We're conditioned to think all debt is bad, and for the most part it is. Any money you owe someone else is less you have for building your own long-term wealth. However, there are cases where some debt isn't a bad thing, and some debt is definitely better than others.
In this article we'll discuss three reasons why student loans aren't close to being bad debt and how they can even be considered good debt to have.
1. Interest is tax-deductible
On federal school loans you can claim interest you pay as tax deductions. Very few types of loans or debt allow you to do this and it can save you hundreds, if not thousands, of dollars over the life of your loan. Credit card debt will not allow this and neither will car loans. You can usually claim interest on your mortgage,but that's about it. Pretty much all other debt will not get you any deductions on interest.
2. Low interest rates on consolidated loans
Granted, it's still debt. And yes, you do have to pay it off. But compared to credit cards at 20-25% interest your 6% student loans are an absolute bargain. Especially when you consider them what they really are: an investment in your future. If you are stuck owing both, pay the minimum on your student loans and close out the credit card debt as soon as possible.
3. Federal loans offer repayment flexibility
If you have an unplanned event occur (such as a job loss) and cannot pay your student loans, most lenders offer deferment plans that will stall your repayment for 6 months or a year. This will allow you to correct your financial situation and get things under control without defaulting on your loans. Student loan lenders understand things happen and they are usually more than willing to work with you. Try getting that kind of compassion from your credit card company.
As good as those three reasons are, your monthly student loan payment would still be better off in your personal retirement fund, so pay them quickly, just not at the expense of paying off other, high interest debt.
My parents can pay me eduation cost, but they just won't. Maybe our they get divorce eariler and try to push me away. I may try some private loan if I could.
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