Central Bank of St. Louis

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  • The pros and cons of student loans

    It is very important that students understand not only the pros, but also the cons of obtaining student loans.

    a scale evenly weighted with gold coins on one side and books with a graduation cap on the other side

    It is no secret that Americans are increasingly burdened by student loan debt. The New York Federal Reserve reports that the total student loan debt has risen to $1.26 trillion as of 2016 - a six percent increase since 2015. While over 44 million Americans are encumbered by the debt of their student loans, delinquency rates are over eleven percent [1].

    It is imperative for students to understand the responsibility they are undertaking when accepting student loans. If the responsibility of paying off student loans is not taken seriously, increased financial difficulties are imminent. The penalties for defaulting on loan payments include added fees, added interest, and wage garnishment.

    an infographic outlining the pros and cons of student loans

    Certainly, student loans can be a blessing for many people, as not everyone has the luxury to afford college. Be it lifting people out of poverty, or helping struggling Americans make ends meet, a source of credit for those unable can have immeasurable benefits. It also is a chance for students to start laying the foundation of their credit history by staying on top of their payments. However, it is important for students and families know the risk and burden they are taking on.

    When an individual takes out a student loan, they are essentially betting that they will come out of their college career with the human capital to repay their loan in principle, plus interest. But, an education that allows a student to have a fulfilling career and life is worth the financial stress taking out student loans incurs.

    [1] A Look at the Shocking Student Loan Debt Statistics for 2017, Student Loan Hero



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