Cause and Effect Essay on Student Debt: Guide & Sample

Cause and Effect Essay on Student Debt: Guide & Sample

The student loan debt crisis has led to several profound negative impacts on students’ lives. This cause and effect essay on student debt guide should help get you on the right path.

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Student loan debt isn’t something new to almost all Americans. Today’s average college graduate has about $40,000 in student loan debt. The current total student loan debt tops at $1.48 trillion from the over 44 million borrowers. And with it, the standing cause and effect essay on student debt that haunts millions of Americans today. You would be hard-pressed to find anyone aged 40 and below who has attended college who hasn’t experienced the student loan process.

If anything, it seems that almost everyone who went to college has student debt. That’s mainly since most students that attend a four-year university get financially pressed into taking out student loans.

Still, you must always try to make your student debt amount manageable and make all your monthly payments on time. This will help keep your credit score higher. It’s no secret that repaying a student loan is one of the most dreaded parts of the entire process. However, a good repayment plan should help lighten the lead. Being informed is the best form of defense that you can have against overwhelming student debt.

cause and effect essay on student debt

The Cause and Effect Essay on Student Debt: How Your Student Loan May Be Hurting You

Essentially, the more you educate yourself about the student loan and student loan debt, the better prepared you will be. However, not many people, especially students, give student loans the seriousness that they deserve. That’s the main reason why student loans tend to have a negative impact on peoples’ futures.

Occasionally, student loan debt has prevented many students from reaching major financial milestones. You may end up having it difficult when it comes to fulfilling some financial obligations like buying a home, saving for retirement, or making certain investments.

Here’s a cause and effect essay on student debt and how you can avoid it:

Affect Your Debt-To-Income Ratio

Most students aren’t always aware that their student loans can affect their debt-to-income ratio significantly. The debt-to-income ratio is what will determine the total amount of your income that will be used to pay your debt. The rising student loan debt affects employees where it hurts the most, their salaries.

Generally, lenders will use your debt-to-income ratio to determine whether you qualify for certain investments, like taking a car loan. It’s vital that you understand how your student loan may impact your debt-to-income ratio. Even a high student debt balance can impact your future credit score significantly. As such, it’s always wise to ensure that your resulting income is able to pay off whatever amount of debt that you decide to incur.

At the very least, know that you may not qualify for some types of loans, especially with a high debt-to-income ratio. It’s, therefore, essential that you keep your debt-to-income ratio in a proper range.

Reduce Your Ability to Take Risks

Any cause and effect essay on student debt would advise against taking student loans if you can avoid it mainly for this reason. Making large monthly student loan repayments can prevent you from taking big risks. For instance, choosing a more stable company rather than opting for a startup company with the promise of growth opportunities seems a more reliable option. Here, you need to think more about your stability that will help you cover your payments.

cause and effect essay on student debt

A student debt crisis can make you pass up on once-in-a-lifetime opportunities like traveling or living overseas due to student loan debt. Having a student loan hanging over your head may result in dozens of opportunities passing you by that could have enriched your life.

Hurt Your Retirement Savings

As aforementioned, one of the main effects of student loan debt on students and workers is limiting the total amount that you can save for retirement. For one, it would be quite challenging to contribute a substantial amount to your retirement when you can barely even cover your student loan debt.

Consequently, not starting your retirement savings plan early can really hurt you financially. Also, it doesn’t really make much sense to start saving for retirement while your student loan debt builds up.

It Becomes Harder to Buy A Home

Not being able to qualify for a mortgage lies in another common cause and effect essay on student debt. Usually, you find that some potential homebuyers prefer not to buy homes altogether due to fear of accumulating more debt.

On the other hand, other interested homebuyers may not just be in a position to qualify for a mortgage with a reasonable interest rate. And the main cause of this is usually their student loan debt.

In addition, saving up a down payment can become a lot more difficult and eventually affect the total amount you would be able to spend on your dream home. Not to mention, the monthly mortgage payments that come with buying a new home. Also, a higher debt-to-income ratio will only make it harder for you to qualify for a mortgage.

Can You Get A Mortgage If You Have Student Loans?

From the immediate context you’ve just read above, you can actually get a mortgage even if you have a student loan. Only that this process might become much more challenging, and, in some cases, you may end up having your application turned down.

cause and effect essay on student debt

The issue with applying for a mortgage successfully if you have student loans has been a long-heated debate. Many professional writers and scholars list it as a leading cause and effect essay on student debt. If anything, it’s the student loan debt that accounts for the significant drop in the current home-ownership rates in the United States.

