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Six Things No One Tells You About Student Loans

Updated: May 16, 2022

Photo by Brooke Cagle on Unsplash

Student loans are a part of the college experience for most people who attend. According to the Education Data Initiative, 79 million Americans have taken out student loans over the course of their education.

The thing is, when you talk to most 18 year olds, they do not have extensive experience dealing with money or bills. It can be difficult to fully comprehend what it means when you sign your name on a $20,000+ loan.

This lack of understanding can cause serious consequences and regrets later on. While student loans are a tool that some people might need to finish school quickly, it's always a good idea to proceed with caution. If you do decide to take out student loans, just make sure to consider the impact they can have on your life.

1. Student loans might limit your lifestyle choices in the future

Imagine your dream life, in that city, in that apartment, driving that kind of car, wearing those clothes, etc. When you have a large student loan balance, those lifestyle dreams can fall to the side. It is difficult to pay bills and have fun and keep up with your loan payment plan. For many graduates, this means they have to live at home for longer or make other kinds of major sacrifices to keep up with the loans.

Below, you'll learn about the story of one student who found herself in a difficult situation. She didn't realize the impact her loans would have on her lifestyle.

2. You might end up paying thousands more than you signed up for

Interest is in the small print, but it will impact you (unless you pay back your loans within six months of graduation). Even though the numbers look small, interest is often calculated daily. This adds up fast, especially with a high loan balance, also known as the "principal balance." The principal balance is the original amount that you agreed to pay back.

The tough thing about interest is it eats up your repayments, and makes it difficult to actually get the principal balance lowered. For example, if you have $500 accrued in interest, and you make a $1000 payment, you really only paid down your loan by $500. The interest ate up the rest.

Below you can see some fixed interest rates from the Federal Student Aid website.

Student loan interest rates
Credit: Federal Student Aid

Private loans, from lenders like Sallie Mae, can have interest rates as high as 12.60 %.

3. It will hurt paying it back

Just like you don't want to pay your student loan debt now, you won't want to pay it off in the future either. Every time you make a payment, whether it's $100 or $1000, you will imagine all you could do with that money if you didn't owe it to your school. An incredible night out? A week-long vacation? A new laptop? A dog? Anything you wanted. Every single penny will hurt, so don't take out more than you have to.

4. You can't get rid of it, except in extremely rare occasions

If your financial situation ever becomes dire, you can wipe certain types of debt off your record with bankruptcy. While bankruptcy is a last resort and can create issues of its own, it can bring a sense of relief to someone trapped by debt.

Unfortunately, student loans are typically protected as "non-dischargeable" under Section 523(a)(8) of the Bankruptcy Code. This means that even if you are in an absolutely desperate financial situation in your future, you will still be responsible for paying back your student loans.

5. You can't count on forgiveness

The idea of loan forgiveness might make you feel confident as you sign the dotted line, but unfortunately it's actually a rare phenomenon. According to the Education Data Initiative, "Prior to November 2020, 0.7% of eligible borrowers eventually benefited from student loan forgiveness."

6. It might not be worth it

There are many reasons to go to college, but you want to make sure that you are investing in something that will truly be worth it to you. Research the career, speak to people who live it, and understand what your realistic salary expectations should be. With this information in mind, never take out a student loan balance that you'll never be able to pay back with your expected salary.

There's a lot of pressure to go to college, and for good reason. But the reality is that you are the one who will pay back every penny on the loans you take out. Make sure that you think through your plan and make the best choice for your present and your future self.

The Bottom Line

Does this list mean you should absolutely not take out student loans? Not necessarily. Taking out loans is a personal financial decision that you have to make for yourself. If you are worried about paying for college responsibly, click here to read about how to attend college in an affordable way.


Taking out loans and dealing with the reality of paying them back can be overwhelming. Book a virtual consultation with a coach at The Financial School today. It won't cost you, and it can give you a clear sense of direction and inspiration.

Written by: Norah Kearney


  1. Education Data Initiative. "How Many People Have Student Loans?" Accessed Jan 9, 2022.

  2. Youtube. "I Pay $900 a Month In Student Loans."Accessed Jan. 9, 2022.

  3. Sallie Mae. "Student Loan Comparison." Accessed Jan. 9, 2022.

  4. Gov Info. "11 U.S.C. 523 - Exceptions to Discharge." Accessed Jan. 9, 2022.

  5. Education Data Initiative. “Student Loan Forgiveness Statistics.” Accessed Jan. 9, 2022.

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