4 Benefits Of Having Student Debt

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Close up of college diploma.

That degree you’re rightfully proud of? The debt helped you get it.

I’m no stranger to the student debt blues. You know, that overwhelming feeling that you made a horrible, horrible decision regarding going to college? Or maybe it’s just a twinge of frustration that you can’t afford anything. Like at all. Like scrounging for quarters to get something off the dollar menu for breakfast at all.

Do you know the feeling?

Instead of wallowing in self-pity, I’ve chosen instead to reflect on the reasons why having student debt is actually a good thing. Here are my top four.

***

1. Building Credit

I’m very in debt. Because of that, I’m struggling to save; however, that very indebtedness will actually help me buy a house, a car, and lots of other things in the not-so-near future. And that’s because I have a student loan I pay regularly.

When you apply for loans, lenders will check your credit score to determine if you’re a good or bad risk for them. By showing that you can manage to pay bills (large bills) on time, you improve your trustworthiness in their eyes.

2. College Email Address

Student debt isn’t the only thing I got from attending college. I also received a student email address. An email address that I can keep. Forever. So, according to the online world, I’m a student. Forever. This means I can get student discounts!

Before you chastise me, listen: Most of these discounts are for “”students.” There is no specification if they’re for current students. Plus, don’t broke new grads deserve discounts too? Also, if I’m using them for professional reasons, I think it’s OK. It’s not like I’m going to student night at my local bar. Adobe Creative Suite and New York Times delivery at a reduced rate? How can I resist?

So, fellow new grads, check to see if your .edu address still works. Or if you still look enough like your student ID photo. These could come in handy.

3. Tax Benefits

If you have student loans, you can choose from several opportunities when filing your taxes that will help you get a greater return. If you make under a certain amount in income, you can use whatever you pay in interest every year (up to $2,500) to decrease your taxable income  (check out IRS Publication 970 for the income limitations). In turn, that can increase your tax refund. People without student debt don’t get cool tax breaks like this.

4. Your Degree

I know it’s obvious, but I think it needs to be said. I often forget why I took out my loans in the first place. Frequently, we focus too much on what we’ve lost (for me, it’s been vacations, martial arts classes, and leisure time) and take what we have because of our loans for granted.

A world of opportunities is available to me just because I went to college. I have a great job with great pay (for someone with a liberal arts degree, at least), an education, and experiences that I’ll take with me for the rest of my life. Is all that worth six digits? I’ll let you know in a few years.

Have you found a silver lining to your debt? Share it in the comments.

(Photo: Our Lady of Disgrace)

Update 11/24/14: This post was updated to clarify some of the tax information mentioned. 

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  1. C.A. November 20, 2014 / 4:21 pm

    Number two is not correct. Not all students get to keep their email address issued by the school. Forever. Many schools deactivate student accounts after inactivity or withdrawal. Thus, making it very difficult for servicers to get in contact with loan borrowers.

    • Ryan Lane November 21, 2014 / 8:09 am

      Excellent point, C.A.! Not everyone will be able to keep their school email address forever. The school may deactivate, or you may switch to a more “professional” account to reflect that new phase in your life. To your point, in those instances, that’s why it’s so important for borrowers to make sure their servicers have up-to-date contact information. If borrowers aren’t sure who their servicers are, they can find out at http://nslds.ed.gov.

  2. Mikaelacolner November 20, 2014 / 6:51 pm

    I’m sorry, but these are not silver linings. I have the mixed blessing of making too much $ to get my student loan interest back. And what about that great job I have because of my student loans? Well, I may make a nice salary, but my student loan payment is 1,500$ per month. So this means that after taxes and my student loan payment, I make less than a school teacher. So was it worth it? I tell others not to do it. If it wasn’t for IBR, I’d be buried alive by my student debt.

  3. Tori November 21, 2014 / 6:51 pm

    I’ve been discouraged by (some of) what I’ve seen on this blog. It’s one thing to encourage smart loan management in tough times, and encourage readers to make the best of their situations. It is another to laud what is essentially a deplorable condition and decry others for “wallowing in self-pity.” We are in dire straits in this country with interest rates on student loans at least twice as high as those of mortgages on average, and almost five times that of car loans. Student loan debt is higher than credit card debt in a country that admittedly leans heavily on credit in general. This is a shitty situation. By denying it and trying to “focus on the positives,” as I assume the author intends to do, you alienate readers. Instead of feeling positively about my school encouraging me to educate myself about the student loan programs that exist to benefit me, I just feel bitter when I get newsletters from SALT including articles like “Four benefits of student debt!” or “Why moving back in with your parents is awesome!” Get real.

    On a different note, a friend of mine had this to contribute after reading the article:
    “[This article] is factually wrong about the tax benefits (you don’t get anywhere near “up to $2500 back” for paying student loan interest: there is a huge difference between deducting $2500 from taxable income and getting that money back.) Clearly the author does not appreciate the niceties of marginal tax rates and AGI phaseouts.
    Signed,
    Eternal Taxgeek.”

