Comments on No Debt MBA: Why student loans are the worst kind of debt

The student loan is also considered as a personal loans. Any loans would be considered as a burden, you should need to find a loan rates that are suiting your needs and financial status.

I agree with the previous comments. Student loans ...

2012-02-20T17:37:13.912-08:00

I agree with the previous comments. Student loans can indeed give a lot of burden to the students. If you can't take it anymore, then you may need to get a help from your lawyer. He may advice you to file bankruptcy to get rid of the burden that makes your life more miserable. In fact, student loans are supposedly done for the benefits of the students.

Student loans are almost non-dischargeable in bank...

2011-12-21T18:28:42.464-08:00

Student loans are almost non-dischargeable in bankruptcy. You still can have them discharged or eliminated. You just need to show to the bankruptcy court that the loan payments are putting an extreme burden on you or your family.

Good post, but I have to disagree with your commen...

2011-06-23T00:11:23.135-07:00

Good post, but I have to disagree with your comment about debt reducing ROI as opposed to cash financing. If the return on your degree (asset) is greater than the cost of debt, then your ROI actually increases due to the smaller initial investment.

You have no assurances as to know much you will be making post-grad, but you can venture a guess. There is uncertainty involved, but uncertainty exists in stock market returns as well. If anything, your post-grad outcome falls more under your control than stock returns.

If certain degrees are "outrageously expensive", then it's a stupid investment regardless of how you finance it.

While I think that too much student loan debt or a...

2011-06-20T10:29:59.471-07:00

While I think that too much student loan debt or any student loan debt can turn into an ugly situation, I just can't agree that it's the "worst kind of debt." You take the interest right off the top of your gross income, they automatically defer payments if you go back to school (and pay the interest if it's a subsidized loan), and they are the easiest loans to defer.

Very well written. That stat noting how student-lo...

2011-06-10T11:31:29.353-07:00

Very well written. That stat noting how student-loan debt now surpasses credit card debt is shocking to me.

But debt is debt. And making interest payments are never fun - no matter who you're paying.

MoneyInYour20s - That's great to hear! ...

2011-06-08T05:27:43.012-07:00

MoneyInYour20s - That's great to hear! I really feel that there's no harm in saving and shooting for schoarlships and trying to be debt free - the student loans will always be there to fill in the gaps, there will just be fewer of them (or maybe none!). Good luck!

Paula - I think the degree from Harvard may be a good investment and degrees in general may be good or bad investments, but the student loans are only a method of financing. The student loans are never an investment in and of themselves and if they were they would be a terrible one since they have a negative return.

Like a mortgage on a house, student loans can only reduce your return on investment since you will be paying significant interest on them eating into any gains you have. In some cases you may still be left with a positive ROI, but it will always be smaller than if you had paid with cash.

The only benefits to student loans, buying on margin, and other debt is their ability to leverage what assets you have to provide greater opportunity. So while you may not be able to get the degree without student loans and obtain the maximum ROI you can still potentially use them to obtain the reduced ROI which is better than no ROI. Debt also allows you to minimize opportunity cost which can be helpful if you can pay for an asset in cash, but could gain a bigger return elsewhere (ie student loans are 7%, but you could get a %16 return elsewhere giving you an over simplified profit of 9% minus fees etc). The latter is not the case for most students, but the former might be if the degree is a good investment.

Again, I think student debt can be "good"...

2011-06-07T17:22:12.252-07:00

Again, I think student debt can be "good" or "bad" depending on what institution you attend and what degree you receive. If you're attending graduate school at Harvard, where you'll network with a cohort of peers, alumni and professors who will introduce you to amazing opportunities, it could be well worth the investment.

Great points- I have a lot of friends who have hea...

2011-06-07T07:33:25.742-07:00

Great points- I have a lot of friends who have heavily financed their degrees with student loans. It's one of those things that students don't think much about when they begin college because it's so common, but many rethink their decisions once they're trying to pay off $50k+ in debt (for private schools).

Before reading this blog I assumed I would be taking out loans in the future for an MBA - after all it seemed like a good investment when looking at average salaries of those coming out from top programs. But you're right, student loans are never good and should be used as a very last resort.

I'm hoping that if I save aggressively and apply for wide range of scholarships/grants I can complete my MBA debt free as well.