More Student Loans May be a Good Idea

Community Ladders has made a concerted effort to reach out to students (undergraduate and graduate) while they’re still in school.  Two of the main things we focus on are building up credit scores and planning for expenses (including additional debt) in the years following graduation.  I’ve seen a lot of students graduate having not thought about credit scores (or much else in terms of finances), and then immediately get a car loan or continue to pay interest on outstanding credit card debt.

As a planner, I often find this makes little sense, especially for those students who passed up subsidized loans during their final years in school.  To be clear, legally student loans should only be used for education expenses, but planning your transition in the last year of school is part of that educational process.   If you’re going to need to take on debt immediately after university, student loans may be a better way to finance those needs. This is especially true if you’ve had a rough credit history.  See our adjacent blog post for the number of benefits that make student loans … well … special.

Critical Note: There are a lot of moving parts in the calculation about whether more student debt makes sense.  This is not a recommendation.  In fact, I only recommend this to a very small minority of our membership.  For the majority, it doesn’t make fiscal sense.   My point here, though, is that our instinct is to shun debt until we are desperate for it, and that’s not always the smartest play.