Student Loans: The Good, The Bad, and The Ugly

student loans

Student Loans: The Good, The Bad, and The Ugly

Are student loans good for your financial health? They are certainly in the news a lot and often not in a good way. But loans are an important financial tool for financing a college education and can be all three: Good, Bad, and Ugly.

Good Debt and Bad Debt

First of all I want to explain my view of debt. There is good debt and there is bad debt.  Good debt is any debt which you take out to pay for an asset which has a good likelihood to appreciate in value. If you live in your home for 10 years or more, then it has a pretty good chance to appreciate in value so a mortgage is good debt. Bad debt is any debt you take out to pay for assets which depreciate in value or maybe have no value at all. Credit card debt used for clothing purchases is a perfect example of bad debt. What do you think used clothing is worth? As soon as you walk out of the store and put it on, its worth pretty much nothing. Many people borrow to pay for their cars and even though sometimes you have to get an auto loan because you don’t have $30,000 lying around, it is also bad debt. Cars depreciate incredibly fast when you leave the showroom and debt used to buy them is definitely bad debt. read more

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College Decision Time

Higher education machine

College Decision Time

It’s almost April 1st and in addition to April Fools Day, it is also the final day that most colleges and universities will notify their applicants whether they have been accepted, denied, or wait-listed. Prospective students now have approximately one month to make their decision. Colleges usually expect to have students commit to them by a May 1st deadline.

Students and Parents have a big decision ahead of them. The decision is a personal one: The school may be large, small, or tiny. It may be urban or rural. It may be a serious school or a party school (or sometimes both). It may be far away or close to home. The decision is also an academic one: Is this the best place for the student to achieve in their major? Or maybe the question is whether the school is the best place for the student to figure out what their major or career choice will be. And of course, the decision will be financial. Can both the student and his/her parents afford the best choice academically and personally? Maybe a trade-off on the academic or personal side will make a big difference financially. Is it worth it? read more

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