Definitive Guide to a Debt Free Life – Chapter 12: The Dangers of Student Loans

In Chapter 12 of The Definitive Guide to a Debt Free Life we will be exploring student loans.

As college tuition rates climb steadily higher and higher in price, student loans are becoming an increasingly relevant topic of discussion, for new college students, current students, and recent graduates among many others.

In fact, student loans are one of the primary causes of long-term debt in the United States. Because of the severity of this debt problem and the sheer number of Americans affected by it, student loans and their associated dangers deserve a chapter of their own.

Below you will find information regarding the dangers of student loans, how to find the best student loans possible, and how to repay your loans in the most effective manner possible. Student loan forgiveness and student loan management are both covered as well.

The Dangers of Student Loans

Student loans have more than their fair share of dangers. Chief among them is the associated debt which can be difficult to pay back as terms dictate.

student loans

Even when student loan payments are made in full and on-time, they can cause a heavy financial toll. Part of the reason for this is that a college education costs so much in this day and age. Taking out a loan for the full amount can result in literally decades of loan repayments.

Matters get even worse when students miss their loan payments. Late student loan payments can instantly turn manageable debt into unmanageable debt.

In addition to backlogging payment, missed student loan payments are apt to kickstart any number of late fees and penalties, including increased interest rates. These increased interest rates can build up over time making it so that you ultimately pay back much more than your initial loan.

All of these factors have subsequent effects of their own. For instance, missed payments and increased interest rates can lead to a negative drop in your credit score, causing you to be seen as a greater risk for financial institutions, credit card providers, and other lenders. (

How to Find the Best Student Loans Possible

There are a number of different ways that you can find the best student loans possible. A few of the best include:

  • Cover all your bases – Student loans are not the only way to pay for a college education. Make sure to exhaust your options for financial aid and grants before exploring student loans.
  • Limit the loan amount – Many college students borrow too much with their student loans. While it can be nice to have extra money to cover things such as food or gas, most people are better off taking out a loan only for the amount of their tuition (after financial aid and grants), books, and room and board. A part-time job can help with other expenses.
  • Understand your terms – It is of utmost importance that you have a thorough understanding of the terms of your student loans before you take them out. Setting up a pay-back plan of attack will help you maximize the benefits of your college loans.
  • Begin payback immediately – Starting to pay back your student loans as soon as possible is one of the best ways to maximize their benefits. You will pay off the loan more quickly and will end up paying less interest in the process.


Student Loan Forgiveness

When you are struggling with student loan debt, student loan forgiveness programs can be a blessing.

These programs allow former students to erase some of or all of their debt over a period of time. However, they don’t come without work.

Student loan forgiveness requires those wishing to erase their loans to spend time working in one of several jobs, usually a government job or a position at a nonprofit organization. Teachers and public defenders are two examples.

It is important to note that there are several regulations and restrictions involving student loan forgiveness. For instance, many of the most popular programs – including the public service program and income-based repayment – have regulations that require you to have made a set number on-time payments, oftentimes up to 120 consecutively.

Simply put, student loan forgiveness programs reward people who already have solid repayment habits. (

Student Loan Debt Management

For those that do not qualify for student loan forgiveness and that are struggling with debt, there is another option: student loan debt management.

Constructed in much the same way as traditional debt relief strategies, student loan debt management basically acts as a foundation to getting your financial life back on track. A few of the most popular student loan debt relief methods include:

  • Budget Plan – Though it is not a debt relief service, creating a budget plan is a solid method of student loan debt management. A budget plan will ensure that you put the required amount of money towards your loan repayments each month.
  • Debt Consolidation – Consolidating your debts is a surefire way to make student loan repayment all the easier. Debt consolidation consists of your various student loans being combined into one, resulting in a single monthly payment that often comes with a lower interest rate. (

As unfortunate as it might be, student loans are just a part of life for many people in the United States. And student loan debt all too often comes along, hand in hand, with the loans themselves.

The information discussed in this chapter should give you a strong understanding of student loans and their many dangers. At the same time, however, it contains the information that you need to make solid decisions regarding your loans, including how to find the best ones.

In the next chapter of our guidebook we discuss special debt relief options. These are debt relief options for seniors, the disabled, and military veterans.


  •, “Explore How Student Loans May Become Bigger Credit Risks”

  •, “Types of Student Loans”

  •, “A Guide to Student Loan Forgiveness and Repayment Options”

  •, “Student Loan Debt”

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