Student Loans are Toxic

student loans bad

Student loans make up 65% of our current debt. When I think about that, all I feel is rage: at the people who make them sound so appealing, and at myself for being so gullible. Now, before we get too carried away, I don’t dislike the student loan program. I think it’s a valuable opportunity for some people who need it, and there are several situations where it’s necessary. But I’d bet that for a large part of us, it’s only enabled us to be irresponsible to some degree or another. And do you want to know why I know that?

Because I have never heard someone look at their student loans and say it was worth it. Instead, most of the time you hear something like, “I had to in order to get an education” or “I had no idea what I was doing.” Personally, I felt like I did know what I was doing. And for the most part I did. I didn’t take out my first student loan until almost three years into my schooling, right before my wife and I were married. I had been working full-time before that in order to avoid them, but my wife knew that I had very little free time and that I was getting into the more time-consuming stage of my major, so she asked me to go part-time so we could see each other more. In hindsight, I don’t regret that decision, but that doesn’t mean we made the best decisions moving forward.

Student loans are too attractive

There is no other way to go into debt that is more attractive, and there is no group of people more ill-fitted to that offer than kids who are getting the first freedom they’ve had in their adolescent lives. Think about it. These kids have absolutely no credit experience and no plan to pay them back. And unless I missed something, they don’t really educate you on what you’re getting yourself into. The thing that got me was that the government would pay my interest until 6 months after graduation. That was still two and a half years away! Out of sight, out of mind. And you can use that loan for anything. It doesn’t even have to be related to school. You can’t do that with a car loan, and if you want to get a personal loan, the rates are ridiculous. In fact, they even say you are “awarded” a loan. Sounds a little skeevy to me. I don’t recall my bank calling my auto loan an award. They call it what it is. A giant iron shackle that is going to live with you for years to come. Or something along those lines 🙂 And let’s not forget that student loans are a source of revenue for the government and private companies, and whenever someone else is making money off of you, don’t expect their motives to be pure when they’re advertising.

They give you a false sense of security

When I was in school, I got into a habit of thinking, “We can do this or that because if we end up needing more money, we can just get student loans.” We weren’t too crazy from day to day, but I twice convinced my wife to take trips because a) I love traveling and b) we had the money (thanks to student loans). We went on a cruise to the Bahamas in 2011 and took a trip to Anaheim in 2012. Both times she fought me on it, but I convinced her with my charming smile and whispering sweet nothings into her ear. We were pretty frugal and only spent about $3,000 total, but ultimately that amount was added to our student loans. I had that sense of security then, but now I feel the weight of the loans and it’s driving me insane. I still find it hard to regret taking the trips, but it would be nice to not have to pay interest on it.

Debt begets debt

In the moment, there’s not a whole lot wrong you can think about with getting student loans. Education is a worthy cause and the terms really are hard to beat. But the hammer doesn’t hit you until much later. Right now, for example, we have a 12 year old car and a 15 year old car that are still running pretty well, but if one of them bites the dust, we don’t have any savings to buy a new one with cash because we’re paying off the student loans. We’ll have to go more into debt. The payments really limit us to how much we can save up for the things we want to do. And for us, the payments are still doable. I can’t imagine having a loan amount ten or even five times what we have. There are people in their 50s and 60s who still have student loans, and they can never get a handle on it because they keep adding more and more debt on the other things they can’t afford because they’re constantly making payments.

Where’s the return on investment?

Some people argue that student loans are good because you’re making an investment, but how do you calculate the return on that investment? Sometimes things come up and people never graduate, but they’re still stuck with the debt. Sometimes it’s a choice but sometimes it’s out of their control. Sometimes the job they’re counting on to help them make the payments never materializes. There are too many people in this country who are grossly under-employed. Since I’ve been a bank teller, I’ve met other people like me who graduated with a degree and can’t seem to find a job they’re qualified for. A couple of weeks ago I met another teller who has a master’s degree and she’s stuck earning less than $10/hr. She told me she keeps requesting deferments on her loan payments because she can’t afford them.

Student loans are toxic

The crappy part about all this is that I’m writing this now and not 4 years ago before I took out my first loan. There are obviously no one-size-fits-all solutions, but all my solutions fall under the umbrella of being responsible. You know—get a job, live on a budget, that kind of stuff. Lucky for you I had an article published just yesterday that discusses some solutions in more detail. So if you’re interested, bounce on over there and enjoy 🙂

p.s. I want to give a shout out and a huge thank you for all of my personal finance blogger friends for sharing my stuff! Here’s a list of all you awesome people.

(photo cred)



19 thoughts on “Student Loans are Toxic

    1. Great article, Holly! It makes me even more sick that they had no idea how much they had borrowed. There needs to be more education for people getting student loans so they can understand what they're really doing.

    1. Genius! A friend of mine was able to work the system for his masters degree too, albeit not at Harvard! Those are some pretty slick skillz you got there 😉

    1. I agree! But right now they're always fighting for the younger votes, and it's a lot easier to just throw more money at them than it is to try to teach them to be more responsible…sad isn't it?

