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# Benefits and drawbacks of college loans

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- The great majority of students have debt when they graduate from college. The average for a student going to a public school is about $26,000 of debt. For a private school it's around$29,000 of debt. - Taking out loans to pay for your education is a highly, highly, personal decision making process. And it gets complicated because I think families tend to advise students and sometimes that advice is very helpful and other times it's kind of antagonistic because it just adds another pressure that you have to keep in mind. And sometimes the pressure is to take out loans because no one has money right now, or in other times it's we're not taking out any loans because we have no money to pay it back. Which might mean that if you're not going to take out loans, you need to pay everything right now. Which means you might have to work a whole lot more, somehow, in order to pay for your education. And so my biggest advice is to think very practically about can you actually pay back those loans? - Always have an understanding of what is your overall indebtedness. I see students get into trouble because they just keep taking out loans every year and then it's a big surprise for them at the end of four years how much they owe. So you should know how much you've borrowed, you should know what that means in terms of monthly payments when you graduate. What's the dollar amount that you're going to be responsible for? And have an understanding of basic budgeting. What does that mean in terms of what will your lifestyle need to be when you graduate. So don't just take out those loans blindly. Know what the monthly payment obligation is going to be, what that means for you once you're out in the world of work. Unfortunately, we can't avoid those student loans forever. So it means taking out loans for reasons that will keep you in school. Taking out a loan because you want to do a really fun spring break probably isn't a good idea. - So especially the work that I've done, and I was a low income student, you have to think of loans in the context of going to colleges and investment in yourself. Yes it's debt, but it's also an investment and if you realize that a student with a college degree makes a million more dollars over the span of their lifetime than a student with a high school degree, $26,000 of debt to a return of over a million extra dollars is a pretty good investment in yourself. So it takes a bit of a mindset adjustment. It's a scary amount when you're a low income student, and think "Oh my gosh$20,000 in debt," but that's why it's also really critical for you to pick a school that really is going to help you be successful and graduate. Taking out loan also helps you build up credit, which is a good thing, and get a credit score, but in general, again, most students are going to have loan and they need to kind of think about the school they're going to go to to pay back that loan, but also again it's an investment in themselves.