“I’ll give you a prediction: It’s gonna be cold, it’s gonna be gray, and it’s gonna last you for the rest of your life.” – Phil, Groundhog’s Day.
Student loan debt is nearly immortal. It’s the Energizer Bunny of debt.
There are really only three ways out, and only one of them is palatable.
You can pay it off. You can become disabled. Or you can die. That is it. Those are your options when it comes to student loan debt.
Why is student loan debt the worst type of debt you can owe?
Let’s count the ways.
1) You can’t discharge student loan debt in bankruptcy
Like that scar on your leg that reminds you to this day that trying to jump that crick in a sled as a kid was a bad idea, so too does your student loan debt follow you everywhere you go and just about regardless of the hurdles life throws your way. Even if you surrender and admit financial defeat, student loan debt will still be there for you. Credit card debt may more often be entered into with perhaps “worse intentions”, but it is much easier to get rid of credit card debt than be saddled with the almost impossible to discharge in bankruptcy student loan debt that not enough people warn you about. Student loan debt: the world’s most loyal type of debt, some might say. Or as I call it: the Worst debt you can have.
2) Student Loan Debt Can’t Be Sold
Right now my wife and I are new homeowner’s. The mortgage we now carry terrifies me to be perfectly honest. “How am I ever going to pay back a quarter of a million dollars?,” I sometimes worry when I focus in on just how large that number is. But then I remember that I can always sell the house, if worse comes to worse. Although the housing market is in a major slump, I should, barring a systemic meltdown of the entire financial system, be able to sell the house to help pay off most of the outstanding mortgage debt. You can’t, however, sell that diploma. You can only use the diploma by trying your best to find and keep profitable employment. Of course sometimes that is easier said than done given current market conditions.
3) The Tax Benefits Are In Danger of Being Revoked and Are In Many Ways Overstated Anyway
The tax benefits are nice, but have a small cap and only apply to interest. Moreover, they are not as established in the system and are therefore potentially more likely to be revoked. They also fade/disappear above a certain income threshold that seems large but may not be if you’re paying $2,000 per month in student loan debt.
4) You Can’t Consolidate Student Loan Debt
With many types of debts you can, when the rates decrease, save money by consolidating. Unfortunately, student loan debt is now fixed (at 6.8% for many of it’s programs). This is also problematic because for the past several years the country has experienced deflation to some extent, along with the more prevalent stagflation. Just another reason that student loan debt is the worst kind of debt you can have to your name. Note: in student loan debt’s defense, some of the “grace period” and the flexible repayment plans are appreciable.
5) The Student Loan Debt Naivety Factor
Many people begin their relationship with student loan debt when they are young and have never even worked a real full-time job before. Money is almost a non-tangible idea for many of today’s teenagers when they make the decision to enter into tens or hundreds of thousands of dollars of student loan debt. Good financial decision making skills are also perhaps lacking for many people at this age, and the adults in their lives for the most part are generally caught up in the belief that every student, despite their abilities or prospects at repayment, should attend college. There is also the unfairness factor that some kids may not realize their suite mates are maybe partying so much because their parents are the ones actually picking up the college tab.
Our Student Loan Debt
Give me a mortgage. Give me a car note even. Heck, give me a gambling debt that crossed some dangerous people (ok…maybe there are scarier types of debts to have, but I am only referring to “legal” debts after all).
Just don’t give me that most terrifying of debts: student loan debt. It is, however, unfortunately a debt that my wife and I are extremely familiar with. We currently have over $160,000.00 in student loan debt to repay for our fourteen years combined of “higher education.” How terrifying. How horrific. How… student loan debt.
Conclusion: Student Loan Debt: The Worst Kind of Debt You Can Have
I believe that in many instances if you have a debt it is your obligation to pay it back, if at all possible. That said, the lack of options should things fall apart in your life is, in many ways, absolutely terrifying. There is nothing I can do now (since I don’t want to die just yet), but keep plugging along and trying to pay down the debt as soon as possible. That is what this site will be about, just like our previous site, Broke Professionals.
Anyone disagree with my villainous assessment of student loan debt? Anyone have bad experiences with the “worst” kind of debt? If you contend student loan debt is not the worst type of debt, then please explain what kind of debt does take that title in your opinion.