Is Student Loan Debt Bad? I’m confused…

“Stop it. No. Don’t. No, don’t even imply that it’s good.

You’re actually saying that, aren’t you? YOU are saying that?”

This might be going through your head right now. This is what’s going through my head right now.

But humor me, just for a second. Because I’ve made some peace with my student loan debt that may just make you feel a little bit about yours.

I think student loans are evil, and yet…

It’s no secret how I feel about student loans. This entire blog is dedicated to crushing student loan debt for good. My student loans were the $30,000 gorilla that I wanted so desperately to get off my back. My debt made me uncomfortable.

So I went hard at them. HARD.

I threw every extra  dollar I had at my debt. I ended up paying down $23,000 in 3 years. Then in March 2013, I made a pledge to get rid of them once and for all, promising pay off my remaining $7,600 in student loan debt by the end of the year. Finally, four years after college graduation and paying $900-$1000 a month toward my loans, I declared my official debt freedom in October 2013.

Being debt free feels AWESOME. Never getting another letter from my student loan servicer feels like ending a bad relationship. Saying so long to a $900 payment every month feels freakin’ liberating.

I’m glad I was able to recover from all that debt. And now I know what I would’ve done differently. If I had a Back-to-the-Future-style time machine (which I don’t, but I WILL someday), I would gladly hop into my Delorean, head back to 2005 and tell myself to not borrow so much money. There were so many alternatives to paying for my college experience (like applying for more scholarships each year) and my life would’ve been incredibly different after school if I hadn’t borrowed so much.

But here’s where the lines get blurred for me.

Yes, my student loan debt limited my options right out of college. But I literally could not have gone to school without student loans.

Is student loan debt bad? Here’s what I know:

I hate to admit it, but I’m grateful for my debt (some of it). My student loan debt got me to where I am today. Does that make student loan debt bad? Here are some truths:

Student loan debt is good because…

1. Student loan debt affords you opportunity. I was the first person in my family to get a college degree. That makes me pretty damn proud. And I also came from a family that had no savings for college, which meant that student loans were an absolute necessity for me to be able to attend school. I didn’t need all $30,000 in debt, but I definitely needed some of that.

2. Student loan debt is like a monthly subscription to a lifetime of greater earnings. Think about it this way: would you be willing to pay $200 a month for 10 years if it meant that you could earn twice as much as a high school grad? Student loans are like a subscription service to the real world. The trick is finding a job with higher earnings and keeping that monthly loan amount as low as possible (and unfortunately, $200 is not the reality for most of us).

Student loan debt is bad because…

1. Student loan debt costs you opportunity. Student loan debt giveth, and then it taketh away. While my loans may have opened the door for me to go to college in the first place, the amount I owed at graduation withered away my post-college opportunities. I needed money ASAP and a lot of it – there was no time to explore my options. Debt means delaying the important stuff, like not buying a home for a few years or staying in a job that stinks because it helps you pay the bills. When I started to get the itch to start my own business, I knew that I had to dump my student debt first. 

2. Student loan debt costs you money. It literally costs you money every month. But student loans costs you more than just your monthly payment and the interest that builds up over time. That money could have been saved or invested. You could be earning a return on that moolah in a retirement account. You could be saving up for a down payment on a house. You could be saving that up in a Freedom Fund to someday quit your job. But your indentured servitude toward your debt means that you have an obligation for those few hundreds of dollars.

Okay, so both of those lists are compelling reasons why student loan debt is bad… but can also be good. So is student loan debt just a necessary evil?

Here’s what I believe:

Sometimes debt is necessary. Lots of debt is bad. How you feel about it depends on the person.

That’s my new mantra. That’s the message I want to send to student loan borrowers, credit card users and soon-to-be-homeowners. We should not fear debt. Sometimes debt is necessary to open up the right opportunities in life.

But a lot of debt? That’s bad. That’s where student loan debt starts to suck. Avoiding lots of debt means making smarter decisions earlier on, and sometimes means not choosing an expensive college that skimps out on financial aid (*cough* Boston University). Once you are in debt, it can be stressful. And if you’re like me, you can desperately want to do anything to get out of it. Or it can not phase you at all. It can just be another bill you have to pay and the balance doesn’t keep you awake at night. How you view your current debt load – good or bad – is up to you.

So how do you avoid it in the first place? Simply put:

Know before you owe.

Be a smart borrower and don’t borrow more than you need. And carefully, CAREFULLY weigh the opportunity costs involved with taking out student loans.

It’s that simple.

This doesn’t mean I still don’t want that time machine.

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4 thoughts on “Is Student Loan Debt Bad? I’m confused…

  1. Adam Kamerer

    I think it’s important to clarify what exactly we’re talking about when we talk about student loan debt.

    You can get federal student loans to get an education at an in-state public university, or you can get private student loans to attend a private university out of state. The difference in the amount you borrow for those two scenarios is HUGE.

    Not to mention the difference between graduating with a degree that gives you higher income potential for the rest of your life vs. borrowing for school that you don’t finish because you got sick or injured or simply couldn’t make it.

    1. Stephanie Halligan Post author

      Yes, absolutely! I mentioned my degree from BU (a private expensive university) was probably not the smartest choice for me, cost wise. I wish I had done more shopping for a better value school or had applied for more scholarships and grants.

  2. Jackie

    I don’t think debt is ever “necessary” — unless maybe it’s needed to obtain medical treatment that you’ll literally die without. I do agree with your “know before you owe” mantra though. Not enough people take the time to understand the full, long-term impact of what they may be getting into.

  3. EL @ Moneywatch101

    If you owe them they are bad, if you don’t then they are still bad but tolerable for others. Ha. You have to send big payments often, and did writing in the checks the words “For Principal Only” work in your case?


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