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How much do student loans effect your long term financial wellness?

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Tammy’s Answer

This can be a tough question to answer because each person's financial wellness can be very different. There is no question that college is expensive and taking out loans will have an impact on your future financial health. However, what you choose to do with your money and how you handle those loans will make a difference in the future. When you are offered your loans, take out the smallest amount of loan money that you can at this point. The smaller the loan now the smaller the financial burden it will be later. Taking on school loans are the equivalent of taking on a house mortgage. You will be paying them back for many years to come and there are strict penalties for not paying. If you can manage to pay for some or all of your college bills while in school, I would definitely advise doing so. Once you graduate from college and have to start paying back your student loans, I would set a plan in motion to pay off the balance. Depending on your family situation, borrowing money from family might be a better option or living with relatives during college to save on expenses or after college for a while so that you can put as much of your paycheck onto paying off your loans sooner. You can pay extra money on your loan each month to pay it down faster. Talk with a financial advisor to find out the best plan to pay back your loans. There are some loan forgiveness programs out there but they have a lot of requirements and make you jump through many hoops to qualify. Do your research and only take out what you need. And never take out of a private loan to pay for college as those interest rates will be much higher than the federal loans. Make sure you have a budget and that you are sticking to it now. You should know exactly how your paycheck will be spent before you spend it. Save as much as you can during college so that you can use that money later on to pay down those loans. You also have the option to start paying your loans back while you are in school still which might be something you want to consider. The first few years of paying your loans will only be paying the interest anyway and the sooner you can start paying on that, the faster you will be paying things down and the smaller your overall debt will be to pay back. Good luck!
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Candice’s Answer

This is a loaded question and will depend very much on what type of career you are planning to go into (earning potential) as well as how responsible you are in managing your debt. If you are able to reduce the amount of loans you take while in college, you can make things more manageable later. If you borrow a lot, prepare to be making larger payments for a longer period of time after graduation. However, if you budget appropriately and are responsible about not missing payments (or asking for forbearance or deferment when it applies) or even paying a little extra each month, then student loan debt may not affect you too negatively. Aside from this, making regular payments can help build your credit score. It is a good idea to make sure not to rack up credit card debt while in college, however, because the interest rates on that type of debt can get out of control very quickly. If you are thinking of going into a field that doesn't have a high earning potential, you may want to examine the cost versus return on investment when choosing schools.
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