Should I Take Loans out to Attend College?

There can be no doubt that earning a college degree can be one of the most expensive investments a person will make during his or her lifetime. Tuition, room,and board at major public or private universities can easily run into the thousands of dollars per semester, and most undergraduate programs call for at least eight full semesters of study to earn a Bachelors of Science or Bachelors of Arts degree. Post-graduate degrees often require at least two more years of study, and medical schools usually require even more course work. Considering the limitations of financial aid programs, taking out college loans may appear to be the best way to finance a higher education, but many financial experts urge caution before taking on too much personal debt at an early age.

One thing most financial experts agree on is that college loans, whether private or federally-backed, should only be used to complement other forms of financial aid, such as Pell grants, scholarships and work/study programs. Many of these programs are designed to meet all or nearly all of a student's tuition, books and basic housing expenses while in college. College loans are intended to fill in the gap between tuition and actual living expenses, primarily food, transportation and other personal needs not covered by grants and scholarships. Unlike other forms of financial aid, however, these college loans must be repaid following graduation or voluntary withdrawal from college. A student may have to start repaying college loans as early as six months after leaving an institution of higher learning, whether or not he or she has actually earned a degree or has secured an entry-level job.

So should you take out college loans to finance your own higher educational plans? That often depends on how much money is still available after other financial aid programs have been applied to your essential college expenses such as tuition and books. Some students find that by budgeting the remaining money carefully and taking advantage of work/study programs or off-campus employment, they have no real need to take out college loans to meet their personal needs. Others, especially those attending expensive private colleges, may discover that other financial aid programs do not provide enough money to meet their obligations to the school, so college loans become a necessity rather than a luxury.

As far as personal loans are concerned, federally guaranteed college loans offer some of the best terms available. Interest rates on college loans are generally lower than other financial loans, and borrowers who find themselves unable to make payments have a number of deferment and forbearance options. A student considered financially independent by financial aid standards can borrow thousands of dollars through college loans with a minimal credit rating and little collateral. If you need additional money to support yourself while attending college, taking out college loans is a fairly easy way to eliminate financial stress while concentrating on your studies.

One of the problems with taking out college loans, however, is the accumulation of substantial personal debt before you've even secured an entry-level position in your field of interest. A student pursuing an advanced degree at a major university could easily take out thousands of dollars in college loans over a period of four years and forget that all of that money is a loan, not a grant. When that student graduates, he or she could be hit with a substantial loan repayment bill and still not have an income large enough to make a full payment. If you are considering a course of study with a low starting salary, such as social work or liberal arts fields, you may want to reconsider your need for college loans. At the very least, only borrow the minimal amount required to keep mind and body together.

College loans are a good idea as long as they complement other financial aid programs. Depending on the cost of tuition, federally guaranteed college loans may even be a necessity for some students. Taking out private college loans should only be done after examining all other options. College life should be filled with social and entertainment experiences not found in a classroom, but it should also be a time to learn about adult financial responsibilities and the benefits of living under a budget. College loans should only be taken out after all other financial options have been exhausted, since repaying them can take a big chunk out of an adult's budget every month.