  1. I agree to an extent. I don't regret going to college, and while I'm not currently using my degree, I wouldn't be the same person if I hadn't had that experience. Was it worth the $18k or so in student loans I graduated with? I'm not quite sure. I tried my best to graduate with the least amount of debt possible, and I think I did okay. I'm not struggling to pay them off, but it is a burden as it's the only debt I have. I do hope within the next few years that it proves to be worth it.

    I did know someone who dropped out of college in their last year because of a death in the family. While he's successful now, he hates the fact he has to pay $330 every month for something he's never going to use. It's a shame. I definitely think more education on loans should occur before students enroll in college.
    My recent post Two Sides: I Want A New Car

    1. Dang, that sucks! Yeah, I'm totally not against getting a college degree. I just think there are a lot more ways to pay for it than through student loans, but they make them seem so attractive that a lot of students take it as the easy way out.

  2. Student loans DO give you a false sense of security! I thought for sure going to college would be worth it, but the return of investment, just wasn't there. Sometimes, I get disheartened with how much debt I have, but I keep on trying to climb out of it!

  3. I didn't personally have any student loans – I attended a commuter college and my parents are 100% anti student loans so I worked and paid my own tuition.
    HOWEVER, the most interesting thing that I am not sure I have ever read in all of the articles that I have read about the student loan crisis is about any anger towards your parents who allowed you to take on this kind of debt? Also, I have not read from any parents of this generation any sense of remorse or guilt for ALLOWING their kids to take on this kind of debt either. It's kind of the elephant in the room to me actually. How are you guys not seething with anger towards the people who should have known better than to allow their kids to be saddled with this much debt? I mean, I am not sure that any teen or young twenty something really understands the magnitude of taking on that kind of debt – they just don't have the life experience to know it's a bad idea, but your parents probably did . . .
    Please don't read this as a slam towards you or your parents personally, I just find it interesting that no one really addresses it because I can't really imagine that you guys don't feel this way (but maybe I am wrong here).

    1. Interesting take! I'm sure that in a lot of situations, I'm sure parents encourage their kids to take student loans. For my part, my parents did a great job at teaching me to be self-reliant, so I was completely on my own for college, and we never really talked about how I was paying for it, and my dad has told me before how predatory private companies are who offer student loans. But I know that we're a little different and that a lot of parents are very involved with how their kids finance their education. That would be a great idea for a future article!

  4. Good article Ben.

    It's so true that the student loan is like a bait for teenagers, whom can't ignore the opportunity they see in the new-found freedom of college/university. The whole scam sells itself to begin with, and I'd think that not too many would be turned away from the idea even if the real risks were actually revealed before the student-to-be carries out the applications. This is because the temptation for youngsters to get away from there parents and guardians and into a life of frolicking, nightclubs and so on is too great, especially when you consider the excitement of a new and bigger city to relocate.
    It's also true that the first year at university is often low on pressure and workload, so teenagers will think they have a whole year to adjust and experience 'free' fun before anything gets serious. What the loan essentially says is "Leave home and get large injections of cash without having to worry about responsibilities as an adult". And this is dangerous, not only financially in the long run but also promoting youngsters to be free and wild (they should be kept indoors ha ha)

    I went to university at the age of 24 for a three year course in Creative Writing, which ended just over four years ago. and for the past year i've been battling my way through unemployment with limited success. My personal experience is that university lifestyle is too 'flashy' and all the screaming, excitable 18+ year olds can be so naive and seem not to have a care in the world, maybe until they realise the cost of their antics. As an independant (mature) student and already coming from a big city in the UK, I perhaps had a better idea of how debt would prevail. Also having lived some years away from parents and supported myself already I was more aware, firstly that nightclubs and student parties are not all that appealing, and secondly I knew about the extent of housing bills to come, like rent and food shopping. Additionally I've always been able to cook, whilst a lot of the fresh students I came across didn't have a clue how to buy and prepare good meals for a reasonable price.

    But as I say, the temptation of a loan + bursaries + freedom is like a ticket to paradise for most and hard to turn down. As it turned out I didn't get my first installment of money until 8 months after i started the degree, so my first year was practically ruined by a poorly run and idiotic student loans company. There are many regrets, and that is the true price of a proper education, and it stays with you for many years if not your whole life, until you are able to remove the debt.

    1. Sounds like a rough story! I'm sorry you've been struggling with unemployment. That's one of the hardest experiences I've been through. I really wish there were some sort of education for those incoming freshmen, but like you say, there may be some that just won't be deterred no matter how scary the consequences are.

      1. Thanks, but more recently I'm in less of a 'hole' than I was. I think it helps for anyone if you take on full time education after you've grown up a bit, but then the norm is these days to stay at home for much longer before leaving the nest. Some kids long for this opportunity, especially when they can usually return home after a few years, broke and jobless. Some kids on the other hand dread leaving home at 18. We'd certainly all like home cooking every day for the rest of our lives!

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