There are many parents and children that worry a lot about getting a student loan. There is reason to have concerns as they do last a long time and many people do find that paying them off can be difficult. However, some people go even further with their worries in thinking that it can lead to a pattern of debt. It is worth considering whether this is likely or not.
What is a pattern of debt?
A pattern of debt is when one loan leads to another. This could be because once we have borrowed money, we no longer have a stigma associated with it as we have tried it. Therefore, we are not so worried about trying it again and we will get out loans so that we can treat ourselves to all sorts of things. We might also find it difficult to cope when we are making repayments on a loan and that could lead to us borrowing more money so that we can manage the loan repayments and our other payments.
Can a loan lead to this?
It is possible that a loan could lead to a pattern of debt. Some people do seem to have multiple loans and keep borrowing and always seem to have debt. It could be that one debt has led to another. However, there are people who have very few debts. They borrow a little but manage their repayments and do not let having one debt force them to get more. Ideally everyone should very carefully manage their debt. They should only be taking on loans that they can afford to repay and for good reason. Borrowing just to buy some treats is not a good reason but if they are borrowing to better themselves, like getting a student loan or for emergencies then these are better reasons. It is always worth therefore thinking hard about the reason that you are taking out a loan and whether it is a good one. It is not always that easy to work out but if you discuss it with someone else, this could help you.
Alternatively, you can think that loans might help us to avoid debt in the future. It might be that we felt stressed while we were in debt and therefore, we want to avoid that happening again. It might also mean that we have to learn to carefully budget our money, so that we can afford the loan repayments and this can lead to good habits in the future if we keep up with it. It may also allow them to have a good understanding of the difference between good and bad debt and so they will only borrow in the future if they are taking on good debt rather than bad. This means that for some people having a loan can lead to the opposite and they might avoid debt in the future rather than take more on.
Will a student loan lead to this?
The main worries with a student loan is that because they are taken out at such a young age, they can have a big influence on the student. However, as explained above the influence could be a good or bad one. Whether the having the debt is seen as a learning experience and the experience helps the graduates to learn to budget better or whether they see the advantages in debt and decide to get lots more, regardless of their purpose, will depend on the individual.
It Is partly the responsibility of the parent to do their best to teach their children about good and bad debt and the importance of making repayments on time. If they are responsible then their experience of debt should be a positive one and they should learn from it. It can be hard for parents to talk to their teenagers about this sort of thing as teenagers do not always want to listen. Therefore talking about it from when the children are young could be a better tactic if it is not already too late.
If the student themselves is worried about the debt then they will need to make sure that they get a good job after they graduate so that they will be able to repay the debt more easily. If they earn enough they will be able to easily make the repayments and get the debt repaid. By making sure that they live within their means, so that there is always enough money to cover the debt repayment, this will help. It could even be worth thinking carefully before college, to make sure that the career that you are studying towards will give you an income that will allow you to be able to get a good level of pay and therefore manage those repayments.