Dealing with Student Loan Debt

This year, 2016, has not even ended yet, but a class of 2016 graduates has already incurred about $37,172 in student loan debt, which is about 6 percent higher from 2015. Right now, over 43 million Americans are in debt because of student loans, and the amount they owe is over $1.3 trillion.

Yes, America has a student loan debt problem. Costs of a liberal arts education have risen to unprecedented amounts that no average American can afford college without going into debt. What’s the alternative? Not go to college? Statistics show that people who are only high school graduates earn far less than their college-educated counterparts. It seems like the system is rigged in favor of debt.

So, if you are a high school graduate or a nontraditional student who wants to go to college, obtaining a student loan is a question you will have to address head on. Be aware that this is not an easy question to answer. In the past, most people thought that they would be able to pay off these loans quickly soon after graduating. After all, a college education is an excellent investment, right?

It Depends on Your Major and the Amount You Borrow

First of all, understand that not all majors are made equal. Your future ability to pay off your student loans will depend on the profession you choose, which is not necessarily determined by your major. For example, imagine that you major in English. Now, what will your job prospects be? High school teacher, writer, or poet? None of these are known as highly lucrative professions. Now, if you took out hundreds of thousands of dollars in student loans to go to a fancy college and major in English, you will most likely not be able to pay it back soon after graduation.

On the other hand, consider a major like petroleum engineering. People who become petroleum engineers enter a job market that highly demands their skills and pays well for them. So, if you took out hundreds of thousands of dollars to pay for a high-demand major such as this, you will be in a better position to pay it all back.

Sometimes the Interest Rates are Far Too High

Here’s the ugly truth most students don’t realize about student loans: they come with sky-high interest rates. Even if you become a petroleum engineer or a doctor, you might not be able to cover the monthly due amount. Soon after you graduate, you can only earn an entry-level salary. This little salary will have to cover your rent, transportation and other necessities. When all that is paid off, there might not be enough left to pay back your creditors. Then you might fall behind on your payments, and sink deeper into debt. It’s a vicious cycle.

So, What Should I Do?

You can always wait until America makes college education free. In case that day might never come, you should consider reducing the overall amount you have to borrow by applying for scholarships and grants. Also, borrow money from family, which will not incur interest. Then, borrow only the amount that you absolutely need.

The fact is that it’s difficult to succeed in life without a college education. And the majority cannot get a college education without taking out student loans. It may seem unfair, but if you enter into loan agreements with a clear set of goals, it might not be impossible to pay off your student loans.

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Is Peer Pressure a Reason to Travel?

Traveling is one of the greatest joys of life. Or so you may have heard from people who have been lucky enough to travel around the world.

When you have student loans and mortgages to pay off, traveling might not be on the list of priorities for you. However, you probably can’t stop dreaming of a day when you can fly off to Norway to watch the northern lights, or enjoy the azure beaches of the tropical belt.

For most of us with debts, traveling is restricted to driving to work or grocery runs. Then again, there’s the occasional story of that couple you know are deep in debt who somehow managed to holiday in Thailand for the summer. Of course, you see their pictures on Facebook and can’t help but feel jealous.

Why Do You Want to Travel?

If you are currently facing serious financial pressure, but planning a wonderful trip is in the back of your mind, there are some questions that you might want to ask yourself first. For starters, you might want to ask yourself what motivates you to plan this trip. If it’s the Facebook photos you saw of your friends’ trip to Thailand, stop right there. That desperate need to travel you may feel when you scroll down your Facebook feed is called peer pressure, not genuine wonder. And that’s never a good reason to travel.

When you have people telling charming anecdotes about their travels at the Christmas dinner table or class reunions, and look at you for your own story, it’s only natural to feel a certain level of social pressure to conform (meaning to travel like the others). However, you should never allow this pressure to push you towards making bad financial decisions.

Why It’s Not Good to Let Peer Pressure Make Decisions for You

It’s never a good thing to do anything because of peer pressure. If all your friends have gone to Aspen, and you are feeling left out because you haven’t, then don’t take out a personal loan to fund an expensive skiing trip to Aspen. After all, you will be the one who ends up in debt, not your friends.

Peer pressure is a strong communal motivator that can make you do both good and bad things. It’s your responsibility to avoid doing the bad things. Instead of taking out a ridiculous travel loan, consider telling your friends that you have other obligations or don’t have the time for traveling. Make up an excuse, rather than compromising your finances.

Budget-Friendly Alternatives

If you genuinely want to travel, you can always consider budget-friendly alternatives. Instead of buying expensive plane tickets, you can enjoy a road trip for much less. If you are seriously strapped for cash, consider going on family picnics to a local park or joining a group trip.

Likewise, think of innovative ways to travel on a budget. Never, ever allow peer pressure to overwhelm your decisions. Instead of taking out loans, start saving now so you can enjoy a lovely trip to Aspen or Thailand in the future without becoming indebted.

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