The Positive Aspects of Student Loan Debt

By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS

Whether you hear presidential candidates speaking on it, read it in the newspaper, or see it on the news, student loan debt seems to be an insurmountable problem with no solution and no positive consequences. While the total student loan debt in this country is absolutely absurd, that does not necessarily mean that student loan debt is completely negative. In fact, there are a handful of good things that come out of student loan debt, and some of these benefits are described below:

1. Loan debt can be viewed as an investment in human capital.
   The government provides money to college students in hopes that they will use that money to earn a degree and become a valuable member of society. There is no denying that individuals with a college degree earn more money on average than an individual without one. Even though interest rates can be high and tuition costs can be excessive, many college students end up earning a degree that pays off in the long run. The ultimate hope of the Department of Education is that every individual that starts college has that same outcome.
2. Loan debt helps fund other aid-based programs.
   The Pell Grant, one of the best forms of Federal Student Aid (FSA), is funded through the interest received on student loans. The Pell Grant is given to financially-needy students, and it is not required to be paid back. While the Pell Grant may not help all students, it does help those that otherwise may not have a chance to go to college.
3. For individual students with loan debt, they can use it as a vehicle to build credit and boost their credit score.
   Young people have to start somewhere when it comes to building credit, and taking out school loans (and paying them back in a timely manner) is a great way to show creditors you are financially responsible. Contrary to popular belief, manageable student loan debt may actually aid you when it comes time to buy a house, car, or other large purchase. For example, some of the First-Time Home Buyer loans require individuals to have at least three open lines of credit (for at least a year) to prove they are capable of handling debt.

Rising student loan debt is still a major problem in this country. However, the bigger problem lies with irresponsible borrowing, non-completers, and students not positioning themselves for gainful employment. Managing your student loan debt is actually a great way to build credit, and it hopefully resulted in a college degree that can be put to use immediately. It may be much easier said than done, but having student loan debt does not have to be a black cloud over your head; in fact, it can reap you (and the economy) major benefits.