How Is Student Debt Good?

Your path to career success and a solid credit history.

Carrying student loan debt may be good for your credit

There’s a lot of reasons to hate the idea of student debt. With added interest, the government and private companies can profit out of people’s desire to improve their lives and build a better future for their families. What other countries give for free, Americans have to pay for. The list goes on…

But student loan debt doesn’t necessarily have to be all bad. If you do it right and things go well, it can vault you into a much better position – both career-wise and when it comes to your credit.

Of course, all of what’s listed below is only true if you’re in a good place with your student debt. If things aren’t going right, then it can definitely be a tough road forward. If you’re in that situation, call us or complete the form to the right to get the help you need.

Financing for all

One of the nice things about student loans is that they’re available to everyone. It’s really the only type of traditional loan you can actually qualify to receive regardless of your credit history. You can have no credit score and still get the financing you need to further your education.

And the loans can be subsidized or unsubsidized. That means whether you can prove need to qualify for a subsidized loan or can’t prove need and have to use unsubsidized loans, you still can find federal loans that you can use.

And by and large, the system isn’t designed to screw people over. The idea is that you take out money comparable to the salary you’ll earn in that profession. So firefighters and police may only require an associates degree should have lower education costs than doctors and lawyers who are required to go to grad school.

Of course, this is all done with the idea that you’ll go to school for something you’re passionate about, graduate and continue in that chosen career path. If things go wrong, your situation with debt can go off the rails.

Fact: Student loan default is more common for those who attend for-profit schools than a traditional nonprofit college or university.

Building good credit

The biggest bonus student loan debt can provide is the ability to build credit when you may not have much credit history.

After the Credit CARD Act was passed in 2009, students can’t qualify for unsecured credit like credit cards without provable income or a parent who’s willing to cosign. With that in mind, if you don’t have a job during school, you may graduate without any credit in your name – except your student loans.

Repaying your student loans builds your credit history and establishes a positive relationship with credit. Being able to eliminate these loans makes you look good to creditors, so you have a way to achieve a high credit score early in life so you can qualify for loans and lines of credit when you need them.

So if you can keep up with your payments and eliminate your debt, you can make positive moves for your credit score. Even if you start having problems, as long as you either defer payments or consolidate to lower your payment, you still build good credit.