The Side Effects of Student Loans

Written by   // October 10, 2011   // 3 Comments

Education savings

Education has long been considered the key to future success. In order to attend college, many people require financial assistance which often comes in the form of student loans. Student loans are an attractive funding option because they don’t have to be paid off until after graduation.

However, upon graduation students must begin the process of paying back the loan.  While these loans prove helpful in acquiring secondary education, failure to address this debt can have a profound financial impact on future decisions such as establishing credit and obtaining home ownership

Despite the benefit of acquiring an education based on student loans, the negative consequences of failing to pay them off lasts much longer than the four years spent at school.  According to an article entitled Repaying Student Loans Held by the U.S. Department of Education, failure to repay defaulted loans can lead to “garnishment of your wages, offset of federal and/or state income tax refunds and any other payments, as authorized by law, and losing your eligibility for other federal loans such as FHA or VA.” Among other things, this could also impact credit.

Credit is a part of financial security which plays a large role in determining eligibility for things such as job placement and home ownership. Like any other significant financial component, payment or lack thereof regarding student loans can have a positive or negative impact on the state of your credit score.

For those who pay their debts on time, it allows for freedom in making financial decisions. On the other hand, for those who are delinquent on their payments, it acts like a dark cloud for years to come.

According to, “Failure to repay your defaulted student loan can be damaging to your credit record. In fact, consumer reporting agencies may continue to report an account for 7 years from the opening date.” The simple solution to avoid credit issues is by paying your debts and there are more payment options available than ever including loan programs and payment online. In addition to major credit problems, student loans also impact one of the most important post college financial decisions, home ownership.

Home ownership is often the first priority of a graduating student. However, those who have lingering student debts are less likely to achieve this goal than non-borrowers of student loans.

The obstacle that most often interferes with graduates becoming homeowners is obtaining a mortgage, an issue that can be directly impacted by student loan debts. Homebuyers still burdened by student debt will find their options more limited than non-borrowers. For example, an individual with $50,000 debt might only be able to afford a $150,000 home rather than a $200,000 home because they haven’t paid off their leftover student debt. This example shows the longstanding impact that student loan debt can have on our life if it goes unpaid.

            These facts illustrate the difficulties that borrowers will have in achieving the goal of home ownership in addition to restricted freedom in other financial decisions and emphasize the importance of paying off student loans for the sake of future financial security.


student loans

Similar posts


  1. By maximize tax refunds, October 22, 2013

    I blog quite often and I seriously thank you for your content. This article has really peaked my interest. I’m going to take a note of your blog and keep checking for new information about once a week. I subscribed to your Feed too.

  2. By maximize tax refunds, October 28, 2013


  3. By l, May 4, 2016



Leave a Reply

Your email address will not be published. Required fields are marked *