Easy enough, it’s really quite easy to talk yourself out of applying for a mortgage if you still have a huge student loan debt to deal with. Add this to the monthly mortgage payments that you need to start making, and you will really feel the pinch of it.

On the flip side, some more fortunate people qualify for mortgages while still paying off student loans. In such rare instances, you’d find that buying a house may actually end up being a good money move. This is especially true for situations like if:

  • You currently live in a buyer’s market
  • Your mortgage payments are less than what you are paying in rent
  • You plan to take advantage of the low mortgage interest rates

Also, investing your money into a mortgage payment rather than rent allows you to build equity in real estate. In other words, you will be planting essential seeds for your financial future.

So, yes. It’s absolutely possible to get approved for a mortgage, even if you are in the student loan bubble. But it takes some planning, and some vital money moves to improve your chances of success.

Why Is It Difficult to Buy A Home with Student Loan Debt?

By now, it’s evident that the economic environment we’re living in now isn’t like that of a decade ago. The cost of secondary education has skyrocketed in the last ten years alone. It’s due to this fact alone that many students have been forced into debts just to start their financial lives. And you realize that those who take the most student loan debt – law school students and medical students – are better placed to pay them off. That’s primarily due to the high incomes that such courses and fields secure.

Cause and Effect Essay on Student Debt: Guide & Sample

In contrast, you find that the average student who borrows a lesser student loan amount finds it difficult to pat it off. This is even truer for people who don’t complete their degrees and, therefore, struggle to make ends meet. A lot of Americans live paycheck to paycheck. And this is what keeps owning a home out of their reach, especially if you include the student loan debt card on them too.

Getting a mortgage while still paying off your student loans isn’t impossible. However, it makes the whole process and likelihood of qualifying for a mortgage a lot more difficult.

How to Reduce and Evade Overwhelming College Student Loan Debt

You might have already heard about some informative speech on student loans or advice on how you can avoid it already. However, only about half of these talks and stories are always true. Most of the causes of student debt crises are as a result of misinformation or lack of enough information, to begin with.

This is perhaps the main cause and effect essay on student debt in the United States today.

When it comes to reducing or avoiding overwhelming amounts of debt, even the slightest prevention method is worth a pound of cure. As such, there are several things that you can consider before starting college, while in college, and ager graduating. Here are some factors to consider:

Rethink Your Choice of College

Much as joining an Ivy League school may be a dream come true. It comes with a hefty price tag. This is a common cause and effect essay on student debt to watch out for. And if you happen to be lucky enough to get admitted into an Ivy League school, then you would be hard-pressed to take on several student loans.

If anything, it would be worth considering the best choice of college that you want to join. And, although having a degree from an Ivy League school has some clout, is it really worth falling deep into debt? There are other options that you can always consider. For instance, you may need to:

  • Attend a community college instead.
  • Attend a state school.

These are also pretty excellent college choices provided you know which school fits your educational priorities.

student debt

Work Part-Time

You would read about this in any student debt essay. Luckily, most colleges offer work-study programs. Even better, some colleges offer flexible schedules to allow you to have a part-time job while studying. If you can fit a part-time job into your schedule, you can make some good money. This should help you offload some of the financial burdens that force you into student debt.

Make A Budget

It’s always wise to have some reasonable idea of the total amount that you plan to spend each month. Compare this amount to the total amount that you earn each month and use the total to make a budget. This can help you plan your expenses and avoid taking out loans to cover any unexpected costs. Create and follow a strict personal budget to help you learn money management.

Pick A Repayment Plan

Another underrated cause and effect essay on student debt is failing to choose a friendly repayment plan. A good repayment plan should help offload some of the strain you may have when making your monthly student loan payments. Your repayment plan should be based on your income at the time of repayment.

Look into Forgiveness Programs

Any good student loan forgiveness essay will advise you to go this route if you are not in a position to repay your loan. The federal loan program provides several loan forgiveness programs that protect you from paying your loan. Still, you must meet certain requirements to be eligible for student loan forgiveness. Plus, it can take several years before you qualify for a forgiveness program.

student debt

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Conclusion

It’s evident that the effects of student loan debt on the economy and students themselves have reached a critical limit. The staggering high prices of joining colleges are the primary cause of the rising student loan debt. Fortunately, this article should provide you with a better chance to reduce your student loan without hurting your finances.

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