Is 20,000 in Student Loans a Lot?
Student loans are often a necessary evil for anyone that hopes to attend college and further their career prospects. One major decision to make is how much of your college expenses you should cover with loans and how much with your own funds. The question remains, is 20,000 in student loans a lot?
Understanding How Much You Need
The answer to this depends on several factors, including how much you need to cover your total tuition and other expenses, your family’s financial situation and the interest rate you will pay. A student that can get enough grants and scholarship money to cover a large portion of their tuition may still require loans to pay for all the other expenses like room and board, off-campus housing, books and other fees, so the amount of loan funding needed may be unavoidable.
Common Loan Amounts
The most common loan amounts taken out by college students are between $5,000 and $25,000. Taking 20,000 in student loan money would not be unheard of but it should certainly be considered carefully. Even though it is not a large amount compared to other types of loan options like mortgages or car loans, you will still need to pay it back with interest over the life of the loan, so it is important to look at all the factors involved.
Considering Your Financial Situation
Before deciding if 20,000 in student loans is too much, take into consideration whether you can easily afford to pay the loan back in a timely manner from your salary when you graduate. This can be calculated by using online loan repayment calculators that show the amount of loan payments made over the loan’s life, which can be 10, 15 or even 20 years, depending on the loan.
You should also look at the interest rate for the loans you are considering, as higher interest can greatly increase the amount you have to pay back in the long run.
Other Financial Options
When considering taking out $20,000 in student loans, it is important to look at all the other options available. Below are a few things to consider:
- Scholarships and Grants: Look for any scholarships and grants that may be available to you. These can greatly reduce the amount that you will need to pay back later.
- Family Funds: See if there is any way that your family can help cover some of the costs, either through a payment plan or by taking out a loan from a bank.
- Taking on Additional Jobs: Increasing your income by taking on additional jobs may help you pay for some of your expenses without taking out a loan.
- Cut Expenses: Consider cutting out any unnecessary expenses and re-allocating those funds towards your tuition and loan repayment.
Conclusion
A 20,000 loan is not a large loan in terms of potential debt, but it is still important to consider the amount carefully and understand what it takes to pay it back over the loan’s life. Look into all the other options available, including scholarships, grants, family funds and additional jobs, so that you can make an informed decision about how you can best cover your college expenses.