For two thirds of American undergraduates, student loans are a necessity.
Among college graduates in the 2007-2008 school year, about 65 percent finished a degree at a four-year school with debt, according to FinAid.org. The average load shouldered by those students was $23,186—excluding any PLUS loans used to finance the degrees.
Loans are far from a fail-safe route to earning a college degree. Some undergraduates may opt for a pricey education when cheaper options exist; others may fail to exhaust all federal student loans before turning to the private sector, where interest fees and repayment rates are traditionally less attractive.
[Read more about the benefits of federal student loans.]
But for students who borrow just what they need to finance a degree they're serious about earning, student loans can add a few positives to one's college experience.
"If you don't need to borrow, you shouldn't—ever—[but] for most students, they just won't be able to afford to get their degree unless they borrow," says Kevin Walker, cofounder of SimpleTuition. "Borrowing is not evil if it's done carefully and you set yourself up to take on a responsible amount that you can afford."
For students who have to rely on student loans, there are at least four benefits to consider:
1. Get that degree: Financial experts say an attractive student loan payment will be no more than 10 percent of a recent graduate's gross monthly income, Walker notes. This type of loan payment, taken out under transparent repayment terms and at an amount you can realistically meet, can help you achieve otherwise financially unattainable levels of higher education. For Julie Feldman, a recent graduate of the University of Maryland—College Park, her combination of federal, private, and interest-free loans—while a confusing jumble of jargon, interest rates, and repayment options—was vital to her degree.
"If I didn't have to, I definitely wouldn't have, but I'm glad that I was able to get the loans or else I wouldn't have been able to go to school," says Feldman, who now works as a senior associate at C. Fox Communications agency in Maryland. "It's hard enough to get a job now without a college degree; not only did I graduate with a college degree, through everything at Maryland and the program I was in, I found my job now."
[Find out what most Americans think about the value of a college degree.]
2. Increase awareness: After helping a student get to college, student loans can also serve as a motivator once you're there, says teen psychologist Jerry Weichman. "As difficult as it is and as much debt as they accrue, there definitely are a lot of positives," he says. "It can be a great way to have an invested buy-in to your academic career."
An impending student loan may encourage you to focus on a degree that will likely land you a well-paying or rewarding job after graduation, or may motivate you to take advantage of all your school has to offer, from clubs and organizations to library and faculty resources. Knowing you'll be paying for this experience in the long run, then, may spur you to get out of your dorm room and onto an intramural sports team, into a seat in student government, or to a professor's office hours for study help.
Though Patricia Coogan knew she'd have to take on student loans to go to Marist College in Poughkeepsie, N.Y., attending the private school—and her brother's alma mater—seemed worth the price. "Knowing that I got to go to this college made me want to get as much out of it as I could," she says. "I never skipped class—it wasn't worth it."
For other students, like Feldman, the looming burden may also enhance your financial awareness and help you to make smarter purchases. "[College] wasn't just me with a checkbook from my parents, writing off rent and books and everything," Feldman says.
3. Build your credit score: If you're responsible with your student loans, they'll serve as a shining track record should you apply for bigger expenditures, such as a car or a house, later in your adult life.