The cost of higher education is increasing like never before. Today higher education, whether for public or private institutions, costs almost thrice as much as that of 1980. The soaring prices have led to greater demand for funding options for college. About 70% of college graduates receive student loans, which also increases the debt on them.

A student loan debt includes any loans taken to cover the cost for your higher education that you require to repay later with interest. It aids in covering all college-concerning expenses, whether it’s tuition or basic living expenses. Therefore, it is essential that students be aware of what they are getting themselves into when they opt for student loans.

What You Didn’t Know About Student Loan Debt?

Here are 3 lesser known facts about student loan debt that will help current and prospective students to make more informed decisions on the matter.

1. Your Future Income Act As The Collateral For Your Student Loan Debt

When you take a loan, a part of an asset or investment is taken as collateral by the bank, such as your home for mortgage. Similarly, in case of student loan debt, your future earnings are considered the collateral. The lender of the student loan (the government or a bank) is legally allowed to take your salary, tax refunds, as well as social security deposits as compensation for any defaults

As a result student loans cannot be discharged easily in bankruptcy and lasts as long as you are physically capable of working. Make sure to check out the financial aid offers, scholarships, prospects of part-time employment, etc. before enrolling into a university to reduce your loan as much as possible.

2. You Can Take A Loan To Cover Living Costs Even If You Have Financial Aid For Tuition Fees

Student loans cover college fees along with living expenses, so even if you have a full-tuition scholarship, you can still apply for student loans to help with your living expenses such as accommodation, food, transport, etc.

3. You Are Obligated To Repay Your Loans Regardless Of Whether You Finish College

College is often associated with finding yourself and your true interests, however financially it is inadvisable to do so. College is expensive and the truth is that even if you don’t finish college, the student loan debt is still under your name and payable by you. Understand that regardless of your plans about graduation, you are still required to pay your debt. Thus, keeping in mind the overall cost of education post graduation is essential.

Conclusion

Understand that while your collection agency cannot legally pursue you for unpaid balances till you are in school as student loans are paid in arrears, however you have to pay the debt once your course at the university is over.

Student loan debt has risen to paramount levels with the general inflation in the economy and high prices of education. You are but one student in a sea of loan debtors. In fact, Americans have more due on college loan than credit card debt, thus, it’s very important to minimize your expenses at every point and judiciously use your student loan.

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