December 13, 2023October 31, 2026

Pros and Cons of Student Loans

What borrowing for college gives you and what it costs

Student loans let many people go to college who couldn't otherwise pay for it. They also leave a debt that can follow borrowers long after graduation. Below are the main arguments on both sides, from interest rates and repayment plans to what happens in bankruptcy.

If you're about to borrow, or you're already repaying, it helps to see where the benefits stop and the risks start.

Pros

Student loans have a poor reputation, but they do some things well.

Accessible higher education
The biggest argument for student loans is access. They let people who can't pay for college upfront enroll anyway, so more of them get to pursue the studies and careers they're aiming for. Without that option, a lot of those students would have to wait or give up on a degree. Over time, the result is a more educated workforce.
Low interest rates
Federal student loans often carry lower interest rates than other kinds of consumer debt. That makes them a cheaper way to borrow. It matters most for students with little credit history or income, who would have a harder time getting reasonable terms on other loans.
Deferred repayment
Many programs let you put off repayment until after graduation. That gives you some breathing room. You can find work and settle into a job before the monthly payments start, instead of juggling them while you're still studying.
Building credit history
Paying on time builds a positive credit history. Lenders look at that record later, when you apply for a mortgage or another type of loan, so a clean track record with your student loans can help with those future applications.
Potential loan forgiveness
Some government and employer-sponsored programs forgive student debt for people who work in specific fields, or who stay in a qualifying job for a set period. If you qualify, the relief from the debt can be significant. That condition is the catch, since not everyone will meet the requirements.
Flexible repayment options
Repayment plans can often be adjusted to fit your financial situation. Income-driven plans are one example: the monthly payment is based on what you earn, which usually keeps it manageable in years when your income is low.
Investment in future earning potential
For many people, borrowing for a degree is an investment in what they'll earn later. The degree may qualify them for better-paid jobs, and over the long run that can leave them financially better off. It doesn't work out that way for everyone, but for a lot of borrowers it does.

Missing a pro?

Let us know which pro you are missing!

Cons

Most of the downsides show up later, once the degree is done and the payments begin.

Accumulating interest
Most student loans start accruing interest as soon as the money is paid out, and that keeps going while payments are deferred. Over the years it can push the total you owe well above what you borrowed. The longer your repayment period, the bigger that effect tends to be.
Long-term debt burden
For many borrowers the debt lasts for years. It can get in the way of other milestones, such as buying a home, starting a family, or saving for retirement. And the weight of it can be heavy for a long time.
Limited financial flexibility
A monthly loan payment narrows your options. Taking a job that pays little at first, or making another life choice that doesn't bring an immediate financial return, gets harder when part of every paycheck is already spoken for. Some borrowers end up feeling financially trapped.
Impact on credit score
The credit effect works both ways. Missed or late payments hurt your credit score, and a lower score makes it harder to get favorable terms on other credit in the future.
No discharge in bankruptcy
In most cases, student loans can't be discharged through bankruptcy. You're still obligated to repay them, even if you run into severe financial hardship, so the usual last resort for overwhelming debt mostly doesn't apply here.
Potential for overborrowing
Because the money is fairly easy to get, it's tempting to borrow more than you need, and that can leave you with an excessive debt load at graduation. Working out what you actually need before you sign, and borrowing only that amount, is the most reliable way to avoid it.
Impact on post-graduate life choices
Debt can shape what you do after graduation. To keep up with repayments, borrowers may feel pushed to put higher-paying jobs ahead of careers they care about more. That can rule out the career path they actually wanted, at least for the years the loan is running.

Missing a con?

Let us know which con you are missing!

Conclusion

The case for borrowing is strongest when the loan is federal and the amount stays close to what you actually need. If you're counting on forgiveness or an income-driven plan to make the numbers work, check the conditions before you sign, because in most cases bankruptcy won't get you out of the debt later.