loan.

Before you graduate, you may even make payments on your student loans.

While you’re still in school, you can frequently establish recurring payments in nearly every bank account, so you may pay down your debt while you’re still in school.

You can also use any remaining loan money to set up a savings account while you’re in college or graduate school.

While you’re enrolled as a half-time student, none of your federal subsidized loans will accrue interest, so there’s no reason why you can’t utilize excessive loans to establish an emergency fund while in school.

Once you’ve graduated, the overall amount you borrowed will begin to earn interest.

For most federal loans, there is a 6-month grace period before interest and monthly payments begin (this isn’t always the case for private loans).

Make sure you’re ready to repay your remaining loan after college if you decide to keep the money.

You may also like: Your Simple Guide To How Student Loan Interest Works (2022 US Guide)

Frequently asked questions