    • Tori November 21, 2014 / 7:00 pm

      Slight clarification: my math re: interest rates is for graduate-level loans, so not all interest rates are quite so high. Regardless, we’re paying higher interest rates than exist on most loans, and I would think it should be the opposite given the high priority our country places on higher education.

    • Ryan Lane November 24, 2014 / 9:27 am

      Thank you for this note, Tori.

      Your friend is correct: that language about the tax benefits is unclear. It makes it sound like this is a tax credit (which would give you the literal amount of money offered), when it is actually a tax deduction, which decreases your taxable income. My apologies for the confusion, and my thanks to you for pointing this out. I will update the text accordingly.

  4. Nick Wilson November 22, 2014 / 1:15 pm

    I’m sorry, but this is one of the worst articles I’ve read in quite a while. Not really a surprise considering I read it due to the title, which promised actual benefits to student debt, which are nonexistent. Here’s my personal analysis of these points:

    Point 1: Paying off your debt on-time and regularly (not just having debt), will build your credit score (a.k.a. your “I love debt” score), which will allow you to go ever further into debt in the near future. While it is very difficult to buy a house outright, you do not need a credit score to buy a reliable used car with cash, which is the only way to make sure you aren’t paying a lot more than you want to spend on a car and to get out of debt faster. The benefits of not having student loan debt and gaining wealth far outweigh this benefit, so it is pretty much a lie to call it that.

    Point 2: This point made me laugh because it has NOTHING TO DO WITH HAVING STUDENT LOAN DEBT. Shocking, I know. People without student loan debt can have this awesome benefit just as easily, and some schools don’t allow this benefit regardless of your debt/no-debt status.

    Point 3: Oh gosh, where to start… Oh goody, I got my interest back in the form of a tax break (making this the closest point by far to being a benefit but still failing) and students without debt don’t get this cool tax break! Oh…wait… that only applies under a certain income. Oh…wait… the students that don’t have student loan debt don’t get this cool tax break because they already have this money, having not owed the interest to anyone in the first place, and are more likely to be making more money and interest on top of that through saving!

    Point 4: Your degree…see point 2. Great work. Two of the four points on this article had literally nothing to do with student debt specifically and could have been achieved with equal ease without debt.

    I don’t know if SALT is a WSU site or if WSU just hired them, but this kind of stuff is a poison to their stated cause. Yes, I know, this is a blog portion to the site but newer students can read this and might think this was written by someone who knows what they’re talking about. I know that sounds rude but this site needs sound advice, not unknown authors who are maybe 21 with no real financial credentials and very limited experience (see the author’s other articles).

  5. Ryan Lane November 24, 2014 / 9:21 am

    Thanks to everyone for their thoughtful comments. Part of what we hope to do on this blog is encourage conversation, which this piece obviously did!

    Another goal we have is to offer real stories from students and alums about how they handle financial matters in their lives. This is Sasha’s story. It isn’t wrong or right, or good or bad. It’s hers. I appreciate her sharing it, just as I appreciate each of you sharing your own thoughts.

  6. Nick Wilson November 25, 2014 / 1:32 am

    I can appreciate the desire to be positive in a bad situation. However, college students absolutely must think of it as it is. Student loan debt is a curse shoved on them by people who really don’t care about their future financial well-being. The reason we accept it as a “normal” thing (yes, I fell into that trap too I’m sorry to say) is because the vast majority of teens are not taught money values and money-handling skills before that point. If we continue to try to put a false positive spin on college debt, students will never truly have the willpower to blast through it when they graduate. When I was in college not all that long ago (I finished my Master’s in 2013 as a monetary reference), I figured I’d just be paying off college for years and that was the norm. No biggie, right? Well, it is a huge biggie and now I am just thankful I became better educated on the topic of money sooner rather than later. I’m selling a good chunk of what I have and throwing as much as I can into getting out of debt. College students need to have that intensity about getting out of debt or, better yet, staying out of debt throughout college. What would colleges do if they never had a student take out a loan and only come if they could actually afford it? Think on the repercussions of that for a while, but I’ll give you a hint: those 10%+ hikes in tuition every year wouldn’t happen for a start. Neither would the multi-million-dollar renovations to random things like playfields while school programs and majors were being shut down due to “lack of funds.”

    If this is a narrative blog telling a personal story about college (which it is not, seeing as it is written in an informational/persuasive format), fine, but let it be just that. I found this article on the SALT newsletter. At first I didn’t even know it wasn’t written by the experts at SALT and was shocked to hear this misinformation. Does SALT endorse these opinions as financial fact? I would certainly hope not, but they might just want to look at what goes on their official e-newsletter before it’s sent out.

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