I came across an interesting article in the U.S. News and World Report today. It was interesting because it brought up a topic that I hadn’t thought of before now. I figure if I have not considered it yet, maybe others of you out there haven’t as well. So here we go…
As many of us know, student loans can give students the financial help they need to attend college and earn a degree or diploma. This is all well and good, but it’s possible that there can be side benefits to student loans if you use them responsibly. According to an article by Katy Hopkins titled, “Student Loans Pack Surprising Benefits,” there are potentially three other benefits linked with student loans.
Increased awareness: According to the article, student loans could motivate students to perform well in college because they are financially invested in their education. In other words, knowing that you are financially responsible for your education could be a cause to increase your social and academic participation on campus. As Patricia Coogan, a student at Marist College put it, “Knowing that I got to go to this college made me want to get as much out of it as I could. I never skipped class—it wasn’t worth it.”
Build your credit score: Building credit is important as you begin to think about other large purchases you may make in your lifetime, such as a house or a car. These types of purchases require good credit in order to take out a loan to cover the cost. Paying off your student loans helps build good credit and can provide evidence that you are a responsible borrower. The article quotes Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, who says, “I wouldn’t suggest a student take out a loan specifically to help build good credit, but if they use it wisely, then it can have a positive impact on their credit and on their ability to borrow in the future.”
Train for the future: Taking on any kind of debt can be stressful. However, when it comes to learning to manage your money responsibly it’s good to start early. “The process of paying back your student loans can serve as a post-graduate prep course in adult financial literacy,” writes Hopkins. This financial knowledge and experience can help prepare you for when your financial responsibilities increase as you get older.