Were My Student Loans Worth It? My Thoughts 7 Years Out (2024)

FAQs

Are student loans forgiven after 7 years? ›

Do student loans go away after 7 years? While negative information about your student loans may disappear from your credit reports after seven years, the student loans will remain on your credit reports — and in your life — until you pay them off.

Carrying student debt can affect your ability to buy a home if your debt-to-income ratio is too high. If you have too much student loan debt, you won't be able to save as much for retirement. Student loan debt can lower your credit score, especially if you fail to make on-time payments.

They can be considered good debt because the money you're borrowing to attend school is your ticket to earning a degree and getting hired at a well-paying job. That debt should pay itself off over time with a lucrative career in place.

Borrowing to earn a four-year college degree typically pays off, according to research from the College Board, a company that helps prepare students for higher education. This conclusion holds true even after considering the time out of the labor force when a student could have been earning money.

What are the Cons? Taking out a student loan means you are starting your adult life with debt. Student loan debt can get in the way of other financial and lifestyle goals. The penalties for defaulting on some loan payments include added fees, added interest and wage garnishment.

Key Points. Interest can make student loans more expensive, while inflation can make that debt harder to manage alongside other bills. Paying off some of your debt during your studies could ease the burden later on and save you money on interest.

More debt and less support have undeniably led to long-term debt burden and severe financial consequences. Although more students of color are attending college and pursuing the “American Dream,” student debt has delayed them from purchasing homes, starting businesses, and building generational wealth.

Your student loan acts more as a graduate income tax: unlike commercial loans, repayments are calculated solely on how much you earn, not on how much you owe (amount borrowed + interest). So if you don't earn enough, you don't repay. You don't start repaying your loan until you earn over a certain amount.

For decades, there had been enthusiastic bipartisan agreement that states should fund high-quality public colleges so that their youth could receive higher education for free or nearly so. As a result of this ideological swing, student loan debt began to mount.

Do student loans look good on credit? ›

Student loans affect your credit in much the same way other loans do — pay as agreed and it's good for your credit; pay late, and it could hurt it. Student loans, though, may give you extra time to pay before you are reported late.

A low DTI signals to lenders that you can likely make timely monthly payments and are able to handle debt responsibly. Paying off student loans early can help you lower your DTI and take on other debt more easily, such as a mortgage or practice loan.

Regardless, one rule of thumb for student debt is that you should try not to borrow more than the first year salary you can expect in your chosen field. This means that if you expect to earn $38,000 in the first year of your career, you should try to borrow $38,000 or less for your degree.

If the loan is paid in full, the default will remain on your credit report for seven years following the final payment date, but your report will reflect a zero balance. If you rehabilitate your loan, the default will be removed from your credit report.

The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.

At what age do student loans get written off? There is no specific age when students get their loans written off in the United States, but federal undergraduate loans are forgiven after 20 years, and federal graduate school loans are forgiven after 25 years.

Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.